IMC Period 40 Report; Period 41 Budget

Governance
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Hi all,

Summary below:

Report 40

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IMC continued spending budget cut (by calculating values with artificial 0.005 RPL/ETH ratio)

  • ~11k of inflows, ~8.7k of outflows
  • Budgeting summary:
    • RPL balance change: Period 39 saw a +20% change from ~13.72k RPL to ~16.38k RPL
    • The IMC continued saving the allocations previously budgeted for cakepie (1,100 RPL per fortnight), and Hop (100 RPL per period), which contributed to an additional 2,300 per period not being spent). The IMC made a decision on how to spend the surplus moving forward, see the Period 41 Budget for more info…
    • Balancer continues to send USDC as part of the Balancer Alliance fee share. This is used to grow the v3 position for “LP 80/20 BAL/ETH”.

Budget 41

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  • The IMC decided to spend the “extra” unallocated inflows through Paladin to boost liquidity. The plan moving forward will be to roughly spend the entire inflows again each period. The RPL balance change for the period is shown at the bottom at ~ +1.56%
  • The IMC currently has a surplus that will now be treated as reserves, and if liquidity becomes insufficient we will begin deploying the reserves. Conversely if liquidity is more than sufficient, we will begin contributing to reserves again.
  • The general framework for “insufficient / sufficient / more than sufficient” will be determining the amount of ETH to cause a 1% price impact / total rETH TVL. To summarize, we will define:
    • “Sufficient” as between 0.5%-1.5%TVL for 1% slippage: keep outflow ~= inflow
    • “More than sufficient” was above 1.5% TVL for 1% slippage: put into reserves
    • “Insufficient” will be below 0.5% TVL for 1% slippage: use reserves to rent more liquidity
  • The IMC has decided to contribute to an incentives campaign for RockSolid :partying_face: , this will be 200 RPL per fortnight, which is expected to begin on the second fortnight of Period 41, and continue at 200 RPL per fortnight for 3 months (1200 RPL total)

Data - 1% Price Impact

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  • rETH has been trading at a discount, which temporarily went away as rETH was trading close to NAV (this seemed to be due to a large node operator exiting which allowed for arbitrages to close the peg). This helped boost liquidity since the IMC targets a range around NAV rather than market price.
  • The IMC is increasing spending which should ideally help improve the average 1% price impact that has taken a dip in recent months

Resources

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IMC Period 41 Report; Period 42 Budget
IMC 42 Report; Period 43 Budget;