Dynamic Rewards Allocation (RFC)

Lots of discussions on the minutiae of allocating rewards have been shared over the last few days.

Most of it opinion-driven, some of it backed by beautiful Excel calculations.

Let me allow to add one more ugly Excel calculation.

PICKLEPOWER uber alles?
Problem: What percentage of PICKLE rewards should go to LPs, which to Farmers?
Instead of discussing the outcome, let’s discuss procedure.
At the moment, we have 7 farms that compete for the leftovers of the PICKLEPOWER LP Pool.
What’s the correct amount of allocation, we wonder.
But should it matter? Being numbers-driven, we should align on a process that dictates the allocation.
So here, I do not derive the percentages allocated to each pool by pure imagination and willpower, but from the share in Pickle they would receive.
This also serves as a steering mechanism for TVL.

TVL or APY?
All TVL is not equal because our Treasury longs for that sweet sweet 27.5% cut of Jar APY.
The discussion on how to reward and why is as old as time… er, PICKLE itself.

Proposed Solution

Here’s a two-pronged approach here that serves both interests.
Splitting the rewards that are available to Farms in two parts, rewarding both TVL and APY separately dictated by their share of total TVL and APY.
If need be, we can change the factor by which these two are weighted.

Upsides. Upsides Everywhere.
This will make sure all TVL is treated “fairly” to some additional APY.
This will make sure all TVL is rewarded exceptionally according to the value they bring to PICKLE.
This will make sure that TVL moves into a new Farm with good APY in a short time, smoothing out the TVL over all Jars.
This means we never have to discuss PicklePower rewards again, as they are a function of the amount of Farms we provide to the DeFi public.

Scenarios
In these scenarios I demonstrate the flexibility we will gain by implementing this change. None oft these are supposed to be exact proposals and should not be read as such. They’re just extrapolations.
Play with the Excel sheet if you must!

Scenario 1
Farms: 5
Peg of Rewards: 7% per Farm
TVL/APY weight: 60/40


Screenshot_11
As we can see, all Farms receive a 6.79% base boost.
In addition, all farms are rewarded in proportion to the value the bring to the treasury.

Scenario 2
Farms: 5
Peg of Rewards: 10% per Farm
TVL/APY weight: 60/40


Screenshot_13
As we can see, all Farms receive a 8.08% base boost.
In addition, all farms are rewarded extra better in proportion to the value the bring to the treasury.

Scenario 3


Screenshot_15
We have introduced a super awesome new pool, but it’s small. I’m sure it will grow!
The TVL based reward is super cheap for us since it adds 7.68% for only 362 PICKLE/week.
The APY based reward (measured in PICKLE) isn’t exceptional per se, but with such little TVL, this makes for an extremely attractive reward of almost 17.5%!

Scenario 4


Screenshot_17
The “NEWPOOL” has attracted a major influx of TVL.
Since the Farm’s utility for Treasury is now on par with some of the other Jars, the rewards scale tips back into favor of these Jars, preserving APY of all Farms equally.

I hope with these examples I could provide valid reasoning to start a thought process.
I know the analysis is not on par with what others here have produced in the last few days, but in my mind an algorithmic, sliding and only marginally attackable way for rewards has been outlined in its basic premise.

Feel free to discuss!

again: EXCEL HERE

5 Likes

Lovely well structured idea! I’ll take a look at the data properly later when on.my laptop but it’s an interesting idea and worthy of consideration

1 Like

Will look deeper into numbers on my comp but thank you. This is an intriguing idea!

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Thanks for sharing! I’m going to go through your excel.
A process-driven approach is what we should aim for, as these debates over emissions will only get more contentious as time goes on.

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Re-imagined the model with the three existing farms, taking into account the actual revenue streams instead of just the “naked” Jar APYs. Question remains how BTC price plays in.

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This looks like an interesting idea. I have to get the magnifying glass :male_detective: and go over the numbers. One thing I see missing prima facie is the cost of staking to the protocol (albeit those rewards are in ETH, it’d make the analysis more complete).

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I regard all non-TVL-factors (also the POOL2 stuff) as external and thus not important to the discussion. Let that staking/voting/WETH stuff play out in another thread, imho.