New SPOOL Emissions [SIP - 1.21]

Summary :bookmark_tabs:

Reduce the total bonus emission rewards for smart vaults from 250,000 SPOOL to 50,000 SPOOL per month until another vote changes this metric again. Starting with the next upcoming emission cycle.

Proposal :mailbox:

Spool is currently emitting 250,000 SPOOL to existing smart vaults. After seeing this model being used for the past 3 months, the bonus emissions for all eligible smart vaults shall be set to 50,000 SPOOL per month by this proposal.
This decreased inflation would be one fifth of the bonus emissions compared to previous months.

Motivation :fire:

SPOOL emissions are given to Smart Vaults to incentivize creation and voting on emissions, to curate the best Smart Vaults created. Due to the current market environment, engagement in such activities is down. Emissions should scale with participants, so we are recommending reducing emissions until participation increases, after which we can migrate emissions to be revenue based, as initially intended.

Vote :ballot_box:

With “Yes” you agree with bonus emissions are set to 50k SPOOL per month, with “No” you are against this and no bonus emissions will be given out to smart vaults.

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The vote takes place here
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Timeline :clock130:

2022-12-06T23:00:00Z2022-12-10T12:00:00Z

Could we scale it based on TVR? Our peak TVR was about 65m. Was it ~250k SPOOL rewards back then too? Let’s call that 100%.

Now it’s about 17.5m TVR. That’s about 25% of the previous TVR ATH. So 25% of 250k → 62.5k.

The lower TVR goes, the lower the SPOOL incentives. The higher TVR goes, the higher SPOOL incentives (up to 250k if we reach 65m TVR again). This would incentivise people to add more TVR to SPOOL.

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Hey jtw, first of all, thanks for taking the time to review.

This is Phil, and I wanted to shed some light over the current plan for emissions, which was voted into place after LBP.

Your idea is pretty close to that:

Initially, after the first 3 months have passed, we suggest a transitory period where emissions are proposed and voted on a monthly basis by the Spool DAO.

For the true long term, a more predictable emission schedule is proposed as follows:

E = “monthly SPOOL emissions”
X = “price performance multiplier”
R = “DAO revenue”
P = “TWAP of SPOOL”

E = (X * R) / P

X is determined by the monthly change of P. If the market price of SPOOL increases, higher inflation can be justified. The exact relationship between change of P and X should be set by the DAO and gradually be revisited and changed over time as more SPOOL is emitted.

Eventually, as X tends below 1, Spool should reach a state where stakers receive E>R/P, following the article posted here: Spool: Governance Token Value Generation | by Spool | Spool | Medium

A separate vote will be held closer to the point of switching from emissions guided solely by DAO governance to formulaic emissions guided by the above formula, where we will dive into this equation, especially regarding calculation of X.

Ideally, we want to move to this after v2 releases at that is what has been decided to be good back then but has not been used yet.

What are your thoughts?

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