[Ideas] Change Lender Incentive Payouts

Ideas
1

Authors: @ryan.rodenbaugh @tylerw @hal @RDharia @MG-TT

Background:

As the community has been discussing tokenomics in a few posts now (1, 2, 3) and for the past two months we have made bi-weekly adjustments of lender incentives.

One thing that has not been formally discussed is either (1) vesting on TRU incentives for lenders or (2) paying out lender incentives in stkTRU instead of TRU.

We can discuss both, but for the purpose of this proposal, I will talk about paying in stkTRU.

Proposal:

  1. Pay LP incentives in stkTRU (by default, this means rewards would be locked for at least 14 days)
  2. Increase the fee that stakers receive from 10% ā†’ 15% or 20%
  3. Consider increasing the $TRU incentives paid to stakers if the interest rate becomes unappealing

Points for Discussion:

From the perspective of a lender:

  • Con: lower liquidity, as stkTRU comes with 14d lockup
  • Con: higher risk, exposure to 10% liquidations from default slashing on stkTRU
  • Con: higher friction, more steps to capturing upside of lending
  • Pro: passive new earning upside, in the form of TRU farm & protocol fees (10% now and we can vote this higher)
  • Pro: growing default protection, as lenders will now contribute to stkTRU default assurance pool as they loan
  • Pro: lender involvement in borrower selection, as lenders now get governance tokens used directly in approval of new loans/borrowers

From protocol/TRU holder perspective:

  • Pro: locked liquidity + deeper incentive alignment between lenders & stakers grows the quality of loans and borrowers and designs for long-term investing in TrueFi.
  • Pro: Less mercenary farming where lenders are just there to farm and dump
  • Con: Could lead to short-term TVL decrease if most lenders are not in favor of the change
Temperature Check
  • In favor
  • Against
  • Needs edits (please comment below)

0 voters

2

Iā€™m in favor of paying rewards in stkTRU.

Iā€™m not sure if increasing the interest earned to stakers makes sense. I think this kind of change is a separate issue from using stkTRU to pay stakers. If we increase % fees paid to TRU stakers, I would support at maximum 12.5%. In order to be competitive as a lending product, we need to make sure lenders are getting the best rates for zero-collateral loans as possible. Through decreasing the base rate lenders receive, we are creating a worse product.

Instead of increasing the amount of interest given to TRU stakers, we should implement more creative ways to increase the utility and value of the TRU token.

3 Likes
3

Agreed with Hal that these seem like distinct questions to consider separately.

4

I fully support paying rewards in stkTRU rather than TRU to lenders.

I support having the ability to direct a percentage of the interest to TRU stakers as we do today, but we should also be able to direct a portion to the treasury. I suggest hard-coded ranges:

  • TRU Stakers: 0% - 20%
  • Treasury: 0% - 20%
  • Max across both 0% - 20%

I agree with Hal that we should ensure the lending product is competitive. For the intermediate term, I propose keeping the 90/10 split and directing all of the current 10% from TRU stakers to build up the treasury funds and remove slashing from TRU stakers.

Summary of proposed interest pct payout updates for the intermediate term:

  • Lenders: 90%
  • TRU Stakers: 0%
  • Treasury: 10% (Until sufficient levels of funding for SAFU)
2 Likes
5

These should be three different proposals to vote on:

  • Pay LP Incentives in stkTRU
  • Pct of Interest payout: 1) Add treasury as a payout target, 2) Hardcode ranges
  • Grow funds in Treasury, remove slashing from TRU stakers