Community discussion: Should the DAO tighten voters’ incentives to replenish the DAO treasury and favour longer lasting yield farming incentives?
Summary: This proposal tightens voters’ incentives to replenish the DAO treasury with more than 1.5 Million PNT tokens and favour longer lasting yield farming incentives.
In a nutshell, this proposal is composed of three main elements:
- a switch to the 21% annual incentive for DAO participants 2 months ahead of time
- stopping to reward DAO stakers who don’t participate to governance (skipping votes)
- stopping rewards for poorly performing Steroids pools such as pLTC/ETH
Introducing such changes would replenish the DAO treasury and enable the long-term sustainability of incentives programmes without impacting the token economy and specifically the total supply of PNT.
Abstract: Over the past few months, pNetwork experienced healthy growth both in terms of usage and as a community. The goal is for the positive trend to continue in order for the project to keep contributing into creating a new financial system.
This is a proposal to redefine pNetwork’s incentives with a model that is relevant for the historical moment we are currently living in as an industry. Specifically, the proposal brings forward a revised incentives programme aimed at continuing and growing pNetwork’s rewards for relevant liquidity providers across blockchains (including platforms such as Uniswap, Curve and Pancakeswap among others) as well as redefining incentives for DAO voters and node operators (21% annual rewards and 21% annual rewards plus earned-fees on cross-chain transactions respectively). Liquidity provider incentives which are poorly performing (not contributing significantly to pnetwork’s Total Value Locked and cross-chain transaction volumes) and DAO stakers who don’t vote, would stop being rewarded.
Motivation: For the ecosystem to experience healthy growth it is essential to align incentives for all participants - this is the foundation upon which the new proposed pNetwork’s incentives are built.
A practice some projects in the industry have adopted for incentives programmes (i.e. yield farming) to become more sustainable in the medium to long term is for the supply of their token to increase. As for pNetwork, we would like to tackle the long-term sustainability of incentives programmes by proposing an alternative solution that doesn’t impact the token economy of PNT, but rather rebalances the distribution of rewards among the various players.
Specification: The PNT token represents a key element of the system as it aligns incentives for all participants. In fact, PNT is leveraged internally by the pNetwork system to enable operations for both node operators and DAO members as well as externally as a marketing tool to expand its users-base and grow pNetwork’s liquidity.
Forming this proposal are three main elements, each complementing the other in achieving a new incentives programme aimed at growing pNetwork Total Value Locked and cross-chain transaction volumes as well as promoting incentives for active DAO voters, while maintaining unchanged the figures relating to the PNT total supply.
Below, a breakdown of the proposed changes:
-switch from 42% to 21% APY of voters incentives 2 months ahead of time. The first element going into the proposed new incentives programme would be a restructuring of rewards distributed to DAO participants. The proposal is aimed for high-growth of pNetwork liquidity and users across multiple blockchain ecosystems. It brings forward the switch to the 21% annual incentive for DAO participants ahead of time. This would leave the DAO with additional 1.575 Million PNT tokens funding to dedicate towards a series of growth initiatives (such as yield farming).
A practice some projects in the industry have adopted for incentives programmes (i.e. yield farming) to become more sustainable in the medium to long term is for the supply of their token to increase. As for pNetwork, we would like to tackle the long-term sustainability of incentives programmes by proposing an alternative solution that doesn’t impact the token economy of PNT, but rather rebalances incentives across all pNetwork community members.
Should the proposal be approved, PNT would still be leveraged internally by the pNetwork system to enable operations for both DAO members and node operators, who would be rewarded for their active participation with a 21% annual incentive and with a 21% annual incentive plus earned-fees on cross-chain transactions respectively. Additionally, the expanded DAO treasury would be leveraged externally to expand its users-base and grow pNetwork’s liquidity. A growth in terms of liquidity and cross-chain transaction volumes is expected to gain the project larger visibility across various industry verticals as well as to generate additional fees to be distributed as incentives to pNetwork node operators.
-stop rewarding inactive DAO stakers. The second element going into the proposed new incentives programme would again be a restructuring of rewards distributed to DAO members. The proposal is aimed for promoting active participation and engagement towards the project. It brings forward a new formula to determine DAO members eligible for rewards that sees rewards distributed exclusively to active DAO voters who participate in all voting proposals. DAO stakers who skip votes would stop being rewarded for the given epoch. The rationale being a rebalancing of incentives that goes in the direction of promoting a strong and an engaged pNetwork community.
-revised LP incentives programme. The third element going into the proposed new incentives programme would be a restructuring of rewards distributed to pTokens liquidity providers across blockchains. Poorly performing incentives (such as incentives on the pLTC/ETH Uniswap LP) would be removed in favour of alternative initiatives. These kinds of rewards serve as an important tool to attract new liquidity and users into the pNetwork system, to boost initial creation of liquidity and encourage volumes for such pools. LP incentives that would remain are listed below:
The proposed revision for the incentives programme spotlights a healthy growth for the project both in terms pNetwork adoption and community of PNT enthusiasts. If approved, the works on the revised incentives model would be started straight away.
Join the discussion with feedback and suggestions. Ideally, the final proposal could be opened in the pNetwork DAO for voting in a few days.