Code being implemented:
Balancer was awarded 1.2 million Arbitrum as part of the Arbitrum Short Term Incentives Program (STIP) to be paid out between November 11th and January 16th. The program is being paid out in biweekly chunks of 205,814.8 $ARB based on boost modified veBAL voting.
After a number of weeks of the program in operation, this BIP seeks to make a few modifications to the program in order to increase it’s effectiveness, and enable our current major strategic focus of supporting interest bearing liquidity.
When looking at the pools receiving veBAL there is a clear differentiation. Some pools are growing based on $ARB yields, generating decent volume and or fees and are examples of what we hope to see with STIP. Others seem to be more yield farming plays, with basic ERC-20 tokens that don’t generate much volume, engage with advanced balancer tech, or generate fees through our core pools program.
The STIP was designed to allow everyone an opportunity, but we want to leave space for real innovation and not have access to STIP rewards be made over-competitive by yield farming profit maxis.
The Dynamic Boost is the facility in place to manage this. The original STIP proposal mentioned capping the dynamic boost at 3. This was never implemented due to an oversight when translating the grant proposal to a code spec. We propose continuing to operate with no cap on dynamic boost.
Further, we propose multiplying the dynamic boost by 3, in order to allocate more $ARB towards pools that have a better ratio of fees generated to emissions paid. Here is a sheet with comparison data from the last round between the old and new methods.
Currently the wstETH/4pool and the USD 4pool are receiving equal shares of 22,500 $ARB per week in fixed boost. The wstETH/4pool is not quickly gaining deposits or generating impressive volume, some of this may be time, but it is clear that CL based USD/ETH positions will capture most volume.
sFRAX/4pool is an important part of Balancers interest bearing liquidity strategy, and it should command much lower yields than wstETH/4pool generating an increase in 4pool liquidity. 4pool is currently Balancer’s top volume producing pool on Arbitrum and is a market where more TVL will clearly capture more volume.
We therefore propose that the 50% of direct incentives currently allocated to wstETH-4pool is going into sFRAX/4pool. sFRAX liquidity is an important part of Balancer’s interest bearing liquidity strategy on Arbitrum, and we expect the pair to command much higher TVL per incentive dollar.
STIP automation, as well as it’s results (past and future) have been broken out of the data_automation repo and moved to their own repository for clarity and simplicity: GitHub - BalancerMaxis/STIP_automation
This repository is to serve as the new source of truth for STIP.
This BIP specifies that the new script shall be run each round providing start and end dates for the epoch in question.
python main.py --ts_bound <epoch end timestamp>
Epoch is a 2 week period of time. The next run epoch will end on Thursday, December 28, 2023 12:00:00 AM UTC time and then script should be run with:
python main.py --ts_bound 1703721600
This script functions differently from the currently running code in the following manners:
A 3x has been added to the dynamic boost:
Fixed rewards are now handled based on a configuration value in constants. The reward configuration can be found Here. This configuration currently emits 11,250 $ARB to 4pool, and 5,265 $ARB each to sFRAX/4pool and wstETH/4pool.