[Discussion] VSP Emissions Overhaul

Proposals Governance and Finance
1

VIP-17 Emissions Overhaul

Summary

Introduce a better scaling Emissions framework and align incentives with long-term minded vVSP holders.

Abstract

Many more Vesper Pools are launching, and with the rise of Vesper Orbit and expanding multi-chain ambitions, the rate of new pools will likely increase for the foreseeable future. Our current emissions framework assigns weight to all pools, which isn’t a sustainable approach.

VSP boosting serves several purposes:

  • Boosting APY
  • Attracting (and retaining) TVL
  • Incentivizing collaborations

Initially, VSP emissions were a means of broadly distributing the governance token for the ecosystem, but as VSP is now largely circulated, our intentions for emissions should no longer reflect “diversity of holders” and instead emphasize the most efficient and effective usage of our weight.

Additionally, there is opportunity to leverage vVSP ownership as weight in emissions, similarly to how projects like Curve and FRAX offer “gauges” directed by voter signal.

Expectations

This proposal suggests an emissions restructure that:

  1. Provides VSP emissions to the top performing subset of pools
  2. Cements a predictable, future-proof budget as more pools and chains are incorporated
  3. Encourages participation in new pools

Per VIP-10 there our emissions look like 40,000 for December-January, 35,000 for January-February, then 30,000 VSP for following months for Vesper pools.

Instead of boosting every pool, boost the pools as follows:

Ethereum mainnet

  • 12,500 split between the top 8 performing pools
    • Scoring determined as highest revenue generating pools (30-day average APY * spot TVL)
    • 2,500 VSP each for top pool (1)
    • 2,000 VSP each for the next 2 pools (2-3)
    • 1,200 VSP each for the next 5 pools (4-8)

Other Chains (Polygon, Avalanche, etc.)

  • Up-to 5,000 VSP budgeted per month to boost top pools on non-Ethereum chains.

New Pools and Partners

  • Up-to 10,000 VSP budgeted per month to boost new pools and partners.

Communities looking to co-boost Vesper pools can receive additional emissions through VSP replenish and partnership earmarks outlined in the new treasury split.

Specifications

  • VIP-10 Overridden
  • VSP emissions assigned from DAO holdings monthly, by performance of pool
  • New pools to adopt standardized emissions framework
  • Assigned emission targets for other chains
3 Likes
2

I like the proposal, and just have a small consideration on the formula for VSP rewards

Instead of front-loading the VSP rewards like 2500, 2000,1500 VSP every month, it might be interesting to reverse the emission upto a certain month so that the pool gets 1500, 2000, 2500 VSP. Rational for this is that there will be low pool participants in the beginning and lower VSP will still generate good APY and as pool participants increase, the increased VSP contribution will continue to support good VSP APY, which will incentivize first movers to stay in the pool longer as well

2 Likes
3

I really like the idea of votelocking vvsp and increasing the revenue split towards those “staked” the longest. Multiple benefits without many perceived drawbacks.
For thought, those with large liquidity positions may be tempted to then vote lock instead of lp. Have we considered lp rewards tokenomics changes? Again, curious if the platform can allocate some of the vsp treasury for lp positions, which could provide revenue as well as reduce admissions. Full disclosure, I have a decent lp position and this would temporarily negatively effect me, but would potentially be positive for the platform long term as it preserves vsp for the future and decreases emissions.

1 Like
4

I agree with establishing a vevVSP pool and rewarding those who are willing to “stake” tokens for long periods of time. There needs to be additional incentive to hold governance tokens.

1 Like
5

This is a great idea and I definitely agree this is a better mechanism to boost pools.

Other great ideas surfaced that meet benchmarks of easy-to-implement, effective, and engaging:

Earmark a percentage of revenue as a no-cost, recurring lottery for vVSP holders (similar to the mechanics of the UK Bond lottery). Some percentage of revenue flow goes to a pot that pays out each (interval) to a random vVSP holder.

Earmark a percentage of revenue as a general insurance fund. Claims are handled by vVSP holders (who may work together to invent a more robust standard for payouts). With control held by vVSP holders, they can determine to offer insurance rates to just vVSP holders at a rate of $$ covered per pool per vVSP

2 Likes
6

Hi All,

I’ve made some [redact]ions to the post above. Conversation about votelocking vVSP to drive emissions is 100% something we want to do (plus other features like insurance pool, lottery, fee reduction for vVSP holders).

However, this can be handled in a separate proposal.

We’re looking to make these changes ASAP to 1) aggressively reduce emissions 2) standardize an effective system for introducing new pools 3) stop boosting low performance pools.

Shoutout to @zzebra as well for the smart comment earlier about ramping up rewards for new pools. I’ve made that change as well.

2 Likes
7

This all looks good. The sooner we can establish additional benefits for holding vVSP for long periods of time the better.

1 Like
8

:+1: I think this is a great improvement to the emissions structure

9

This emission structure is a vast improvement over the previous one. I would also love to see the other suggestions e.g. insurance pool, lottery, fee reduction for vVSP voted on in the near future, especially the lottery which sounds fairly straightforward to implement.

1 Like
10

Agree. The new emission structure is more sustainable. Also concur about the other proposals you mentioned and would like to see VIPs supporting.

11

I support this proposal. Narrowing our vsp boost to better performing pools makes sense.

12

Updated the emissions framework to further reduce emissions. Total pool emissions will now never exceed 27,500 VSP - this is a >50% reduction in current budget and reflects a modest emissions of <5% circulating supply per year.

1 Like
13

Closing the loop: Vote passed with 91% and the balance abstaining.

https://snapshot.org/#/vsp.eth/proposal/0x4c33325033a81cf1cabee1aae01c6d58394e6ceb83b7e7b19bb4b020707a1acc