Create a sustainable incentive program in order to attract the best portfolio managers (PMs) to TrueFi.
Context
In working closely with the Adapt3r team on the formation of their first T-bill vault, we have gained greater insight into the upfront and recurring costs associated with managers launching new funds on TrueFi (or any credit protocol, for that matter).
TrueFi today is not spending any TRU on token emissions. All TRU emissions to existing lenders, team, and early backers have already been distributed, and 248mm TRU (17% of total supply) remains available for future emissions and other uses.
We believe this puts TrueFi in a good position and presents an opportunity to use sustainable TRU incentives to attract economic activity on the protocol. In fact, we expect that the dollar value of any TRU emitted through this program will be less than the positive value generated in fees to the protocol.
Details
In brief, the proposed program would work as follows:
Portfolio Managers (PMs) can earn up to 2,500,000 TRU tokens in 250k TRU increments by reaching TVL-based milestones between 50mm and 500mm in TVL.
When a PM reaches the first milestone at TVL = $50mm USD, they will receive 250,000 TRU.
For each $50mm TVL beyond the first milestone, the PM is rewarded an additional 250,000 TRU, up to a maximum of $500mm TVL.
Example: a PM that suprasses $200mm total active TVL in TrueFi would receive 1mm TRU in rewards.
TVL is based upon the PM’s activity across all TrueFi vaults (not per vault).
Example: a PM who brings $200mm TVL across 4 separate $50mm vaults is rewarded the same as a PM who brings $200mm TVL in a single vault.
PMs have full discretion in how they use TRU rewards.
PMs can choose to use TRU to offset expenses associated with fund formation, pass the tokens to vault lenders, etc.
This proposal would set aside up to 25mm TRU to be spent towards manager rewards.
TrueFi governance could choose to modify the terms of this program in the future. Our recommendation is in the case where TRU price increases, terms be changed only for new managers. For example, if Manager_A locks in this program when the price of TRU is $0.04 and TRU then goes to $0.08, TrueFi would not revisit the amount of tokens Manager_A receives per milestone.
However, TrueFi might choose to revisit the # of tokens for new managers who later apply to the program.
Temp check
Do you support creating an incentive program worth up to 25mm TRU to attract new PMs to TrueFi?
Is there a risk PMs sign up, fill the vaults with their own cash, receive TRU rewards, empty the vaults and sell the TRU? Can you profit from this?
I suggest the increments are time-locked. TVL should be above the threshold for at least 12 months and PM would receive 1/365 of the accrued TRU every day.
I think the reward system can potentially be spread further across more ideas.
Reputation and Ranking System?
Establish a reputation system that ranks portfolio managers based on their track record and success in managing loans🤔
Leaderboard and Competitions?
Implement a competitive environment where portfolio managers can compete for rewards based on their loan performance. This encourages them to strive for better results. Maybe higher rewards for those to achieve 100m, 200m, 300m first🤔
Long-Term Incentives?
Introduce vesting schedules for earned tokens, ensuring that portfolio managers remain committed to the platform’s success over the long term. Maybe staking reward pool for PM who hold their TRU rewards long term. A minimum locked term. If they unstake early there will be a min TRU fee paid back to the protocol🤔
Risk Mitigation Incentives & Penalties?
Offer bonuses or rewards for effectively managing risk and maintaining a low default rate in their portfolios. But also penalise rewards for loan defaults🤔
Truefi Collaboration Opportunities?
Encourage portfolio managers to share insights, strategies, and collaborate with other professionals within the protocol. This can enhance the overall quality of portfolio management within the ecosystem🤔
Considering the aforementioned points, it’s likely that the current proposal was presented without a significant requirement for additional time to develop further components?
I think that is fine / kind of the purpose of the program. We would love it if 100 PMs wanted to use this program. That said, it is implied that this program will only be used on 10 PMs (25mm TRU / up to 2.5mm TRU per manager)
Right now the protocol is pretty open in terms of onboarding new managers. Their address needs to get whitelisted via governance, but there is not formal vetting outside of that.
Yes, that is a risk. I realistically assign a fairly low likelihood to a fund going through the process of getting onboarded (publicly) and then doing this. To some degree, if someone could find 500mm to put into a vault to get the incentives, more power to them
I think some kind of smaller “time lock” could work. I’d go as short as 1-month though.
Your concept may have been intended to be a simple system without the need for further development to get started, but my remarks above may require further development, which could delay implementation. Which might not be great if anything needs to get going quickly.
