We are officially expanding Quest and Warden to the Balancer ecosystem. This means that starting the next round, DAOs will be able to use our dapp to access the Balancer gauge, and in a couple of weeks, LPs will be able to buy veBoosts to maximize their yield strategies.
The goal of this post is to include Quest into the list of service providers contributing to the Core Pool Incentive program highlighted in BIP-19.
What is Quest ?
Quest is a gauge acquisition tool that allows DAOs to incentivize veToken holders. Yield is fixed by the quest creator since a specified amount of voting power is targeted. This means once loyal voters fill a quest, no additional votes are rewarded, ensuring maximum efficiency for DAOs. Overall, this approach is more sustainable for bribers. You can find more details about the mechanisms here.
Why should it be added to the Program ?
Currently, the Core Pool Incentive program is only relying on Hidden Hands. So why add another bribe marketplace?
As mentioned previously, Quest is a radically different solution in the sense that it enables bribers to fix their rate and know exactly how much they’re paying per vote.
DAOs can manage their budgets better and play the gauge wars without spending more than the emissions they attract, especially when the market is irrational. For Balancer this is specifically relevant because the previous round of bribes is finishing at ~0.23$ / vote while each vote directs 0.14$ of emissions. From what we have gathered, this 40% markdown is an intentional strategy to attract more veBAL lockers with high bribe APR. While extremely smart, we believe the Balancer DAO should be vigilant in totally killing the organic bribe market with subsidies that make the base layer unprofitable to incentivize.
Having two bribe marketplaces with different systems would allow the DAO to maintain high bribe APRs on certain pools, while offering LPs extremely high APRs on other pools since they would have bribes optimized for BAL emissions. This would attract more TVL to the protocol.
Additionally, Paladin will try to provide a unified marketplace for both veBAL and vlAURA in the very near future, which should free operators from some menial bribe-splitting tasks, as well as other modules allowing for a more composable and decentralized approach to gauge incentives.
How should this Program be amended to include Quest?
In BIP-19 we requested a framework of bribe sharing to avoid an implementation roadblock during our request. Since we weren’t able to introduce a framework because of time constraints, we suggest the following approach:
- Split Core pools between “High Growth Priority” (most lucrative ones) and “Low Priority / Mature Pools”
- Mature Pools would go to Hidden Hands, where they would offer juicy bribe yield to create a “Lockening”;
- High Growth Priority Pool would go to Quest, where bribe prices would be lower but the number of votes attracted would be significantly higher, effectively attracting more LPs to the pool.*
Any feedback is welcome.
*There will always be demand on Quest because the yield rate is fixed and the soon to be unified marketplace with vlAURA will allow the use of governance arbitrage to attract vlAURA voters.
** Paladin has set up a Partner Program with a fee-sharing mechanism, we think the program can be activated for Balancer to redirect the fees to finance contributor initiatives.