KIP-2 Act IV Emissions Reduction

KIP- Act IV Emissions Reduction

Proposal

Reduce remaining Act IV daily emissions for the Hiding Vault by 50% or 75%.

Background

Now that the Hiding Vault has been established as an enhanced lending protocol, both in TVL and total amount borrowed, I am proposing that we reduce the amount ROOK rewards.

  • Hiding Vaults already receive significant benefits from Compound (interest and COMP distribution) and JITU (liquidity buffer). The ROOK rewards should be some (light) icing on the cake.

  • Hiding Vault rewards are not currently motivating users to take positions that create MEV. Until we are able to dynamically distribute rewards to different assets in an effort to dissuade same token supply and borrowing, the Hiding Vault will not be utilized to its full potential.

My proposal is to reduce current daily Hiding Vault Emissions by 50% or 75%, and not mint the excess ROOK. I would project that this decision will not significantly impact the usage of the Hiding Vault, due to the benefits described above.

For reference, here is the current remaining emissions for the last quarter of Act IV:

Name Percentage # ROOK this Act # ROOK per day
Hiding Vault 40 5197.5 231
Hiding Game 40 5197.5 231
Liquidity Pools 20 2598.75 115.5
Total 100 12993.75 577.5

(note: Hiding Game and LP emissions have been fully minted for Act IV)

Assuming that this could go live right as the third quarter of Act IV’s emissions for HV that were minted run out, the final proposed ROOK rewards for Act IV’s final quarter would be:

Option 1, 50% HV emissions cut:

Name Percentage # ROOK Remaining # ROOK per day
Hiding Game 40 5197.5 231
Hiding Vault 20 2598.75 115.5
Liquidity Pools 20 2598.75 115.5
Not Minted 20 2598.75 0
Total 100 12993.75 462

Option 2, 75% HV emissions cut:

Name Percentage # ROOK Remaining # ROOK per day
Hiding Game 40 5197.5 231
Hiding Vault 10 1299.375 57.75
Liquidity Pools 20 2598.75 115.5
Not Minted 30 3898.125 0
Total 100 12993.75 462

Please select an option below:

  • I support the 50% HV emissions cut proposal
  • I support the 75% HV emissions cut proposal
  • I do not support this proposal
  • This proposal needs more consideration

0 voters

Specification

(to be completed once the poll above receives sufficient votes)
Before block ____, mint and distribute remaining Act IV rewards per the schedule below:
Hiding Vault rewards, mint _____ ROOK and send to 0xae7b93a591c37ea37ed8bc7b6b999c85f2ed2405
Reduce per block rewards factor of Hiding Vaults by 50%


4 Likes

This is where we arrived at the end of a nice community voice call on the subject on discord, which lasted about an hour.

@WhatsTheDeetz for clarity, we should choose better phrasing than “Scheduled Excess” - the idea is to either not mint or mint and burn immediately. The former is simpler, the latter may be preferable for accounting purposes. They have the same result on supply.

2 Likes

Yeah. I like mint and burn though. Gives a confidence to users that the un-minted ROOKs in this quarter won’t be minted again somewhere in future.

Also keeps the accounting in check if anyone tracks our emissions/epoch.

1 Like

Moving this to Sophon review per request from @WhatsTheDeetz and the nature of the timeline here. We may have some edits during review, comments can continue.

oh, I just noticed that the HG rewards would stay at their current level.

Yes, we had discussed increasing those over comments and the voice call on the subject but collectively concluded there are diminishing returns to doing that right now, while adding risk of just switching farming problems from one product to another.

1 Like

Strongly in favor of this change. I think there are many other ROOK incentive pieces to address but this is an important step in the right direction. Good to not wrap too much complexity in a single KIP so a fan of putting this through ASAP.

3 Likes

Hi there,

It seems like there are no rewards for HG

Great! But we have passed this block

The initial plan was to reward HV users only when they get liquidated. But the current rewarding system is rewarding all users if they keep any borrow position open. So I think we need to be more strict in giving away these free rewards to HV users. Hence, I support 75% burn of HV rewards.

Protocol should generate revenue from any rewards it gives out to participants. This is what happens in HG. But until we figure out how to reward users in ROOK only during liquidations, I think we need to minimise the rewards as much as possible.

5 Likes

Would it be possible to also reduce LP emissions to be more consistent with emissions reduction thought the entire protocol than just HV

I think it’s important for us to keep the scope of KIPs reasonable. If there’s interest in adjusting levels of other emissions, they can/should be in other KIPs imo. Otherwise we muddy up things and may reject some good ideas because other ideas are attached to them.

That is not to say we shouldn’t cut LP emissions. That’s a different discussion, is all.

edit: If this was not time sensitive, it might make sense in this KIP. But this is time sensitive with the next mint looming, so having that discussion now would risk having the HV reduction in time for the next mint. The start of Act V would be the next LP mint, around Nov 14 iirc

2 Likes