Posting this as an RFC because I have no intention of pushing forward this proposal unless we’re mostly in agreement on it.
For October, November, and December redirect Balancer’s 50% share of Optimism fees back into growth incentives - either bribing or direct LM. Bribing for L2’s is likely to be a negative ROI so I suggest doing direct LM but if people feel strongly about bribing we can only do that.
Our proposal for OP incentives stipulated that we must pair OP 1:1 with protocol fees. If Balancer agrees to forego their 50% share of fees we can instead take these funds, pair them 1:1 with OP, and use them to further our growth on Optimism. The idea would be that when Balancer starts taking their 50% fee again in January we’d stand to earn a lot more money because we took these three months and invested in growth.
To date, Optimism has sent $50,100 in fees to Balancer since launch - so this does not represent a large loss of income. It will probably not even be noticed realistically. But it can have a large impact on our growth at this critical time. We’re working to secure aggregator support on the new boosted pools as without that we’re earning almost zero in swap fees. We need every dollar of protocol fees we can get returned as incentives to ensure we can continue our growth trajectory.
Would love to hear any thoughts or feedback. Thanks everyone.
I am on board with doubling down on Optimism incentives at the cost of the fee split considering the circumstances. I prefer to push capital efficiency in terms of direct liquidity mining myself, but if consensus lands with bribing I would support that as well because of veBAL holder sentiment. Either way the goal is set up our OP arm for success now with the bet that it pays off in multiples 1-2 quarters after.
I agree with this idea in pricipal because it doesnt seem we are giving up too much to date and it is a trial to see if it causes OP growth. However i do wonder if there is a seesaw effect at the end of this program and OP potentially ends up near where we started in terms of TVL. What is the plan to make some of the new TVL “sticky”?
all of our liquidity is yield bearing so there’s a direct relationship between TVL and revenue. Once aggregators come online that will also boost revenue.
It is a fair point that if we do this and gain TVL we might stop gaining or even lose TVL when Balancer takes the fee again. I believe that the bigger we get the easier it will be to attract partners and other projects to spend money on us. We already have close partners like Rocket Pool, Lido, and Qi DAO who will likely spend large amounts of OP with us once they take possession of their grants. Every day we’re working to connect with more projects.
Ultimately the job of keeping TVL will be no different than it is today after this is over. The reason for this proposal is to allow us to continue growing while we get aggregators online rather than having to take our foot off the gas (again).
Also worth noting we can print BEETS as we allocated 3M BEETS initially and could potentially renew that. So far we’ve spent 600k on bribes and strategic LM like helping to jump start wstETH. We will use this to try to keep things on track if Balancer declines to adjust the fee - the downside of doing so is we have less resources in the future to deploy strategically if we need to start pools or match incentives with partners.
This proposal makes a ton of sense. OP, with the new Balancer boosted tech rolled out and implemented, is now in full swing - so yeah, let’s definitely give it some more momentum for the next 3 months.
BeethovenX and our DAO are also fully committed to doing everything we can to make OP a success.
Since June (so in the 4 months including June to now) BeethovenX has already allocated 50% of its fee share (or 25% of gross protocol fees) to liquidity incentives, which were Aura gauge rewards until it became unprofitable to do so and now to direct pool incentives. This allocation was approved by BeethovenX governance in June, and BeethovenX will continue this practice into the future.
As of last month, BeethovenX governance also allocated $75k of treasury stables to buy $25k of veBAL, $25k of Aura for vlAura, and $25k for staked auraBAL. Since September and going forward, 50% of BeethovenX’s remaining net fees after accounting for the above (or 12.5% of gross) is allocated to acquiring more veBAL, Aura, and auraBAL. And BeethovenX’s veBAL and vlAURA can only vote in favor of OP pools.
Overall, BeethovenX has already and will continue to allocate 37.5% of OP’s gross protocol fees (or 75% of Beethoven’s share of protocol fees) to OP liquidity incentives thru direct pool incentives, gauge rewards when it becomes profitable again, or gauge votes via veBAL or vlAURA.
This BeethovenX allocation started before and will continue after the 3-month time period that applies to @solarcurve’s proposal.
More overall IB liquidity on OP should result in more protocol fees, which should enhance the liquidity flywheel thru more direct pool incentives and/or more gauge rewards, and more gauge votes for OP pools.
Happy to support this. Optimism is a strong place rn growing in TVL and it makes sense to further incentivize growth whilst the iron is hot. Its essential that we set up some form of a pathway to find success on Optimism. I believe this is a good play in the long term.
