Proposal: Continue Curve stETH LDO liquidity scheme for 12 months / vote on the quantity of LDO to be distributed on a monthly basis.
(In collaboration with Krasmussen)
This proposal is based on the initial “Incentivizing Curve stETH liquidity with LDO" proposal.
This proposal covers the implementation of LDO rewards for Curve stETH liquidity providers that stake in the Curve liquidity gauge.
stETH holders who add stETH/ETH liquidity to Curve - in addition to making use of the Curve liquidity gauge - are rewarded with LDO emissions.
Unstaking ETH is currently unavailable and additional Curve pool incentives will make stETH/ETH more liquid as well as stable in peg.
There’s a need to incentivize stETH/liquidity to maintain a 1:1 exchange rate and to allow the seamless transfer between the two assets.
Between Jan 12 - Feb 12, stETH liquidity providers on Curve are rewarded with 0.5% of total LDO supply as incentive.
This works to incentivize liquidity provision across Curve which in turn contributes to a 1:1 peg between stETH and ETH, effectively allowing users to unstake their ETH through the liquidity pool.
I suggest a continuation of this moving forwards - 0.5% of LDO supply for the coming 30 day period - with future amounts to be voted on on a monthly basis.
Points of interest:
- When should the LDO amount be voted on?
- Should there be a max/min LDO amount to distribute each month?