Author: @victormerino, @gperezalba, @sokardys, @ibaixauli, @mcaballero Created: 29 August 2022

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Abstract

The tokenomics designed before the $TUT launch in 2021 defined a very profitable model for yield farming rewards: after the first weeks, yields in staking & farming contracts remained at around 30 & 100% APR, respectively.

These constant and profitable yields have been creating a high sale-pressure effect against the $TUT, diminishing the capability of the token to capture value. By the time, users preferred to sell half of their rewards to buy bitcoin and add more liquidity to the pool $TUT/$WBTC. More LP tokens were being farmed but with the requirement of selling $TUT. Thus, the $TUT is directly facing the negative effects of inflation.

However, by reducing the yield rewards in Staking & Farming contracts the inflation should be reduced, and so the selling pressure caused by liquidity providers, impacting the price positively. The growth of $TUT price would be less hampered and could capture more value when more buying pressure comes in.

Motivation

Our purpose is helping $TUT to capture value. The more value it gets, the more exciting and scalable the project will be. We learned during the past year that a protocol should not be so generous with APR yields, because inflation is hard to control. By reducing inflation we are convinced will see a double effect:

• Users will not swap so many $TUT for $WBTC
• More experienced users will be attracted to a healthier protocol

Proposal

The proposal is reducing ⅔ of the current yield rewards, which will impact the APR metrics approximately as follows:

• Farming: 97% to 32%
• Staking: 30% to 10%

The recipient of the rest of released tokens will be a contract, which will be controlled by Tutellus DAO for a new purpose in the future. Those tokens could be burned or used in another product, and this will be decided by governance.

Implementation

The implementation steps proposed are:

1. Deploying the recipient contract from TutellusManager. Upgradeable contract, so the implementation can be defined in the future by governance.

Contract: TutellusRecipient
Address: TDB as {RECIPIENT_ADDRESS}
Function: deploy (  )
Transaction: deploy (  )

2. Adding the recipient to RewardsVault and assigning a new allocation for Staking, Farming and the new Recipient (percentages are set in ether units):

• Staking: 20% → 6.666666666666666666%
• Farming: 80% → 26.666666666666666666%
• Recipient: 0% → 66.666666666666666667% (+1 wei to match 100%)

Contract: TutellusRewardsVault
Address: 0xc7963fb87c365f67247f97d329d50b9ec5a374b8
Function: add (
    address account,
    uint256[] allocations
)
Transaction: add (
   {RECIPIENT_ADDRESS},
   [
       6.666666666666666666,
       26.666666666666666666,
       66.666666666666666667
   ]
)

All transactions are executed from Tutellus DAO Gnosis Safe

Voting options

YES → Yes, reducing fees and inflation NO → No, keeping fees and inflation

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