YIP: Pause LP Incentives

You can view the discussion here: https://forum.yam.finance/t/pause-liquidity-incentives-until-yam-eth-update/821

Basic Summary

We are currently paying approximately 70k BoU YAMs in incentives to LPs, despite consistent negative rebases which do not utilize this liquidity. We propose to pause incentives for LPs and reinstate them on the YAM/ETH pool. By doing so, we could save as much as 164k BoU YAMs (currently 763k YAMs) of the total 925k BoU YAMs currently allocated for liquidity incentives - approximately 17.7%. The final number are dependent upon when this proposal would be executed onchain and when ETH/YAM incentives begin.

Abstract

The incentivizer contract has a simple breaker switch to turn off incentives at the end of a weeklong cycle. We would utilize this breaker to pause incentives on YAM/yUSD, in order to use our current rewards budget more effectively. It is important to note, this is not reducing or removing the total amount of rewards that will be distributed. It is shifting the timing of those rewards to maximize their impact and value to the protocol.

Motivation

Pausing incentives on YAM/yUSD would have several benefits:

• It would prevent the protocol from continuing to pay for liquidity it is not using.
• Increase ease of governance participation until the LP voting is implemented
• Does not decrease the amount allocated to LP rewards – it just shifts the timing to better align the incentive program with protocol needs and market conditions
• If positive rebases do occur while incentives are paused and liquidity is low, we will simply see small rebases that quickly hit 5% slippage and YAM accrue to the treasury.

Specifications

Due to the liquidity incentives operating on a weekly cycle, once a cycle is started it must be completed. In order to get the most benefit from this proposal, it would need to be enacted onchain by 8PM UTC October 17, meaning a on-chain proposal must be submitted by 8AM UTC October 15.

If positive quorum is reached after 24 hours, it may proceed to on-chain proposal, per YIP 3: https://snapshot.page/#/yam/proposal/QmdBiJuXFtYephsmz9mWF9WoDDrnYtAVaGAPkoB8QrF76h