While the current liquidity mining program has helped grow the ETH, DAI, and USDT markets, liquidity is still relatively low and utilization has frequently gone above 80%. Now that the current program is about 50% completed, I wanted to consider some future ideas for the next epoch.
KPI based liquidity mining
Introduce a multiplier for the epoch if the protocol hits a certain goal (e.g. all rewards for the epoch are multiplied by 1.5x if the protocol averages over $50m TVL for at least one month). This could also be done on a sliding scale as opposed to a binary KPI.
- Creates a shared goal among the community
- Incentivizes users to promote Sturdy
- Can potentially be gamed, for example if a user deposits just enough to hit the KPI goal and then immediately withdraws
Users can lock their liquidity for a fixed period of time (e.g. 6 months) and receive boosted incentives.
- Guarantees sticky liquidity
- Aligns incentives between the protocol and users since they’re committed long-term
- Rigid and difficult to adapt. For example if the protocol offered incentives to lock USDC but suddenly saw an influx in organic USDC supply, the DAO would be needlessly paying out emissions
Note that these ideas could be combined, i.e. the rewards for locking USDC could be dependent on a KPI. Would love to get feedback on these ideas and hear any other possible options!