Background
A treasury for ESD has recently been established with 2.5% of all supply expansion rewards going to the treasury. During expansions when coupons are cleared, the split is 77.5%/20%/2.5% (DAO/LP/Treasury)
The treasury is meant to cover costs for all aspects of protocol development & growth ranging from operations, research, development, design, ecosystem grants, liquidity mining incentives, etc.
The current rate of treasury growth is sufficient to cover continued operations & development, but not meaningful liquidity mining rewards to encourage adoption of ESD In other protocols.
Proposal
Change the supply expansion distribution to:
- When No Coupons: 75% / 15% / 10% (DAO/LP/Treasury)
- When Coupons Active: 80% / 15% / 5% (Coupons/LP/Treasury)
Allocate 75% of treasury to liquidity mining reward programs. Many of which can be performed in conjunction with strategic partners that are currently helping with future or current integrations (i.e. Curve, Sushiswap, Bancor, Saffron, CREAM, etc.)
Rationale
For expansions where coupons are not active, 2.5% & 5% rewards are taken from DAO and LP respectively. Currently, Uniswap LPs are being overpaid and the marginal utility of having more liquidity is flattening. As an example, DAI in Uniswap has two times more liquidity than ESD, but DAI has six times the market cap. Even with the inefficient XY=K style AMM, trades can be easily be executed in size with only minor slippage.
These rewards can be used to seed liquidity among other trading pairs and in other DeFi venues.
Currently, the amount of effort required to clear coupons is quite extensive. Therefore, it is recommended for the treasury to get slightly less rewards when coupons are still active.