[PIP-24] Introduce PICKLE rewards for MIC-USDT PickleJar

Pickle Improvement Proposals
#1

Vote here: Snapshot

Introduction

The reception of our BAC-DAI (Basis Cash) and MIC-USDT (MITH Cash) PickleJars has been quite positive so far. Both of these Jars combined make up more than half (~$19M) of Pickle’s TVL. These Jars have also generated almost $100k in fee income for the Pickle Treasury in only the past 5 days since launch.

Currently, the liquidity in our MIC-USDT Jar is about a third of that in the BAC-DAI Jar, despite their overall liquidity values being similar. Accordingly, an opportunity to attract more profitable liquidity to Pickle presents itself.

Proposal

In short, I propose re-allocating rewards so the Basis Jar receives 6% of emissions and so the MITH Cash Jar receives 5% of emissions.

Presently, the allocation of PICKLE rewards is as follows:

PICKLE/ETH: 65%
pUNIBACDAI: 8%
p3CRV: 4%
pSUSHIDAI (Sushi ETH/DAI LP): 4%
pSUSHIUSDC (Sushi ETH/USDC LP): 4%
pSUSHIUSDT (Sushi ETH/USDT LP): 4%
pSUSHIWBTC (Sushi ETH/WBTC LP): 5%
pSUSHIYFI (Sushi ETH/YFI LP): 6%

I propose diverting tweaking emissions to the Sushi Jars so that they’re all equal at 4% and to equalize PICKLE rewards for BAC-DAI to arrive at the following distribution:

PICKLE/ETH: 65%
pSUSHIMICUSDT: 5%
pUNIBACDAI: 6%
p3CRV: 4%
pSUSHIDAI (Sushi ETH/DAI LP): 4%
pSUSHIUSDC (Sushi ETH/USDC LP): 4%
pSUSHIUSDT (Sushi ETH/USDT LP): 4%
pSUSHIWBTC (Sushi ETH/WBTC LP): 4%
pSUSHIYFI (Sushi ETH/YFI LP): 4%

Discussion

Members of our Discord have also proposed alternatives such as re-allocating rewards from the PICKLE/ETH LPs towards our new MIC-USDT Jar. However, seeing as these LPs hold the voting power and have been on the short end of the stick in terms of IL recently, a vote requiring them to give up more rewards may be met with resistance.

I’m totally open to having my proposed formula tweaked or for us to go in a completely different direction. I welcome everyone’s thoughts here.

7 Likes
#2

I agree that this is where our positive momentum is coming from currently, and we should continue to incentivise this growth. I would suggest allocating 8% to both BAC and MIC, and lowering LP.

This gives us something very attractive to be highly competitive in this ‘on trend’ topic. We can always reallocate if this strategy does not see a noticeable boost to TVL.

2 Likes
#3

I think we shouldn’t slash the pUNIBACDAI for now, as these jars have proven to bring a lot of “good TVL” since they have such high base APRs for us to deploy compounding strategies on. Their base APRs will be slashed as well, so there will be an opportunity to revisit these numbers. Now that we are moving forward with Smart Treasury, the LPs can come on-board with this logic of bringing cash to the Treasury (since half their LP bag is PICKLE they would want price appreciation there).

I think this would be fine:

PICKLE/ETH: 60%
pSUSHIMICUSDT: 8%
pUNIBACDAI: 8%
p3CRV: 4%
pSUSHIDAI (Sushi ETH/DAI LP): 4%
pSUSHIUSDC (Sushi ETH/USDC LP): 4%
pSUSHIUSDT (Sushi ETH/USDT LP): 4%
pSUSHIWBTC (Sushi ETH/WBTC LP): 4%
pSUSHIYFI (Sushi ETH/YFI LP): 4%
2 Likes
#4

Even out all the farms at 4%, assign 8% to both MIC/USDT and BAC/DAI and put the rest (60%) in PICKLE/ETH

rationale being that both new strategies account for most of the protocol income, so they should be assigned more pickles than the old strategies

The smart treasury is meant to fix the problem of liquidity and pickle appreciation,
so the 5% pickle yield cut from the liquidity providers will be returned in the form of pickle price going up over time.

3 Likes
#5

I do not believe the additional 4-6% will add much value to the MIC-USDT PickleJar. I would prefer that we take some time to analyze the market around MIC-USDT since it is a bit newer and riskier. Also the return is almost mind boggling, at this point. Therefore I would advocate we wait until the distribution shifts to make this cherry on top matter.

Also, reducing the emmissions to current Pickle-Eth Liquidity Providers would be a disservice, particularly with the state of Pickle’s value. I advocate for a little patience.

Also, it will give us time to determine if Mic-USDT LP are even interested in Pickle’s governance and future or solely the yield.

2 Likes
#6

I’d even go further (another hard cut, but oh well):

  • Discontinue all SUSHI Farms except YFI (for “loyalty” reasons).
  • This cuts ~6ish mln FARM TVL.
  • Distribute the freed-up PICKLE rewards evenely across BAC and MIC.

This leaves room for a bunch of more Farms that can be handsomly rewarded with yearn v2 go-live.

#7

I think the most common suggestion here is to go with the allocation in your post.

I’m happy to push things to the Snapshot stage on this basis, but let’s address the elephant in the room first - do we think LPs would agree on a vote which cuts their rewards by 5% (down to 60% total emissions)?

@Jomari as much as I appreciate the PICKLE/ETH liquidity providers for sticking with us, many people agree that we are overpaying for liquidity when those emissions could be diverted towards attracting TVL which helps earn profits for the protocol. Currently we are providing 65% of PICKLE emissions to fund liquidity. Harvest, in comparison only provides 55% for liquidity.

1 Like
#8

I can definitely buy into the idea that the liquidity is being overpaid. Especially after delving more into some of the considerations and factors for liquidity incentives.

I still advocate for patience or at minimum a clearer general rubric for evaluating our emissions. Some larger principle or ideology about metrics (even as rough concepts) would make sense.

#9

Given that this should/could be the last time we need to adjust the weights this way and have LP govern, I would actually lean towards @Larry_Cucumber’s suggesting of keeping the LP rewards as they are, or close to. It would be a mess if the vote went the wrong way on this occasion.

I also agree with @Jomari in that Pickle emission actually makes next to no difference to the APY on these new jars - it’s currently <1% of the BAC jar APY. It’s nice to put the new jars in the limelight and for marketing to those communities, but nobody is going to cry about it changing slightly.

My suggestion:

  • PICKLE/ETH: 64% (haircut so minimal it would be petty to reject)
  • pSUSHIMICUSDT: 6% (put MIC on equal footing with BAC … @yyctrader aside, Pickle shouldn’t really have favourites)
  • UNIBACDAI: 6% (slight haircut, but as mentioned it’s going to make 0.2% difference to their APY so doubt many will care)
  • p3CRV: 4%
  • pSUSHIDAI (Sushi ETH/DAI LP): 4%
  • pSUSHIUSDC (Sushi ETH/USDC LP): 4%
  • pSUSHIUSDT (Sushi ETH/USDT LP): 4%
  • pSUSHIWBTC (Sushi ETH/WBTC LP): 4%
  • pSUSHIYFI (Sushi ETH/YFI LP): 4%
    (the rest even out)
1 Like
#10

No one can say for sure whether the LPs will reject or accept this. A well-drafted proposal could be enough to convince them to vote yes, even if not overwhelmingly so.

To @Jomari 's concern, I do have in mind a north star metric (NSM) to help us guide these decisions (and many others) quickly. That is, after all, a core part of the Growth process. I will share in this forum in due time.

We do not know for certain whether the LPs will get to vote again. If DILL is on schedule, then probably this will be the last time voting is on the hands of LPs, but that is not a given yet. We will still need to procure a healthy level of liquidity. From previous debates, if I remember correctly, 50-60% was more of the sweet spot for LP incentives. To me, it makes sense to aim to get to that level sooner rather than later and this is a step in the right direction, done for the right reasons.

2 Likes
#11

To be honest, I don’t see the point to give pickles to a jar that has 10000% APY.
I understand the cases where you try to incentivize people depositing in jars by sprinkling pickles on top to increase their APY. But on this MICJAR… I don’t see the point.
But I’m on board with whatever the majority decides best.

2 Likes
#12

seond that.
better to give PICKLE to Jars in need, like, say, renBTC (j/k ofc) but adding 8% to 10000% is a bit try-hard imho.

1 Like