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.
- Pay LP incentives in stkTRU (by default, this means rewards would be locked for at least 14 days)
- Increase the fee that stakers receive from 10% → 15% or 20%
- Consider increasing the $TRU incentives paid to stakers if the interest rate becomes unappealing
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
- In favor
- Needs edits (please comment below)