[RFC] Treasury Cap and Reward Stakers

There has been discussion on the Discord regarding implementation of a cap on the Treasury, where excess profits above the cap will be given away to Pickle stakers. For convenience, I will call this concept: Cap & Reward.

Note: Since this is Treasury-related, it may have potential interaction effects (be it positive or negative) with the Smart Treasury idea discussed here.

Some questions to get the ball rolling:

  1. What are the pros and cons of this idea?
  2. What other projects do this? Do we have links to those discussions?
  3. What should the cap be set at?
  4. What would be the distribution methodology/schedule for stakers? Do we give everything above the cap in the immediate week? Or should there be a capped or phased payout (so we don’t immediately blow a huge sum)?
  5. Since we might be paying $242k to buy CRV if we get whitelisted by Curve, we should set a reasonable cap where we still have a significant amount of money.
  6. Does implementation of the Smart Treasury idea obviate the need for a Cap & Reward

Feel free to add your own questions to the discussion.


I really like the idea!
But I lack skills for all the technical aspects …

So I cannot define a course, is 500k too little? Is 1M Too High? maybe we can adjust according to the income of the treasury?

The distribution could be done every week (as long as the CAP is exceeded), what do you think of snapshot wallets in staking from one week to the next?
This will encourage our PICKLEs to be staked all the time.

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  1. In my opinion the pro’s of the “Cap & Reward” concept are that it should help the pickle price better reflect (in price-to-earnings ratio) how profitable the system has actually been over the last week (whilst $18k is being distributed to stakeholders this week ~$300k has been added to treasury overall in the last 7 days), which should in turn benefit the whole pickle ecosystem. This concept should also provide a more natural and timely economic cycle (increase pickle rewards -> increase pickle price -> increase in APY -> increase in TVL -> increase in pickle rewards). The con’s are that this method would make rewards more volatile, and we would not continue to accrue value in the treasury. There’s been benefits to the manual management of the treasury in the early days, such as saving enough for curve boost and audits, however going forward I believe $500k is a significant buffer.
  2. Yearn operates a similar treasury system, it has worked well for them.
  3. I suggest an initial cap of $500k would be ample (based on the fact it is enough for yearn). It could be amended with governance if required.
  4. I think we could probably just go ahead and distribute everything above the $500k cap in the immediate week. The treasury currently contains ~$720k, with more to be added in the next few days before the next distribution round to stakers. Assuming we pass the curve whitelisting vote, the $242k required for the boost could be set aside. This would then probably leave us with just over $500k in the treasury, so any excess above $500k could be distributed to stakers over the upcoming week.
  5. If we pass the whitelisting vote I think the $242k should just be set aside.
  6. It doesn’t need to be either/or - we could do both. We could diversify the $500k, or a portion of it. Once the pickle system matures we could even decide to increase the treasury cap to $1m or greater for a larger investment that will help amplify stakeholder rewards.

I think Pickle needs to get away from being like Yearn. The code was initially from Yearn already. As shown from PIP8, adding more rewards to staking does nothing for Pickle price as the price has essentially crashed. Pickle needs to think of something innovative to do with a treasury rather than just cap and reward. Investors will view this as another cost that needs to be balanced by strats and fees.

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The short answer is $1mill (total treasury). We are around $750k now.

Okay here are my thoughts:

What are the pros and cons of this idea?


  • Substantially increase the rewards allocated for Pickle Staking which will likely lead to more Pickle being locked up. While I don’t necessarily agree with everything here, there are some very good points made about the value that brings.
  • Ensures that the community feel valued
  • Puts excess funds to good use
  • Increased APY could lead to additional utilisation eg Yearn’s Pickle Vault idea


  • Could take liquidity away from the Pickle-ETH pool
  • Limits the treasury size, could inhibit major purchases

What other projects do this? Do we have links to those discussions?
Yearn is the only one I know of

What should the cap be set at?
$500k sounds like a good starting point to me (same as Yearn). Should be reviewed eg Monthly?

What would be the distribution methodology/schedule for stakers? Do we give everything above the cap in the immediate week? Or should there be a capped or phased payout (so we don’t immediately blow a huge sum)?
I think it should probably be everything weekly? If the cap is set at an agreeable level then it shouldn’t really matter how much the excess is.

I guess the flipside is that when the treasury needs replenishing, eg after spending half on CRV, then stakers wouldn’t get much of anything for a while …

Since we might be paying $242k to buy CRV if we get whitelisted by Curve, we should set a reasonable cap where we still have a significant amount of money.
Agree - $500k seems reasonable?

Does implementation of the Smart Treasury idea obviate the need for a Cap & Reward
Can’t say I am a fan of the Smart Treasury idea so not sure.

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As a broad theme, I believe that the Pickle price should always be correlated to the performance of the network.

This is good network design - but currently, I think we have missed the mark. But these new suggestions have got me brimming with the possibilities.

I am not sure if the cap should be 500k or 750k, but having the excess treasury “spill” into the staking pool is great reward as the stakers are rewarded when the token is doing well.

I have written at length about why I think staking is critical to the network health, so I won’t harp on about it again here.

However when we add both additional staking rewards, and the fact that the new staking rewards will be ETH - this becomes one of the most attractive staking mechanisms available.

Please head in this direction.



Thanks for the discussion, @BigBrainBriner. I am here as “the Smart Pool guy” – aka leekuanjew the Smart Pool Jew – to give the perspective based on number 6.

Does implementation of the Smart Treasury idea obviate the need for a Cap & Reward

I will start here then move on to the other points to advance the discussion. My short answer is: Yes. It isn’t because of the cap, actually. It’s the staking that’s made redundant. Explanation below.

Let’s start with the PROS and CONS of Cap & Reward:

  • PROS
    • it’s potentially more generous than the current staking mechanism. This would be good for the APYs of staked PICKLEs.
    • it transforms a “liability” (coming up with $x-amount every week for the stakers) into a bonus (we meet the treasury target first, then rewards go to stakers).
    • it presents a more direct correlation to profits and moneys used to directly impact PICKLE value, arguably what should be our “North Star Metric”.
  • CONS
    • it does not solve the issue of a dichotomy between staking and farming. I’d argue farming is quite important – the tokens in projects like yEarn (YFI) and Harvest (FARM) have extreme volatility which we have been able to avoid. If we are using staking as a value-capture mechanism, then, once buybacks are implemented, we can do away with it and let people farm or hodl.
    • as mentioned already by others, there is a risk of a shock to liquidity if APY from staking beats APY from farming. This has been rightly predicted in the Switcheroo theorem, but the benefits of such outcome are dubious, at best.
    • it can be too generous, sending 100% of revenues above the cap to stakers means the growth of the Treasury would stagnate at the cap. The idea is having the Treasury grow and then, have the DAO spend for growth-initiatives which results in higher profits, then more value can be captured by PICKLE holders.
    • it doesn’t solve the fact that staking puts sell-side pressure as every time the rewards go out, the protocol loses some value (this point may not be super intuitive but we have decades upon decades of data from stocks pre- and post- dividends to understand this) as these incentives are coming from Treasury.
    • it doesn’t make stakers have more skin in the game. Current staking is what I call “flexi-staking”, a come-and-go-as-you-please model. We’ve seen projects, notably Curve (but also mStable), implement vote-locking either as stake-and-boost-rewards (CRV) or a pure stake-and-earn model (MTA). I don’t believe this makes price-pressure better, but it does make the system more antifragile. Many of our stakers want to vote, yet a mechanism for them to match the farmers in skin in the game other than vote-locking has yet to be convincingly proposed.

Again, the Cap IMHO isn’t an issue. We can implement a Cap then Smart Treasury. strategy. Have a small Cap of say $250k after which we send money to Smart Treasury, which will execute an automatic buyback as it rebalances. If the Smart Treasury is, say 30PICKLE–70ETH then for every ETH we send above $250k there, 30% will go to PICKLE buyback, benefitting all PICKLE holders whether they are in-farm or not. 70% will still be added to Treasury assets, accumulating and earning (trading) fee. If we consider the moneys in the Smart Treasury as last-in-first-out (LIFO) then we can take from the Smart Treasury first for growth-related expenses (which will recapitalize automatically as it balances), leaving the $250k as a buffer. We’d keep a lot more value in the system this way.

TL;DR: On the balance, I’d say until we have vote-locking, we should go with :money_mouth_face: Cap & Smart Treasury :innocent: as the fairest, most responsible implementation. It has better PROS (no-one-left-behind), and solves the CONS (apart from adding antifragility via vote-locking, which it would be fully-compatible with).


As an aside, something I haven’t seen mentioned is that there’s no reason why the treasury/rewards split has to be all-or-nothing. Or it could even be a soft-cap.

For example, if treasury is below $250k then split profits 50/50 between treasury and stakers.
Then the treasury contribution linearly scales down so that at $300k it’s 40/60, at $350k: 30/70, etc. until at $500k it’s a 0/100 split.

Alternatively, with a soft cap, the final split could be 5/95 so that the treasury keeps growing at a slow rate even when it’s well-provisioned.

This has the advantage of smoothing the payout curve so that there is no sudden jump or drop in rewards to stakers.


I think it would be a better idea to have no cap and reward for the treasury. Instead we should allow the treasury to accumulate a cash hoard (much like Apple and Brk). Imagine if this cash pile gets large enough it could be used to buy every Pickle at a set price! That would be a huge peace of mind for investors. For example, based on current numbers I’ve seen estimates that says the treasury would have 10 to 15 million in a year. That would be enough to buy every Pickle at the current price. This coupled with a smart treasury would be amazing.

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I think the point @leekuanjew is making regarding the exodus of funds from our ecosystem while giving out “naked-staking” rewards is a very important one and want to advocate for rethinking this model and replacing/supplementing it with increased rewards for providing liquidity in the Pickle Power Pool.

If we were to implement the Smart Treasury Approach we would be able to boost rewards of the Pickle Power Pool with funds that enter the smart treasury in it’s usual reward currency $Pickle.
This would shift the approach from paying out rewards from earnings generated by the protocol to naked-stakers to paying out said rewards to LP providers.
Since the LP providers are doing an important job for the health of the protocol I feel like this would be a more sustainable approach and would at the same time provide a way to “utilize” the funds that are used to earn “fees generated by the protocol”.
Whether we still implement a “naked Pickle” staking option is debatable, but probably still a good idea. But with this approach we would make sure “the switcheroo” is never able to happen since we can manually adjust the balance between fees to LP providers and fees to naked stakers. What that balance shall be, I have no idea, but at first glance it would make sense to have a 2:1 ratio per pickle staked in favor of LP providers since they also bear double the risk.

For the Cap part I agree with @brinosaurus_rex notion that we should implement a rolling threshhold that caps out at a certain amount.

I will also cross post this to the smart treasury discussion, but I still think it belongs here as well.


Curve has delayed moving towards an on-chain vote for “1 to 2 weeks” for security reasons, and has said that there will be smart contract changes required (on their end AND on our end).

That’s totally understandable, but it also means that it may not make sense to hold on to $242k for that long (was originally set aside CRV). Especially since we could still lose that vote (we barely won the Signal vote by less than 5%).

Rather than just sit on so much cash, I was thinking maybe we should just do a $500k cap of the treasury and simply distribute the rest to stakers.

So as an example, what if we do this:

Suppose we have $200k above the $500k cap.

week 1: $100k + prev week’s profit fees
week 2: $50k + prev week’s profit fees + anything over the cap
week 3: $25k + prev week’s profit fees + anything over the cap
week 4: $25k + prev week’s profit fees + anything over the cap

profit fees = 4.5% of jar profits (withdrawal fees are not included)

This way, we have a smoother drop off near the end and it incentivizes people to also stake longer without staking.


This makes sense + a tremendous boost to stakers / super attractive. As the project grows we can always vote to increase the treasury cap above $500k.

Does this delay considerations / work towards the smart treasury in any way? I’m assuming the smart treasury ideas apply to the $500k funds and not the “surplus” you are discussing here.


I think there is still a lot more details to be worked out with regards to the smart treasury. I’m a fan of the idea, but we need to further refine the idea, parameters, and implementation into a concise proposal before we can pass a vote with the community.


Makes sense to spread the current excess over several weeks. Will also lessen the impact to LP which I know has been a concern for some.

As a selfish suggestion, but one I like to have think I would have made before I became a pStaker … how about taking a snapshot to reward those currently in the staking pool and allocate some of the excess there, before following a similar distribution to the one suggested? Not quite retrospective riches on a UNI scale but still something for those who staked, and make up for the lower distribution last week.


the treasury “surplus” is planned after the change to ETH/wETH staking rewards correct?

My only thought is we are missing out on the :man_farmer: farmers :woman_farmer:, here :smiley:

It’s a big thought, tho.

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yes, it will be part of the PIP for this. essentially:

week 5 and onwards: prev week’s profit fees + anything over the cap

We maintain the current 75% split of emissions for ETH/PICKLE farmers. This also gives an opportunity for them to harvest their Pending Pickles and stake them rather than dump or let it sit.

Admittedly, some farmers might pull out of the pool to stake for the first week or so. But rewards for the pool will stay strong, and it would not be wise to pull out all your liquidity because of the smooth-ish downward slope of the “bonus” staking rewards. It would make more sense to accumulate more Pickles by staying in the pool.


I don’t really like this idea. Still think it’s too much like Yearn and adds nothing to Pickle value. Is there any negative to not disbursing funds and just have a large safety net of funds? I don’t think the price is dependent on if this is implemented or not.