Welcome to April’s reWARDS budget.
Details are below as usual. This proposal will be open for community feedback for 3 days. After which, if there is no contention, it will be acted upon.
As always, if there are budget updates throughout the month, they will be posted under this topic for transparency.
The sections are as follows:
- Overall Updates
- Budget and breakdown
- Network Specific Comments
After March being the first month without rewards budgeted for Polkadot nor Kusama, those budget lines will stop appearing in the allocation tables included here for readability.
We’re fully implementing the multi-denomination view of rewards, so the display of aggregated numbers changed slightly from previous budgets. It is now done in LDO (distribution), USD (accouting) and ETH (base asset).
April is the first month since Lido’s reWARDS program started in which the present ETH value of LDO rewards requested is lower than what the Lido DAO is expected to receive in fees over the course of the same month.
As a follow-up to the above point, this budget represents a close to 40% decrease if denominated in LDO, and close to 50% if denominated in either USD or ETH.
Budget and breakdown
April’23’s budget calls for 788,700 LDO. (Actual 717,000 + 10% buffer)
Remaining balances estimated at EOM (unspent and left in the different multisigs by the last day of March and usable for April’s rewards, rounded to thousands):
- Ethereum: 84,000 LDO
- Solana: 27,000 LDO
- Polygon: 0 LDO
- Arbitrum: 12,000 LDO
- Optimism: 6,000 LDO
- Total: 129,000 LDO
Requested budget: 659,700 (Budget Call - Remaining, rounded), to be distributed across the following pools and networks with the buffer of 71,700 LDO held for unaccounted needs during the month.
- The detailed .csv file is provided here.
Aggregated view of April’s budget, in the different denominations aforementioned (download or zoom to view properly):
Network Specific Comments
This is a status update on the presence of wstETH on Uniswap v3, and the performance of LDO rewards to those LPs, via the strategies developed with and implemented by Mellow Finance.
- Withdrawals for stETH are currently estimated to be live on mainnet in mid-May. This has and will factor into the reWARDS budgets’ strategies.
- Budgeted LDO rewards for the solana ecosystem have been greatly reduced from the past month. This is due to the overall reduction strategy that has been getting employed in Lido’s reWARDS since October of last year, combined with specific network growth data and outlooks. Some incentives have been kept in the budget for stSOL in order to sustain base liquidity of the token.
Polkadot & Kusama
- As a last update on these two programs, Lido on Polkadot and Lido on Kusama are both being sunset with the official termination date on the 1st of August of 2023. (Please refer to Sunsetting of Lido on Polkadot and Kusama).
- March was the first month with wstETH on Polygon and with budgeted rewards to support it’s bootstrapping. In April, rewards support for it, alongside stMATIC will continue, and both are under the “Polygon” budget.
- To follow wstETH’s growth on Polygon in general and on its pools on there in particular check the dashboard: wstETH on Polygon.
Arbitrum & Optimism
- OP rewards distributions are expected to start in the month of April, following what has been outlined in Optimism Foundation OP Token Grant Emissions Commencement.
- More thorough comments, allocations and accouting will be posted here as sub-posts to the topic in the coming weeks, once they’re finalized.
As always, any feedback, questions and comments are welcomed!
Hi, when will rewards be able to access
Hey! If this budget is enacted, the rewards outlined in it will start being dispersed from April 1st onwards.
Each integration or pool has different cycle timings – but a majority of these allocations are continuations to current rewards programs in course which you can access already in DeFi (from March’s budget).
New disbursements from the reWARDS multisigs can also always be checked in this dashboard in real time.
Hi all, hope everyone is doing well
In regards to the Uniswap pool, is this one expected to be a wstETH-USDC pool or a wstETH-ETH pool?
Hey, both exist at the moment on mainnet, to check them out: 1. Uv3 wstETH-ETH and 2. Uv3 wstETH-USDC.
Also, you can check out all the uniswap mainnet pools with wstETH as a pair here.
This is a little write-up on the integrations for uniswap that Lido’s reWARDs committee has incentivized for a month or so.
Hi everyone! My name is Paul Sengh, and I’m a contributor to Delta One.
We are glad to see a significant budget cut on incentives until an objective-based framework is figured out. Our team will be closely tracking how TVL and other metrics change due to the adjustments in rewards. Further, the upcoming commencement of OP rewards will be a crucial moment for the DAO, as it is important we bootstrap our presence on Optimism in a sustainable manner. If managed incorrectly, the Optimism deployment can become an expensive liability, as mercenary liquidity providers will abandon the network when rewards dry up––the new pools may never reach escape velocity, and future LPs will pay the price. Optimism is one of very few chains that is growing in TVL during this market, and we hope Lido can enter the market to make the most out of this opportunity. Stay tuned for a proposal that will dive deeper in how we can better improve the incentive distribution on Optimism.
The Optimism rewards budget has been slightly miscalculated; actual March leftovers turned out to be 2,000 LDO (not 6,000 LDO as it was at the time of posting the budget). Because of that, 4,000 LDO extra will be transferred into Optimism reWARDs multi-sig.
Due to renewing mainnet Curve stETH/ETH pool LDO rewards essentially being a human operation, there will be a slight delay in resuming rewards in April.
The current rewards (according to the March budget) will expire on Wednesday, April 5, at 02:35 AM UTC, and continue for April ~13 hours later. Sorry for the inconvenience.
Hey, thanks for answering!
Was looking into the wstETH-ETH Uni Pool and the Mellow Protocol
Wondering if a possible angle would be to instead of having the wstETH-ETH Uni pool be on the 0.05% fee tier create one of 0.01% fee tier and in this way attracting all of the volume traded on Curve which has a fee of 0.04% fee for trading
This could create a semi sustainable pool in which the percentage is sustained by the volume traded. Furthermore, by analyzing the Curve pool it shows consisting volume, higher than the current Uniswap 0.05% pool volume, which reinforces the idea
Hey, Nick from Mellow Protocol here.
I think this makes a lot of sense. If this is approved, maybe a good solution would be to deploy the strategy in parallel for 0.01% fee tier and get some actual data, then decide on the final switching as there’s already sustainable TVL for 0.05% that’s growing.
To do this on the side of Mellow we’ll also need some time to work on strategy params to mitigate possible risks.
Hey, so in my personal view:
The merge, in September, didn’t have that much of an effect on the need to have secondary market (DEX) liquidity for liquid staking tokens;
The recent Shapella network upgrade, however, will, yes.
Once withdrawals are enabled for stETH, currently targeted for May, deposits into and withdrawals out of stETH will function as a means of
(primary) liquidity and alleviate the total dependency ethereum LSTs have had since launch;
From that point on, reWARDs budgets should become considerably smaller and directed towards new expansions, and integrations beyond the simple ETH-stETH LPs;
As an additional point of context, even now, reWARDs budgets are already very significantly smaller than they were last year, with April’s being around 16% (in LDO) of last September’s.
Hey Nick, sounds like a good idea!
What will be the next steps to follow from the Lido and Mellow side? I can certainly look more in depth into the volume data of different pools and try to calculate some possible scenarios.
That would be super helpful if you could join and get some data on the possible volumes & scenarios.
In terms of the strategy deployment on the side of Mellow – we can do this in 1-2 days if the strategy for 0.01% fee tier makes sense.
A significant update regarding April’s rewards:
- Rewards distributed for KyberSwap Elastic pools that had not yet been distributed to LPs have been clawed back and returned to the respective Lido reWARDs multisigs.
- This was done as a preventative measure once Kyber contributors informed the reWARDs committee about a vulnerability that had been found on the protocol.
Longer context, quoted directly from Kyber’s contributors team:
"On April 17th, the KyberSwap team identified a vulnerability in KyberSwap Elastic DEX, where in specific circumstances (details withheld to prevent exploitation by opportunistic blackhats), LP funds could potentially be at risk. No funds were lost.
The KyberSwap team took immediate action to fix the issue and disabled additional deposits. They also conducted a comprehensive review to identify any other potential related issues stemming from the discovery, but no further vulnerabilities were found.
However, as a precautionary measure, the team recommended that all KyberSwap Elastic LPs withdraw their funds; and quickly notified Lido DAO contributors due to the existence of significant wstETH, stMATIC and LDO liquidity. Within a couple days, most LPs were withdrawn and KyberSwap Elastic TVL dropped from ~$105m to ~$3m.
Kyber set a deadline to stop all farm incentive distributions on April 18th at 4pm UTC. Kyber, alongside Lido DAO’s reWARDs program had also been in the middle of incentivizing the following pools with LDO and KNC via yield farms. All remaining incentives from previous phases and from the current phases at the time of the vulnerability discovery were returned to Lido DAO’s reWARDs operational multisigs on April 26th.
The KyberSwap team has fixed the vulnerability issue and will redeploy KyberSwap Elastic with a target redeployment date of May 25th, after completing some audits."
Return transactions, for transparency:
Many thanks to Kyber’s contributor team for identifying this, reaching out and acting fast to successfully prevent any loss of funds. cc: @Sasha_Mai
These retrievals have been factored in on May’s reWARDs budget, under funds left by EOM on each multisig.
Due to this situation and respective timelines, no rewards allocations were budgeted in the May’23 budget linked above. Once a resolution is achieved and the new KyberElastic is redeployed, it will be again considered for the allocations (June and onwards).
Kyber team acknowledges and confirms all of the above information. We apologize for any inconvenience in halting farms midway upon our discovery of the vulnerability. We look forward to a new and improved KyberSwap Elastic re-deployment next month, as well as future cooperation with Lido on continued liquidity optimization. We are happy to open the discussion back up soon.