PR with Payload
Summary
The purpose of Balancer’s locked vlAura should be to augment our successful revenue driving pools while also giving us the flexibility to target particular narrative strategies so that we are able to compete with protocols that have a centralized emissions direction framework.
Balancer DAO currently has 1,423,058.93 vlAura as a result of BIP-481 [BIP-481] Claim and Lock Balancer DAO Aura allocation into vlAura
This represents about 5.74% of vlAura voting weight and represents 2-3% of total veBAL votes.
I propose we utilize this voting power to forward the strategic initiatives of the Balancer DAO according to the following framework.
40% Revenue Producing Pools
40% Facilitating Core Liquidity
20% Discretionary Business Development
Revenue Producing Pools (40%)
40% of the vlAura will be used to vote for sustainable revenue producing pools. We define a sustainable revenue producing pool as a pool with predictable revenue production that does not depend on volatility to earn protocol revenue. This would be inclusive of major LST stableswap pools with fee on yield (Lido stETH, rocketpool rETH, frax sfrxETH) and pools with >=50% composition of major interest bearing stablecoin pools (sDAI, sFRAX).
The allocation strategy will be simple, first we will designate a list of pools to be considered as “core revenue producing pools” which align with the composition described above. This vote weight will be distributed pro-rata according to the revenue earned relative to other core revenue producing pools. So if pool A earns 30k, pool B earns 10k, and pool C earns 20k, the vote weight distribution will be 50,16.6, 33.3. In order to simplify voting and minimize dust amounts, we will initially restrict this to the top 6 pools.
These pools should not be used to further business development efforts and should solely be utilized to promote DAO revenue.
Facilitating Core Liquidity/Bootstrapping (40%)
A very important part about being a multichain dex is ensuring there is enough core liquidity to facilitate routing through the most important major assets such as WETH and USDC. Having a Stablecoin<->WETH route allows us to structure liquidity in a way that allows us to route to nearly any asset, assuming there is liquidity connecting them. The issue with a pool like WETH/USDC weighted is that there is very little incentive for veBAL or vlAura holders to allocate vote weight towards as there are no external incentives and are purely fueled by core pool bribes. Having this vote weight will allow us to spin up liquidity that is strategically important for routing and future revenue potential without relying on philanthropic veBAL voters to vote for it. Note that there may be some overlap between revenue producing pools and core liquidity, especially as LST’s and sDAI/sFRAX grow their presence on L2’s.
In the interest of getting this initiative live in a timely fashion, this allocation will have some discretionary components initially but a transparent objective methodology will be put into place.
Discretionary Business Development (20%)
This portion of vlAura should be used to vote for strategic partner initiatives that are likely to grow beyond the initial vote weight we assign. In the modern dex landscape we are competing against projects that have an entirely centralized emissions allocation strategy and this gives them the ability to be nimble in regards to bootstrapping narratives. We hope that this vote weight will help attract important partners to build their liquidity on Balancer for the long-term by giving an initial boost needed to bootstrap.
These vlAura votes should not be used to sustain any particular BD initiatives for over 6 weeks and will fall back on revenue producing pools should there be no current BD initiatives.
Miscellaneous:
There is no easy way to automate vlAura voting on chain because it uses offchain snapshot voting. vlAura also requires submitting votes for every biweekly period, and there’s no ability to “lock in” votes to roll over epoch to epoch. This means that there will have to be some entity capable of executing on vlAura votes. We propose that we delegate our vlAura voting power to a Maxi controlled multisig that will then be used to vote according to the above criteria. All allocations and methodology will be posted on github which will be used as the data source for submitting votes.
Additionally, Balancer will recycle 70% of bribes collected back into vote incentives on the that generated them. 30% will be sent to the DAO treasury as USDC.
This is a living framework and can be refined in the future to better suit the ongoing needs of the protocol, subject to a governance vote.
No project can request vote weight as part of their gauge proposal/governance vote.
Specification:
Balancer DAO multisig() on mainnet `will:
- call the
delegate(address)function on the vlAura locking contract0x3fa73f1e5d8a792c80f426fc8f84fbf7ce9bbcacwith the parameter newDelegatee set to0x9ff471F9f98F42E5151C7855fD1b5aa906b1AF7e - call the
setRewardForwarding(address)function on the hidden hands BribeVault0xE00fe722e5bE7ad45b1A16066E431E47Df476CeCwith the parameter setRewardForwarding set to0x9ff471F9f98F42E5151C7855fD1b5aa906b1AF7e
0x9ff471F9f98F42E5151C7855fD1b5aa906b1AF7e is a new vlAURA voting multisig deployed across all chains on which Balancer operates. It requires 3/7 Maxi Signers to sign, with @gosuto being added as the 7th signer. Details about the setup of this multisig can be found HERE. This multisig is hereby granted the mandate and authorization to:
- Vote with it’s delegated vlAURA in accordance to the guidelines proposed above.
- Claim all earned vote incentives, sell them for USDC, bridge them to mainnet, and process the proceeds in accordance with the guidelines laid out above:
- 30% to Treasury
0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f - 70% recycled as new vote incentives (potentially via the multisig handling core pools incentives to save on gas)
- 30% to Treasury