[RFC] Re-allocation of PICKLE Rewards

UPDATE: PROPOSAL SUBMITTED FOR VOTE

Continue discussion here: [PIP-17] Re-allocate PICKLE rewards

Introduction

Our TVL has largely stabilized following the removal of withdrawal fees. Now is an appropriate time to consider whether the allocation of PICKLE rewards could be done more effectively.

Background

There was discussion in a previous thread started by @Dr.Eggplant for an increase in PICKLE rewards to the renBTCCRV Jar (pJar 0b). The rationale was that Pickle Finance could be marketed as the “home for Bitcoiners” to thus substantially increase our TVL.

Another thread started by @Peachy proposed that 5% of PICKLE/ETH rewards (currently at 70% of emissions) be re-allocated to the renBTCCRV and 3poolCRV farms.

It is apparent that there is at least some community support for tweaking PICKLE rewards to more heavily favor the BTC pools.

Proposed Options

We have considered the opinions expressed in the previous threads as well as in Discord and propose the following two options:

Option #1 - re-allocate 5% of PICKLE/ETH rewards

With this option, we would re-allocate 5% of PICKLE/ETH rewards to other non-Uniswap farms.

An example distribution is as follows:

  • 3% to renBTCCRV (5% -> 8%); and
  • 2% to to 3poolCRV or DAI (4% -> 6%).

The rationale for such a distribution is that it gives us a chance to attract BTC deposits for increased TVL, as well as earn more fees from incentivizing one of the more profitable Jars.

Option #2 - TEMPORARILY re-allocate 5% of PICKLE/ETH rewards

Liquidity providers may understandably be nervous about potential decreases in rewards.

One option is to perform Option #1 with the additional stipulation that the 5% is returned to the PICKLE/ETH pool after UNI rewards end (which appears will be the case on November 17).

In this manner, the benefits of attracting additional BTC capital can be explored without commiting to any permanent changes.

Miscellaneous considerations re: liquidity

It is helpful to consider how other projects (Harvest being the example here) approach the topic of liquidity:

Pickle Harvest
Liquidity $11M $8M
Market Cap $26M $36M
% of token in LP 42% 22%

The above may suggest that PICKLE emissions could be used more productively in profit generating ventures rather than paying for a deep liquidity pool.

17 Likes

I am in favor of this! My personal flavor of this would be the proposal for:

  • +3% renBTCCRV
  • +2% cDAI

I choose these pools as there is a huge amount of BTC in other similar platforms earning less than we can offer them - they will come to us as @Dr.Eggplant has pointed out. The pDAI pool is also a good choice as at the current time it is around 1/3 the size of 3pool so we have a lot of room to grow here. Also, the pDAI strategy is currently more profitable than 3pool.

As for option one vs. two, I think should be a completely separate discussion as we do not really have the data to make an informed decision. At the time UNI ends we will anyway need to have a discussion on those 17% allocation at which point we can address the liquidity allocation.

5 Likes

I favour option 2, with an automatic reallocation back to the Power Pool on November 17, UNLESS another vote is passed in the interim. I think it would be easier to garner support from LPs if done this way.

Just read that Harvest is planning to farm our DAI jar. As the DAI jar is far more profitable than BTC, I suggest the following split:

2% to DAI (shock value, high APYs, promote in-house strategy)
1.5% to 3pool
1.5% to renBTC

As we’ve already discussed in the discord, there’s already a lot of BTC that hasn’t come over despite our offering the highest yields. Let’s incentivize it a little, focus on marketing, and see how it goes.

Big thank you to @0xBoxer for this data

3 Likes

The “Miscellaneous considerations re: liquidity” information you referenced lends further powerful credibility to the concept that we are most likely over-emphasizing the need for deep liquidity at the expense of potential profit generation.

I believe we should soundly reduce the value from 70 to 65 (and potentially more so if the hypothesis proves successful) as we might actually be shooting ourselves in the foot by being too conservative with our P2 incentives. Thus, I vote for Option 1.

Fundamentally, we can always revisit the idea to vote and alter the rewards at a later date regardless of what happens in the future so Option 2 seems more of a ‘nervous’ solution as if there is some perception within the community that the Devs are inflexible in modifying the reward model. I believe any of the members that have been with the project for more than a few weeks would see that this project is CLEARLY flexible and truly listens to the community.

Again, I say the above as someone who has been heavily in P2 (and have added to it consistently) since mid September as well as also staking in the new PS (Pickle Staking) rewards.

6 Likes

love this… home of bitcoiners… future is green with shades of Orange!

option 1… def boost and make attractive for defi pulse

1 Like

Further evidence of our potentially over-rewarding the LP:

Looking back at Farm/ETH LP on Uni: The max liquidity for them was just before the recent snafu on Oct 25 when they were trading at roughly $335/FARM with a liquidity of $27M.

Both values are roughly 3X their current values implying that they seem to move in concert with each other without impact.

3 Likes

Also my preferred option:
+3% renBTCCRV
+2% cDAI

Let’s do this!

2 Likes

Basically +1 to this. I’ve also spent the majority of the time in the pickle/eth pool and currently back to 100% of my pickles in there and really think that taking a little slice like 5% can do a lot for the mentioned jars (in whatever ratio ends being decided to be best) without having any sort of drastic consequences to the pickle/eth pool. Intuitively I feel like more that 5% could be taken but I’m in favor of starting with that, evaluating how it affects TVL/profits/staking %/pickle price etc and then going from there.

1 Like

Good points ladies and gents. I hear @Peachy out about the optics/more steps of going with Option 2 but I also see where @yyctrader is coming from for supporting it. My concern is that if LPs are voting then Option 2 may be more likely to pass and be implemented in a timely fashion.

I’m also in favour of allocating the 3% to renBTC (if marketed appropriately) and 2% to the 3pool. That graph @yyctrader posted that @0xBoxer generated is good for insights and we should make sure as many ppl can see it as possible when making the appropriate decision, coupled with number comparisons to what other projects are offering. We need to focus on being the best option for our offerings so it might be worth deciding what capital we want to attract and why, this can also help with marketing initiatives (however I know analysis paralysis is my achilles heel). With no withdrawal fees there is no loyalty, and trying to please the apes won’t get us to where we want.

2 Likes

TL; DR - I support reducing PICKLE-ETH allocation but propose to allocate all 5% to pDAI jar. as it brings real value to Pickle.

I’m heavily invested in Pickle Power but I’m open to reduce Pickle/ETH allocation if it make sense. Let’s talk with numbers, don’t just make up some numbers in the proposal.

So I will start with the end goal --> we are reducing the Pickle/ETH allocation, in order to bring MORE value to Pickle. I’m sure everyone here wants Pickle price to go up as it is the core value for the entire eco systems.

In order to improve the value of Pickle token, eventually we need to bring more revenue to the treasury. 20% of the jar profit goes to potential staking reward of Pickle holders, and when we run out of Pickle, Pickle value is solely supported by the staking reward.

Ok if we are all on the same page then let’s continue. What Jar brings the most PROFIT to the ecosystem? Forget about UNI pairs for now. At the time of writing… ignore the extra Pickle reward for now.

  • sCRV has 13.61% APY (after the 27.5% fees) - TVL $1.13 million
  • DAI jar has 10.13% APY (after the 27.5% fee) - TVL $11 million
  • renBTC has 4.13% APY (after the 27.5% fee) - TVL $31.3 million
  • 3CRV has 9.14% APY (after the 27.5% fee) - TVL $22.5 million

Does BTC bring more profit to Pickle ecosystem? Yes it does. Why big money prefer to stay with Harvest? Do they have higher yield? Harvest has 5.09% (including FARM reward). WE HAVE 9.65% WITH CURRENT PICKLE ALLOCATION!!!

We can tell, BTC stays in Harvest is NOT because of total yield. It must be for some other reasons, we just don’t know what it is. There are 140 million in there!

Can we attract more BTC with additional Pickle? Maybe. But I don’t think it’s going to bring a lot of value. As we see, we are already a lot higher than Harvest.

Then the next Jar we should look at is 3CRV. There is double counting TVL for this jar compare to Harvest as they have $18.3 million deposited to the same Jar.

Does more Pickle reward bring more TVL and more profit? Not really! Again other platforms are farming this jar. when other platform offers higher yield with their own $hit coin, user can exit Pickle CRV and farm with other platform, with the EXACTLY SAME STRATEGY!

For sCRV jar, the team made strategic decision to abandon Pickle reward for this Jar and push people to switch to 3CRV jar so I would say no need to add more Pickle to this jar.

So now let’s talk about DAI Jar. It’s the self-developed strategy by Pickle team and it’s currently not farming by other platforms. All TVL are farming within Pickle platform and it is the fast growing strategy. The total yield with current Pickle allocation is 22.5%. I recommend to allocate additional 5% Pickle to the DAI jar.

Benefit?

  • It’s going to promote Pickle self-developed strategy
  • It brings REAL profit to Pickle (unlike people farming 3CRV with other platforms)
  • More Pickle allocation will ensure people stay in this Jar longer. I’m sure when the total yield dropped to certain value (let’s say two weeks later Pickle emission dropped another 20%), total yield is not attractive enough for long term users to stay.
8 Likes

I’ve been asked privately by several people to provide my thoughts to this thread so here they are…

I strongly believe in Option #1.

As I’ve mentioned in Discord and my other thread on the topic (Increasing Allocation of Pickle Rewards to Bitcoin CRV Pool) Option #1 would drive a ton of TVL to PICKLE. There aren’t many places for Bitcoiners to earn yield in DeFi right now outside of CRV, and adding this increase in APYs could result in another $50-$100M (or more) in TVL and would seriously raise PICKLE’s profile.

In addition to increasing cash flows to PICKLE holders, the increased TVL would drive an increase in PICKLE’s price, which is likely to result in the kind of virtuous price circle we saw with FARM (before it crashed from the hack).

There is an amazing opportunity right now if we act quickly to capture the current bull market exuberance and propel PICKLE to the next level. This protocol has a ton of promise and a great community, and I want to see it succeed in a big way.

What I would REALLY like to see is a complete allocation of these rewards to BTC, meaning the whole 5%. 5% will be a good enough allocation of % to boost the APYs to a decent level and give you the ability to do a marketing push for a Bitcoin Pickle alignment over the next couple weeks.

When UNI farms end on the 17th, you will still have a brand new 17% Pickle Rewards to play with and then you can allocate them to the 3pool and other strategies, and perhaps even more to BTC. I wouldn’t focus on squeezing every single possible penny out of the pools by splitting the rewards right now. This strategy will create more value on the whole over a longer time period. Give Bitcoin a good health boost, then market, and observe the results that brings.

If you do this right now, and use this time, all of this will coalesce with the audit and be a huge boon to this project.

Good luck, I strongly believe this is the correct path forward.

10 Likes

Very strong points @Dr.Eggplant. You make a good point about timing and potential UNI rewards ending freeing up 17% to be allocated. I would support this to see how it works. @UniquePresidentwas right that numbers were being thrown around and now comes to think of it I like the thought of allocating the entire 5% to one jar. We need to capture that niche and then grow.

2 Likes

@Dr.Eggplant can you please inform me as to how exactly TVL means more value for Pickle price when its not necessarily creating high profits vs the pDai Vault like @UniquePresident states. Yearn had huge TVL and it cratered because it had too much funds and not enough profit to go around. I witnessed the staking profits drop terribly over there and the APY’s went way down at that point followed by price crash, not appreciation. I don’t have stats to back this up, but would love to know, are we giving more $ value away in Pickle through that 2% increase, than profits actually coming into the treasury?

Pickle is already 3% higher yield than Harvest for CRVRENBTC strategy but $140 million still choose to stay there. Don’t make assumptions. Make decision based on FACT please.

Plus, 4% REAL farming yield from CRVRENBTC does NOT add much profit % to Pickle.

Not wanting to argue with you but I support allocating full 5% to pDAI jar as it is in house developed and brings much higher real profit % to Pickle ecosystem than RENBTC.

4 Likes

Having skimmed over the lengthy discussion in #governance on the Discord, I can understand that we can decrease the share of Pickle / Eth allocations by 5% (for starters).

And while we’re at it, I’m joining @Dr.Eggplant in allocating the full 5% to RenBTC CRV, at least until November 18th.

I imagine that we will be able to attract more TVL in 3PoolCRV if the whitelisting becomes effective in the coming weeks. At worst, ending the distribution of UNIs will likely release 17% of the rewards.

On the other hand, RenBTC CRV has attracted many investors since the withdrawal of withdrawal fees, and we are already offering the best returns.

Wouldn’t there be an opportunity to come up with a new jar to which to attribute this 5%?
A jar based on WETH for example, in order to complete the loop …

In short, in view of this proposal, I would choose option 2 with the full 5% allocated to RenBTC CRV until November 18 minimum

1 Like

Lots of investors look at TVL as an important metric. YFI is mooning today in spite of its low APYs. Why do you think this is? I believe its because of its community, brand, and TVL. Also, we’ll do better than Yearn because of the recent increase in the Pickle jar profit share. I’m confident that the large amount of profits that will be gained from an increased TVL will outweigh whatever is given away in more Pickle emissions.

You still can’t provide fact that more Pickle reward will bring the 140million BTC sitting in Harvest.

Again, we are already 3% higher than Harvest, why isn’t the 140million coming in? that’s a LOT of incremental $$.

We should focus our resources to the things that bring the most value to Pickle ecosystem.
Current 160million TVL already made Pickle a legit yield aggregator. Not it’s the time to bring REAL value to the ecosystem.

All 5% goes to pDAI jar please

1 Like

Very good breakdown but there are already strategies preparing to launch to farm our DAI strategy. But to your point, I believe it’s only Harvest who is planning this at the moment where as multiple other protocols are building on top of the 3pool (and i believe yearn’s strategy will atually incorporate jar+staking+pickle power pool).

Can’t more agree with this, higher APY != higher TVL . It’s require another condition to bring higher TVL.

I believe we should promote pDAI further, it’s self-developed strategy by Pickle and possible to become valuable selling point for Pickle brand.
So yup, 5% allocation from PICK/ETH for our DAI Jar

1 Like

I also think redirecting the entire 5% to draw more BTC TVL is a compelling idea and I see great marketing potential here. We are at the start of as bull run, led by BTC. I don’t know many people looking to dump BTC at these levels. Everyone I know wants to hold BTC and are expecting new ATHs. Parking BTC and earning yield would be incredibly attractive. So why not create a name for ourselves as the best place in DeFi for BTC.

*NOTE: if we choose to do this, we coordinate a serious marketing push with this. we want ALL of the BTC TVL out there. I want to see ALL community members active on twitter / social / etc. Make it known that there is no better place in DeFi to earn yield on BTC.

Now:

  1. We re-allocate 5% emissions from PICKLE/ETH to renBTCCRV.

Later:
Nov 18th, assuming UNI farming ends, we have a TON of emissions to re-allocate (we have options)

  1. Take a % of those emissions and invest more in our pJar .88 pDAI
  2. We replace the 5% back into PICKLE/ETH LP (only if necessary)
  3. Invest the remaining emissions in other pJars + new pJar Strats.
1 Like