[PIP-26] Remove 20% Performance Fee on SUSHI farms

SUSHI hast it that 66% of the SUSHI earned from farming are vested for an extended period of time.

These vested SUSHI will go to the Treasury, as it would be way to complicated / time intensive to implement a mechanism that harvestst them and then sweeps them into the LP.
Also, the timeline (6 months vesting) makes it near-impossible for this to be a fair process to stakers.

At current state, the PICKLE SLP Farms provide smaller APY then the “pure” SUSHI LPs.
Although something can be said for getting PICKLE instead of the 2/3 vested SUSHI allocation is desirable, there is a discount to the PICKLE farms that is quite substantial in some cases.

The SUSHI LP Farms haven’t really caught on yet, this is an attempt to make them more attractive and thereby increase potential earnings for both the Treasury AND our beloved present and potential future briners.

USDT: 64% APY vs 44% APY
DAI: 68% APY vs 56% APY
USDC: 72% APY vs 58% APY
WBTC: 29% APY vs 23% APY
YFI: 90% APY vs 64% APY

As you can see, the difference in APY is between 20% and 30%, I’d love for them to be at least even to make these Farms worthwhile.

I therefore propose to remove the 20% performance fee on all SUSHI LPs to allow better compounding effects and allocate the 2/3 vested SUSHI to the Treasury by default for current and future SUSHI LP initiatives.

EDIT: of course, the SUSHI harvested after Vesting from now will be added to the Treasury, overflowing into the Smart Treasury. As per my simple calculation, at CURRENT price and CURRENT TVL that would make roughly $7000 per day:

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Moar SUSHI LP APY plx?
  • YES
  • NO

0 voters

7 Likes

This does seem reasonable since we are capturing the future value of Sushi.

2 Likes

The Sushi Jars don’t earn too much from fees anyway, so I agree this would be a good way to show some goodwill to our Sushi friends/depositors. I support it.

3 Likes

Good idea and we should support this- we should also keep a lookout on Sushi SIMP3 to see how they are going to distribute the 2/3 vested sushi…

This seems to be a pretty reasonable approach and would set us apart from Harvest, good thinking.
It also legitimizes the kept 2/3 in a way and clears up communication about it which I also like. Full support for this.

2 Likes

Question just came up on Telegram
Would this also affect the MIC/USDT farm?

I’d guess not, although this might be hell of a boost to the APY :slight_smile:

I like it! (Support it)

Question: You say with this we’d even out the 20%-30% APY difference with respect to the pure Sushi LPs. Have you calculated the actual APY? On the first glance it is at least not immediately obvious to me that this is the case. Since the performance fees are 20% of x. It’s not as simple as adding 20% to our APY I suppose.

Back of the envelope example from the YFI/ETH Farm:
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At current price, for each 1 YFI and the according amount of ETH you stake, SUSHI emits 22.7 SUSHI per day. 2/3 of that is vested for 6 months, so the remaining ~7.6 SUSHI/Day are harvested by PICKLE and compounded. Reduced by 20% this is ~6.06 SUSHI/Day that end up in the ~18% APY.

Same goes for the 10.9% LP yield

so 18+11=29% becomes 22.5+13.2=35.7%, NOT taking into account the increased compounding effect.

1 Like

Where do the 22.5 and 13.2% numbers (from the no 20% fee assumption) come from? Did you calculate them yourself?

yes, by re-adding the 20% percent performance fee.
not very accurate, I concede, but about-ish close to the truth I hope.