Hey! I’m a reWARDS member as well and wanted to chime in. Thanks for the thorough write-up and thought you put into this. Thanks also for the conversation we’ve had to discuss the topic.
These are personal thoughts here:
On Acquiring Governance Power for Liquidity Incentives
The main concerns for acquiring other governance tokens for directing liquidity incentives (under the ve tokenomics model) have been laid out in a couple places but imo they’re mostly:
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There’s loss in optionality by doing such a purchase. It commits at least some of the liquidity strategy to one DEX and ecosystem longer term.
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Payoff periods are not that great (at least in current market conditions).
- A couple examples here and more detailed for CVX on the message below.
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Like you also pointed out, withdrawals will reduce (though not eliminate) Lido’s reliance on secondary market liquidity as there will be a primary market for stETH:ETH. I would expect this to happen much earlier than the EV for payoffs.
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Above all, in my opinion again, purchasing one of these governance tokens is above all a directional long bet on their price. More so than the pure rent vs. own discussion or the LDO incentives savings (altough those considerations matter a lot too but that goes without saying).
CRV or BAL going up or down in price over the months/years would me more impactful to this being a profitable or unprofitable decision than all the other considerations we make.I personally am very wary of taking these directional views.
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I think this last one is not as important as the others, because I’m sure we could find a way, but this initiative probably couldn’t the carried out with just open market buys and sells (just due to size required and current depths available).
(I do think there are pros and reasons for a ‘Liquidity Seeker’ to do such a purchase but you laid out those well. These are just the cons and risks I see. Purposefully not a balanced take)