Poll: Proposal for Reducing TRU Emission Rate

[rafaelcosman]

Based on the preliminary results of this poll, it seems like there is interest from the community in reducing the rate of TRU emissions.

It’s not clear exactly how emissions should be adjusted, so I wanted to put a proposal out there and get feedback from the community.

Current emissions:

When I look at our current rate of emissions, two farms stand out as being potentially too high: the Uniswap Eth/TRU Pair (518,375 TRU/day) and the Balancer BAL/DAI/TRU Pool (377,000 per day). For both pools, the protocol may be over-paying compared with the value it is receiving. This can be seen in the very high APYs those two pools are receiving:

Is capital in those Uniswap and Balancer pools really worth 200-400% APY to the protocol? Likely not.

Thus, if there is community interest in reducing emissions, I would make the following proposal:

• Reduce Uniswap ETH/TRU Pair Emissions by 60% (this would bring it down to 207,350 TRU/day)
• Reduce Balancer BAL/DAI/TRU Pool Emissions by 70% (this would bring it down to 113,100 TRU/day)
• Decrease Uniswap TFI-LP/TUSD Pair Emissions by 5% (this would bring it down to 208,921 TRU/day)
• Leave TrueFi Lending Pool Emissions the same

Proposal Feedback

• I agree with the proposal as stated
• I think a reduction makes sense but the proposal reduces the farms too much
• I think a reduction makes sense but I think the proposal doesn’t go far enough
• I don’t agree with reducing TRU emission at all

If the community agrees with the proposal as stated, we may be able to move forward with it promptly. If adjustments are needed, we can put together a revised proposal and take a community poll on it. Note that if the community does decide to proceed with this proposal, we can implement it, see the effects, and then discuss further adjustments from there.

Thank you for your participation and for working with us to build something great. What we have today is far from perfect, but we’re getting closer every day.

[Kenny]

Hi Rafael,

I wanted to chime in here because I think you’re missing the full picture.

Right now, the company is farming its own tokens heavily. Essentially, the company has its thumbs on the scale and can farm more (and decrease APY) or farm less (increase APY). We saw an example of this today where the company decided (without warning) to farm WAY more and the APY dropped from 750% to 190% almost immediately. If the daily emission is 1.5M tokens but the company farms 99% of it and burns it all, the daily emission is tiny. Only 1% of that 1.5M tokens actually go to the farmers. Does the emission really even matter if the company can dial their farming up or down whenever they want to (without warning) and almost completely control the APY?

Since the company can arbitrarily (and without notice) change how much they farm, it leaves degen farmers out in the dust if one day, the company decides to farm more and another day, it decides to farm less. This goes against the spirit of decentralization and free markets – as well as transparency (all virtues of a good cryptocurrency).

I think the goal here should be to:

1. Stop the company from farming their own tokens (take thumbs off the scale).
2. Create an emission schedule that the company is comfortable with and let the free market forces decide the APY. If that emission schedule is too high or low, you can always amend it with governance and let the community decide what it should be. But none of that matters until you do step 1).

Creating a fair marketplace that is fully decentralized, transparent and community driven should be the goal of every good cryptocurrency. You can’t achieve this if you’re arbitrarily farming your own tokens.

Just my 2 cents.

Ken

[rafaelcosman]

Hey Kenny, if the community votes in favor of the company never farming (even though for the first 6 months the company is burning or contributing back all farmed tokens) I’m OK with that. But I believe that right now the company being able to make adjustments in response to community feedback is of great benefit to the ecosystem.

Take last night: I believe there was widespread agreement in the community that yesterday too many TRU tokens were coming onto the market and this was hurting the ecosystem (see this poll). The company could quickly respond by increasing its own farming (while actual protocol changes take longer) and I believe this is the reason last night went better than it otherwise might have.

[Jacks]

Adding onto Kenny’s comments -

First, in regards to the current proposal to reduce emissions, I think we should reduce the rewards more severely for BAL/DAI/TRU pool than the others. It has a lower risk of IL due to TRU price (2% TRU) and we should be rewarding those that LP’d in the riskier ETH/TRU pool.

I also agree that TT should reduce farming of TRU and eventually cease completely. Beyond that, I think locking up farmed TRU for a short period would alleviate some of the immediate dumping , this also gives consideration to the early investors who still have a large portion of locked TRU.

Positive sentiment for TRU = new loans being made, loans being repaid, and big-time borrowers talking about us. Since we are dealing with real counter-parties, this process isn’t instant. It’s a different timeline than most DeFi users might be use to. A weekly cadence for claiming is more fitting for the TrueFi product flow, IMO.

TRU rewards can still accrue in real-time for everyone, but we could make it so farmed TRU can only be claimed weekly? or maybe bi-weekly.

Also, since staked TRU gets locked up for duration the loan it is staked on, having a short lockup for TRU LPs seems to be fair in my eyes.

Example from Alpha Finance -

[rafaelcosman]

@Jacks something like this may make sense to move to long term, but it will require additional development work and smart contract auditing. In the interim, I think a simple reduction of emissions would make sense.

[Futurism123]

What is the timeline for decisions to be made around community polls like this? Hours/days/weeks? Would be good to understand + include timelines for future polls

[Kenny]

Thanks for your reply Rafael.

I believe this debate is largely philosophical. I’ve been in cryptocurrencies a long time. Blockchains (and thereby cryptocurrencies) in general are:

1. Trustless
2. Decentralized
3. Immutable

If you have to “trust” the company to intervene whenever “it deems” appropriate to control emission, then you’re not truly trustless or decentralized. You have to rely on the company to jump in when it feels there is too much emission. The final voting by the community didn’t even take place to decide if, when or how much the emission was to be reduced and for which pools. The company decided that on its own, by interveneing and farming more of its tokens, without a vote.

I understand that the “intentions” may have been good. But “good intentions” are subjective. What was good for some may not have been good for others. Those who were farming ETH/TRU and took on IL risk, just saw their APY plummet from 750% to 190% in minutes without a vote or a say in the decision to drop the APY in various pools.

[rafaelcosman]

Hey folks, it looks like so far there is broad support for this proposal with 61% agreeing with the proposal as stated.

Let us continue to gather votes on it until 6PM PT tonight and then move forward with implementing the proposal if a majority still agrees with the proposal as stated.

If the community does decide to implement this proposal, we can see how the markets & ecosystem reacts and can make further adjustments from there, either increasing or decreasing the farms. This is just intended to be a step in the right direction.

[Kenny]

Jack – completely agree with you on the Balancer Pool APY needing to be FAR less than the UNI ETH/TRU pool. Your reasoning also makes sense. The balancer pool poses little IL risk whereas the ETH/TRU UNI pool poses severe IL risk. The risk/reward ratio makes no sense here.

More risk (ETH/TRU Uni pool) = more rewards.
Less risk (Balancer Pool) = less rewards.

And in this case, the difference between risk profiles are extreme. There’s a 50% exposure to TRU in Uniswap but only a 2% exposure to TRU in Balancer. That’s like a government guaranteed Treasury bond paying a higher APY than an unsecured corporate junk bond.

[leecrowhurst]

I agree with this. I’m in both pools - so would be happy if balancer got less rewards if ETH/TRU Uni got more

[rafaelcosman]

This proposal has been approved by the community (62% currently in favor). Will be going into effect shortly…

[MG-TT]

Friends, see the new incentives here, chart updated as of December 3rd 2020: