[Proposal] Incentives for Alameda Research portfolio

Summary

Recently the TrueFi forum signaled support for allocating TRU incentives to portfolios in the TrueFi Lending Marketplace. Incentives have not yet been turned on for any pools in the marketplace.

Since that post, three new portfolios have launched in the marketplace: the B2B Fintech Portfolio (blog post), the Perpetual Protocol Portfolio (blog post), and the Alameda Research portfolio (Bloomberg article).

While these “soft launches” have been limited to a handful of investors, the Alameda Research portfolio is ready to open access to external lenders.

In two parts, this post proposes:

  1. Creating guidelines for how new portfolios get incentives, and
  2. Allocating 40k TRU/day incentives (~4M total TRU) to the Alameda Research Portfolio

Proposal

I. Creating guidelines for how new portfolios get incentives

When managers wish to create new portfolios on the TrueFi Lending Marketplace, managers would follow this process:

  1. Become an approved manager: new managers must be added to the portfolio creator whitelist via governance vote. The managers themselves can post the vote directly to Snapshot or reach out to a community member to post on their behalf.
  2. Propose TRU incentives for portfolio: all managers are welcome to request TRU incentives for their portfolio. Managers should create a forum post outlining their request and rationale and then get community approval via a Snapshot vote.
  3. Manager creates portfolio: manager can at this point create portfolio to be listed on https://app.truefi.io/
  4. Lenders receive weekly incentives: lenders can claim incentives on a weekly basis from a liquidity mining distributor, similar to programs on Balancer and Perpetual Protocol.

II. Allocating incentives for B2B Fintech and Alameda Research portfolios

As TrueTrading prepares to open up the Alameda Research portfolio publicly to KYC’d lenders, incentives of 40k TRU/day are proposed, starting next Friday Mar 4 and running through the portfolio’s close on June 18 2022.

Rationale

  • Goal: attract $50M+ in lender capital to the Alameda portfolio
  • By attracting capital to the Alameda Research Portfolio, TrueFi can attract institutions to set up their own single borrower portfolios on TrueFi and use TrueFi as one of their main sources of financing
  • Illustrative projections (see below)

Voting

Snapshot proposal: Snapshot

Snapshot vote is live
https://snapshot.org/#/truefigov.eth/proposal/0xf145f2a530475763306384f453dc035b48c1d8e3e133c215ec61ab33b56391d7

TL;DR - This incentive plan will require airdrops due to the design of the Portfolio. There will be several airdrops to lenders over the length of the portfolio.

Why an Airdrop is Necessary

An airdrop is required for this portfolio because the pool design restricts token transfers. This means that a smart contract for staking LP tokens and farming TRU is not possible. Therefore, a series of airdrops is necessary in order to give incentives to liquidity providers in this new pool.

Airdrop Frequency

There are 2 viable options for airdropping TRU to Alameda Portfolio LPs:

  1. One airdrop at the end of the portfolio (120 days)
  2. Multiple airdrops over the portfolio term

Multiple airdrops are a good option to reward LPs in a similar way to existing liquidity mining (LPs get rewards per-block). However, each airdrop will require some amount of developer maintenance and gas costs. The ideal airdrop frequency is high enough to reward LPs in real time, but infrequent enough to incur high costs.

Over 120 days:

Frequency Number of Airdrops
Daily 120
Weekly 18
Bi-weekly* 9
Monthly 4
Bi-monthly* 2

*bi-weekly and bi-monthly meaning once every 2 weeks

This proposal supports bi-weekly (once every 2 weeks) airdrops for LPs.

Calculating Pro-rata Share

In order to prevent a user from depositing liquidity just before an airdrop, pro-rata airdrop amounts need to be calculated based on the amount and time liquidity is added.

Airdrop Tooling

  1. Merkle Distributor
  1. Batch transfer
  • Transfer tokens in batches using a script
  • Don’t need additional transaction for users to claim
2 Likes

We never formally resolved the question of incentives “airdrop” frequency @hal raised above.

I propose that for Alameda and other upcoming portfolios, TRU incentives are claimable at the portfolio’s close date. This means for the Alameda portfolio, TRU rewards will be claimable on or after Jun 18, 2022.

I believe this is the right approach because we want this mechanism to scale across multiple portfolios. Building a mechanism for periodic / ongoing claimable rewards would be more challenging and may not be worthwhile, given that [Proposal] Cauris Portfolio Manager - Incentives Request proposes an incentives distribution at the portfolio’s close date.

Do others have strong opinions on this? Please share. I’d like to resolve this issue so that we can make our UI clear for existing and new lenders.

1 Like

That sounds fine for the time being.

I think a better long-term approach is to distribute rewards on the fly. This would allow for distributions to be automated while also providing lenders with a great amount of flexibility in claiming rewards.

I can write the smart contract code for this as I’ve spent a significant amount of time on Compound’s rewards distributor.

2 Likes

I’ve built a dashboard in Dune for Alameda SBP lenders to track their accrued TRU rewards for this portfolio:

Lender shares are calculated on a 1x per minute snapshot. These TRU rewards will be claimable at the end of the portfolio (on or after Jun 18, 2022). Let me know your feedback, everyone.

1 Like