I completely agree that liquidity incentives are necessary, I just don’t think that this should come out of the pDAO budget. Currently pDAO funds are fairly limited and we are completely relying on the team to deliver necessary future protocol changes. There is no formal engagement and no recourse if something goes wrong. Therefore I think it’s extremely important to start building up resources that can ensure the survival of the protocol without the team.
I see rETH liquidity as a fundamental part of the protocol (it is supposed to be a liquid staking token after all) just like the oDAO plays a vital role and node operators are essential. The tokenomics allocate part of the inflation directly to node operators and oDAO and completely ingore the rETH side, which in my opinion is a mistake. Inflation and allocation are part of the pDAO settings of the smart contracts, so my preference would be to address an allocation for liquidity incentives that way.
Just to put in perspective what 10-20% of pDAO on incentives would mean: It’s approximately 13.5k - 27k RPL per year or 117 - 234 ETH at the current spot price. The tetranode incentives that started in March were the equivalent of ~200 ETH/year (source) initially and then adjusted to about 1/3 of that. So I’d expect an allocation like that to maintain the status quo and not move things forward in a meaningful way.