One of the biggest changes Balancer made to veCRV when we released veBAL was the use of BAL/WETH 80/20 BPT as the locking token instead of BAL. This has allowed BAL to have extremely deep on-chain liquidity relative to our circulating market cap, all without having to spend costly emissions on BAL liquidity incentives. Encouraging the adoption of similar ve8020 systems across DeFi is a key strategic objective for the ecosystem. This kind of locked liquidity is far more sticky than usual TVL earned from liquidity mining, plus Balancer’s emissions will not be the primary driving force behind users choosing to participate as the project itself will contribute their own emissions, revenue sharing, gauge voting, or similar mechanisms.
While the benefits of adopting ve8020 are numerous it remains a relatively novel concept that most users are not familiar with. It will require additional dev work from projects looking to adopt this compared to single token locking. Thus I propose that the Balancer ecosystem starts a new program for incentivizing ve8020 adoption which will outline BAL grants for projects which meet certain TVL and revenue milestones. Each project must be approved by a Balancer governance vote to participate.
This program is intended to support all systems which involve the staking/locking of 8020 BPT. ve8020 is one such system and it’s a convenient shorthand to use, but this program is not limited to “ve” systems only.
I suggest leaving the qualifications for participating as soft requirements since it’s difficult to account for every possible future situation. We must carefully balance spending BAL to drive ve8020 adoption in a bear market with vaporware projects adopting it just to get paid.
Some factors Balancer governance should assess for projects adopting ve8020:
- Project track record - has it been around awhile, is it likely to exist going forward, does it have an active community/user base, etc.
- Circulating market cap and trading activity - is there a reasonable likelihood for this ve8020 to contribute significant protocol revenue for Balancer?
- BAL incentives should go to ve8020 lockers only, and the lock should have a minimum duration of 16 weeks
It will be up to each project to make the case to Balancer for why they should qualify. Balancer is looking for ve8020’s that not only drive high TVL but also drive protocol revenue.
All BAL granted through this program must be locked in veBAL and ideally the project will provide the necessary 20% of ETH so that no BAL is sold.
Upon a successful Balancer governance vote for a project to join this program they would immediately be eligible for a grant of 25k BAL.
The intention is to make this program accessible to most projects with the goal of Balancer benefitting from their future growth since they’re parking locked liquidity with us. The first two milestones accomplish this while the final two milestones serve to entice larger projects to adopt this standard. If all milestones are met a project stands to gain 250,000 BAL!
Please note that only TVL and revenue from locked liquidity will be counted towards the milestones.
In order to future proof this program against changes in market conditions the milestones are given in relation to the price of BAL.
- 25k BAL
- TVL exceeds value of 25k BAL by 30x
- Lifetime total revenue earned exceeds ⅓ the value of 25k BAL
- 50K BAL
- TVL exceeds value of 50k BAL by 30x
- Lifetime total revenue earned exceeds the value of 50k BAL
- 50k BAL
- TVL exceeds value of 50k BAL by 100x
- Lifetime total revenue earned exceeds the value of 50k BAL by 4x
- 100k BAL
- TVL exceeds value of 100k BAL by 200x
- Lifetime total revenue earned exceeds the value of 100k BAL by 4x
Using today’s price of $5.50 BAL, these milestones would be the following:
- 25k BAL
- TVL exceeds $4.125M
- Lifetime total revenue earned exceeds $45.8k
- 50k BAL
- TVL exceeds $8.25M
- Lifetime total revenue earned exceeds $275k
- 50k BAL
- TVL exceeds $27.5M
- Lifetime total revenue earned exceeds $1.1M
- 100k BAL
- TVL exceeds $110M
- Lifetime total revenue earned exceeds $2.2M
As a final note, I believe it is prudent to include that once a year passes from the approval of a project’s vote to be included they must present another proposal to remain in the program for another year. Failure to do so would make them ineligible for any future milestone distributions.
If approved, governance will soon see applications from projects interested in this program. No immediate action is required. The goal is to establish a clear, unbiased incentives program that is easy to understand and massively scale ve8020 adoption in 2023.