Summary
This proposal aims to build a scalable framework for rewarding TRU incentives to new portfolios launching in the TrueFi Marketplace.
Objectives
The framework should:
- Attract managers & help launch new portfolios: get external managers excited about launching portfolios on TrueFi
- Bootstrap new portfolios: help portfolios attract the first $1M of capital, further incentivize portfolios that generate real lending activity
- Attract lenders with sustainable returns: make yields relatively predictable
- Don’t overspend TRU: set a sustainable framework with caps on TRU emissions spend, avoid paying fixed amounts of TRU to underperforming pools
Proposal
Portfolios receive TRU incentives based upon the portfolio’s total loans outstanding, or “Total Value Outstanding” (“TVO”):
| Tier (TVO level) | Base TRU / day |
|---|---|
| $0-1M | 500 |
| $1-5M | 2,000 |
| $5-10M | 4,000 |
| $10-25M | 7,500 |
| $25M+ | 12,500 |
- Why I like this:
- New portfolios approved for incentives get 500 TRU/day to start, which helps bootstrap portfolios by giving potential lenders an incentive to be the first capital in the portfolio.
- As TVO grows within a portfolio, it can earn higher tiers of TRU emissions. The tiers intend to sustain lender TRU yields of 2-4% APY at minimum, while also offering potentially higher rates to lenders who get rewarded for having capital in growing portfolios.
Proposal Details
-
How are tiers and rates determined?
- Emissions rates for portfolios are set weekly and are determined by each portfolio’s trailing 7d avg Total Value Outstanding (TVO)
-
How do lenders earn and claim TRU rewards?
- Lenders stake portfolio tokens in the TrueFi multifarm contract in order to earn farm rewards
- This means that lenders accrue rewards block-by-block and claim rewards, similar to how they interact with tfUSDC/tfUSDT/tfTUSD/tfBUSD farms today
-
Which portfolios are eligible?
- Any portfolio on the TrueFi Marketplace can participate, with governance approval via Snapshot to add the portfolio token to the multifarm contract
-
When and how long would this run?
- Program runs for 180 days, with an expected start on May 16 and end on Nov 12 2022
-
How much TRU would be spent?
- I expect TRU emissions spend of 10M to 15M TRU, or roughly 55,000 to 83,000 TRU/day if portfolios are generating ~$200-300M TVO on average during the program
- This proposal would set a max. cap of up to 20M TRU to be spent from TrueFi’s unallocated incentive supply; this max. scenario would result in emissions of ~110k TRU/day and would imply ~$400M TVO on average during the program
- For comparison, current lending pools generate ~$400M and total daily are emissions 276,500 TRU/day across tfUSDC, tfUSDT, tfTUSD, tfBUSD
-
What happens if TRU price goes up? Wouldn’t TRU yields get excessively high?
- TRU/day emission rates should decrease slightly as TRU price moves upward, such that lenders still get upside from TRU price appreciation but yields don’t get unnecessarily high. To acheive this, we propose:
- For each $0.05 increase above the $0.20 base level (price to be measured by Binance TRU/USDT 7d MA), TRU/day rates decrease by another 12.5% vs the base rate (see table below for examples)
TRU price (7d MA) vs. TRU/day emissions
| $0.20 | $0.25 | $0.30 | $0.35 | $0.40 | |
|---|---|---|---|---|---|
| $0-1M | 500 | 438 | 375 | 313 | 250 |
| $1-5M | 2,000 | 1,750 | 1,500 | 1,250 | 1,000 |
| $5-10M | 4,000 | 3,500 | 3,000 | 2,500 | 2,000 |
| $10-25M | 7,500 | 6,563 | 5,625 | 4,688 | 3,750 |
| $25M+ | 12,500 | 10,938 | 9,375 | 7,813 | 6,250 |
-
Will these TRU incentives also be L2 or other networks where TrueFi launches?
- Yes. We may have to work out some of the implementation details, but this same framework would apply for new pools launching on networks beyond Ethereum.
Temperature Check:
Should TrueFi use this framework for portfolio incentives?
- YES
- NO
0 voters
If there’s significant support for this idea, I’ll move this to a Snapshot proposal.
