Curve Proposal: Continue LDO Reward Initiative With 3,750,000 LDO

Previous LDO rewards for stETH/ETH curve LPs will expire in 5 days. The proposal is to continue rewards amount: 3.75M LDO for the next 30 days.

stETH:ETH pool is the largest liquidity pool in all of DeFI, which means that increasing incentives there would be an overkill. On the other hand, liquidity is paramount for stETH as it is a precursor to listing on DeFI money markets.

Original proposal for LDO Curve incentives: Incentivizing Curve stETH liquidity with LDO (tech details)


What would the implications of, let’s say, reducing the proposed 3,755,000 LDO rewards to, 1,877,500 LDO be?

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Good question but not a simple one to answer.

What’s the target market share of liquidity? What’s the elasticity of your LPs from previous changes to rewards? How does fee revenue stack up against IL as a function of volatility and drift?

I think there’s a level beyond which people will start removing ETH from the pool and that screws the peg. I think that point is below 3.755m of LDO per month, but don’t know exactly where it is, and we don’t have flexible enough levers so far to react if we set the amount too low. So aiming a bit too high sounds like a good decision to me.

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