[reWARDS] June '22 Budget

June Budget Post

Welcome to the June budget.

This post will be broken into a few sections detailed below and will be open for community feedback for 3 days (72 hours). After which, if there is no contention, will be acted upon.

Updates for each month will be provided in the corresponding monthly threads.

The sections are as follows:

  • Operational updates
  • Budget and breakdown
  • Reasoning
  • New experiments
  • Operational Goals

Operational Updates

Due to the ongoing operational complexity we have increased the requested LDO in the budget by 500K. The reason is to provide a buffer between monthly budget updates until we can get additional resources to streamline the process.

Budget and Breakdown

The June budget calls for 4,600,000LDO.

4,138,500 LDO distributed across the following pools and networks with the remaining held for unaccounted needs during the month.

UniV3 pools were delayed to this month for testing.

The colors correspond to an increase or decrease of LDO for the month.

An easier to view PDF is provided:

June Rewards.pdf

Reasoning and Analysis

We are continuing to experiment with bribes and indirect incentives to increase capital efficiency.

Solana

Solana has been experiencing an increase in arbitrage activity and has resulted in net outflows. We are actively monitoring the situation and continuing to test new pools / platforms.

Notable changes

  • New Launches: Mango, Hubble, Jet & Synthetify

Ethereum

Curve bribes have been discovered to not be as efficient as we’ve expected. We will most likely need to migrate between the 2 strategies on an ongoing basis.

Notable changes

  • We will be redirecting a significant portion of Curve bribes for June back to direct incentives.
    • We’re working on proper analytics report on the matter currently
  • Balancer bribes have been very effective so we will increase the budget to 50/50 direct / bribes.

Kusama (KSM)

stKSM has been steadily growing. We are working on operational process to get an oracle price feed to allow deeper integrations in DeFi.

Polkadot (DOT)

DOT should be launching this week.

Polygon (MATIC)

stMATIC is growing steadily. We are working on Chainlink oracles.

New Experiments

Uniswap V3 pools will be the focus of this month with incentives. Operationally complex so we expect this to be a slower rollout.

New stablecoin pools. There are a number of new multi-stablecoin pools being explored and Lido is looking to pair st-assets against them. Will update this thread with additional details.

Operational Goals

The goal is to now focus on increasing natural trading volume over the rest of the quarter while lowering net LDO emissions from the treasury for mature networks (ETH/SOL) and rotating increased spend to newer networks. While maintaining the peg is our #1 priority we are becoming more mindful of treasury management and focusing on more sustainable defi behaviors.

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Hey! An stKSM notice: 30,000 LDO for Beefy rewards were added for expected launch in June.

Hey hey! Update for Solana budget in June and also updates about incentives from protocols:

  1. For the pool stSOL-USDC in Raydium we agreed for co-incentives from Raydium in June.
  • 10 000 RAY per month
  1. For Aldrin we got co-incentives agreements in June as well(all numbers from Aldrin in $RIN per month):
    stSOL - USDC 16,333
    stSOL - USDT 11,667
    stSOL - SOL 4,000
    stSOL - BTC 4,000
    stSOL - ETH 4,000

  2. For Larix protocol we have new agreements for co-incentives from protocol and increase of Lido incentives:

  • for depositors 16416(Larix tokens) per day
    -12 000LDO per month from Lido instead of 10 000 LDO which are in the budget.

@jbeezy
Could i get access (or just a csv copy) to the reWARDS spreadsheet? I am trying to run some analytics and having a terrible time matching etherscan / dune data to your info.

I would also like to request the addresses for each platform / pair being incentivized. I assume you must keep a record of this somewhere? How else would you know where to send the incentives?

Neither Aragon nor easy track have useful notes to identify these rewards by platform.

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When will you turn your rewards strategy from “based on what we did”, to “based on how much we earned”? Based on current DAO treasury revenue, there is about 750 $steth monthly income, which has the same value as 1.5M $LDO. Now the monthly rewards distributed on Ethereum is more than 3M $LDO. Do you think that makes sense for a long time run?

I recommend using WETH or stETH in the treasury for incentive rewards based on the following reasons:

  • Incentive rewards mostly targeted to stETH/WETH LPs. Using ETH or stETH as rewards can give LPs more stable APR expectations than using $LDO as rewards, because of the huge volatility on $LDO to $WETH exchange ratio.
  • Some of the biggest LPs, like Yearn, routinely sell $LDO for $ETH and reinvest into the LP pool compound their revenue. Using WETH as rewards can somehow simplify their process and save gas for their operation costs.
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Although the Balancer bribes’ effectiveness declines slightly over the past month (as expected), those are still significantly more effective than the direct LDO incentives on the wstETH<>WETH pool. The reWARDS Committee sees an opportunity to optimize pool rewards by allocating another 50k LDO to balancer bribes in June and reducing direct incentives by 100k LDO.
This will result in having allocated 200k LDO to Balancer bribes and 50k LDO to wstETH<>WETH direct pool incentives. We expect it to result in slightly higher APR and save another 50k for the DAO treasury in July.
Due to 4-weeks rewards period on Balancer pool, we need to initiate rewards allocation process before the July budget is published. June budget reWARDS buffer allows to do that without requesting any additional funds from the DAO.

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Until withdrawals are enabled (and this is quite a time away), we’ll need to maintain significant liquidity for stETH holders to be able to exit their positions. That’s what unlocks the growth, and that’s what affects stETH usability on money markets & across wider DeFi ecosystem. Once the withdrawals are here, Lido — most likely — won’t need that much liquidity on the pools, so would be able to change the approach to rewards completely. Before that — we’ll be optimising for lower LDO spend & figuring out what the focus should be. I’ve touched on that on another forum post.

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Let’s do a little napkin math. Lido wields ~25k ETH in Treasury (the exact distribution & targeting for the funds is nuanced, but let’s skip that discussion). By the current price, it’s ~$30m. reWARDS monthly budget ~4.5m LDO, $2.6m, making the whole Treasury worth 1 year of incentives, barring all the other costs. At the same time, Lido Agent holds ~$94m worth of LDO, making this significantly better source for incentives — as long as Lido does need to provide those.

reWARDS is making changes to the strategy to make it more sustainable (we clearly see it’s not that as-is), but that’s not something what could be done on a whim. We need to plan ahead and have the strategy, and that strategy should consider all the options & expenses the Lido DAO is bearing.

The spreadsheet is the same as the “budget screenshot” posted. The July one is around the corner and would be published this week. Could I ask, what exact data you need? May have better way to provide it.

The nature of my request is 2 fold.

  1. Accounting / Audit based request. Given the P/L dashboards and more formal set of financials I have put together, I feel obligated to ensure the validity of the numbers we have put together. Its a trust but verify type of request. Your spreadsheet says 100k LDO to XYZ pool. Great, lets make sure it arrived. Its a classic approach to reconciliation. Obviously we have a few of the big ones, such as curve / balancer, but it would be great to have them all.

  2. Statistical analysis. Your dashboards are excellent and show the committee has done a terrific job at increasing TVL and volume. Your graphs show your work correlates to the increasing TVL and volume. Bravo!! I would like to run some models and test it and quantify the degree to which such correlation actually exists both in a bubble and against many other factors.

In reality I don’t want or need your spreadsheet. I just want a simple list of all incentive contract addresses where Lido is directing rewards to. I will take the list in any form, pdf, excel, .txt, whatever.

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Awesome, thank you for the clarification! We have exactly that — list of all Ethereum side reward programmes on the docs site: Deployed Contracts | Lido Docs (note that the bribing txs won’t get included there).

  1. Votium briber contract 0x19BBC3463Dd8d07f55438014b021Fb457EBD4595
  2. HiddenHand briber for Balancer 0x9DDb2da7Dd76612e0df237B89AF2CF4413733212 (vault for funds) + 0x7Cdf753b45AB0729bcFe33DC12401E55d28308A9 (briber contract)
    HiddenHand has been used by both Ethereum & Polygon reWARDS, so figuring those out could be notch more difficult.

As for the other networks, the rewards there are managed through the multisigs on other chains. Generally looking for outgoing txs to bridge contracts (Wormhole for Solana+Terra, Multichain for Kusama & PolkaDot & Polygon bridge for Polygon) should make it.

Thank you. I have the wormhole and multichain txs all grouped together currently, but would like to separate them out per platform. Whats the best way to identify the incentive contracts on the other chains?

The best way would be to follow bridged funds, but should note that it’ll be quite complex endeavour on Solana due to the sheer number of pools there.

Most other “bridging networks” have 1-2-3 incentive programs, so shouldn’t be that bad.

Ah that is unfortunate. I did embark on that over the weekend for SOL and was quite upset that a list did not currently exist.

How does the committee fund them without a list of where to send LDO to?

There is the one, and you can back-track those by txs on multisig, but should say the ops on Solana are quite haptic

Do you know if the Votium bribes were only for the main curve pool OxdDC…7022 or if any was applied to the concentrated pool? There doesnt appear to be any method to discern which pool the bribes were directed at. Does Lido keep a record of that?

Only for the main pool, didn’t bribed the concentrated one. The pool target is specified in bribe tx

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Hey! Update for Solana budget:

We have 97 658 LDO on our account based on 30.06.22
This amount amount was not spent in June as we:

  • budgeted 50 000 LDO as a buffer for new integrations
  • we sent only half (20 000 LDO) for new pools on Atrix
  • we just launched stSOL as collateral on Hubble and plan to send incentives in July. wstETH as collateral we plan to launch later. ( 20 000 LDO were budgeted for Hubble in June)
  • we didn’t start incentives for Friktion with 1 000 LDO
  • 6 658 LDO left from previous month

Our rewards on Orca pools will be empty today so we decided to sent now 97 000 LDO to Orca to fit July budget. That is due to specific 28 days rewards rotation in Orca which needs from us topups in advance.

Here is July budget for Orca:

Whirlpools(28 days rewards in LDO)
stSOL-USDC 20,000 LDO
stSOL-USDT 12,000 LDO
stSOL-SOL 5,000 LDO
stSOL-BTC 2,500 LDO
stSOL-ETH 2,500 LDO
stSOL-wstETH 2,500 LDO
stSOL-USDH 2,500 LDO

Standard pools (28 days rewards in LDO)
stSOL-USDC 10,000 LDO
stSOL-SOL 10,000 LDO
stSOL-USDT 15,000 LDO
stSOL-BTC 5,000 LDO
stSOL-ETH 5,000 LDO
stSOL-wstETH 5,000 LDO

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Hi! Sharing some changes for DOT and KSM budget part because of the given conditions.

  1. Curve pool rewards raise 100->220K LDO shifted to July. Will bridge DOT Curve pool last June week’s leftover at given rewards rate + July budget to Moonbeam msig now to have it ready to go and avoid extra txs. So not adding Curve DOT budget for July since it will be already settled. Funds will be used used from KSM budget part because of some postponed launches/raises described below. Having a 25K + 220K = 245K LDO tx in total.

  2. Solarbeam rewards raise (40->70K LDO), Beefy (30K LDO) and Zenlink (30K LDO) launch postponed, leaving funds from KSM part possible to use in #1.

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