@napa First, I want to thank you for putting this together. It’s always great to have people really looking out for the best interests of the protocol, and whether I agree with your ideas or not, I personally welcome the effort you put in. I hope you won’t take my next comments as discouraging enough to stop thinking and trying to help. Seriously.
You make a fair argument, but my concern is that it’s a bit shallow in it’s depth of considerations. So let me start with an assumption that I think you’ll agree with:
Any pickle emissions that do not bring in new money / profitable deposits to Pickle platform are wasteful.
Since I believe you’ll agree with that, I can move on to my next point. I believe pushing pickle incentives to heavily degen jars with already large deposits is wasteful. Here’s why. First, the existence of already large deposits indicates (to me) that the APY on those degen jars, or faith in the underlying project, are already sufficient to bring in the deposits needed to sustain those jars. Additional Pickle rewards are superfluous and wasteful. They are unlikely to bring more deposits into those jars. Someone who is not convinced by 170% APY or 220% APY is not likely to be convinced to deposit for 173% or 223%.
A look at the ALCX jar, for example, shows the APY breakdown: pickle: 2.96% ~ 7.39% + alcx: 166.80% + sushi: 0.63% + lp: 0.45%
Despite having 7% of the pickle emissions, It’s only enough to bump the total APY on this jar by about 3% (for non-DILL holders). That’s 3% in their APY, but that 3% increase only really amounts to a 1.8% increase in their return (They would make 167% without PICKLE rewards, 170% with it… so 3/167 is 1.8%. While their APY goes up 3%, this represents only a 1.8% increase of their total return).
If pushing rewards to degen jars represent such a small increase in the APY of those jars, it’s very reasonable to believe that no matter how much pickle we push towards that jar, it likely won’t make the jar more attractive to people who have thus far not joined it. Maybe the thing keeping people away are the 20% profit fee. A small 3% increase in PICKLE won’t really counteract those feelings. Maybe the thing keeping people away are the underlying itself (scared of ALCX for example). Maybe people like harvesting themselves because they have big stacks. The PICKLE rewards likely won’t overcome any hesitancy that people have about using PICKLE. In this respect, pickle rewards on degen jars are not likely to bring any additional profits to the platform. I truly believe this.
So where would pickle rewards actually bring more money to the platform? This is a tough question. So let’s analyze the other two possible places to put the rewards: stablecoin jars, and middle-tier jars. And when doing so, let’s remember our goal is to get as much money into the degen jars as possible.
Stablecoin jars are not likely to bring profit to the platform directly. We agree on this. But, a lot of people might use the stablecoin jars to test out the platform, dip their toe in the water, and engage with the community. Will we be able to convert stablecoin depositors to allocating a portion of their assets to degen jars? Maybe, if they join the chat, etc. The goal for stablecoin jars should be to attract TVL but more importantly show these people the community we’ve built, the discussions we have, and get them addicted.
Middle tier jars have a better outlook in my opinion. Jars that can make 30-50% are great for attracting people with a higher risk profile. These depositors are more likely to convert to some degen strategies if they lean towards degen, or are more likely to bring stablecoin TVL if they lean towards conservative.
Now, let’s address your proposal directly. I disagree with it, for a few reasons. First, it’d complicate the voting logic. Some people’s votes won’t count. Coming up with the weight math might be challenging, and explaining it might be even harder. Second, a lot of DILL holders felt that buying DILL was their “degen” strategy and they want to vote to boost their own stablecoins. This is a legitimate thing to do. In fact, if everyone who bought DILL also brought along $100k of stablecoins with them, those stablecoin jars might actually become profitable for the platform. Do I think it’s likely? No. Not really. But I think it’s fair, and it’d be unfair to force people into more risky strategies by removing the stablecoin options or nerfing them.
Also, I believe this problem will likely go away shortly anyway. Right now there is only 1 jar that fits this criteria, the yearn USDC jar. As TVL goes up, and people spread their money around, PICKLE rewards are also likely to spread out. Don’t forget that the current weights also aren’t completely accurate. While the Yearn USDC claims to have 17.5% of emissions currently, that’s actually only 17.5% of ethereum mainnet emissions, which account for 2/3 of total emissions. So the yearn USDC is actually down near 11% of total emissions.
Pumping one’s own bags was one of the original draws of buying DILL. You buy DILL and you can pump your bags. If we remove that or nerf that, I feel we’re breaking a promise to the community. For this reason, I think we should not move on this suggestion at this time.