There is broad agreement on the need for liquidity incentives that @knoshua outlines in the Liquidity Incentives forum post. I would like to suggest an outline for an Incentives Committee based on the Lido DAO. I further propose that this committee be given access to the LM incentive size discussed in the rETH Liquidity Incentive thread on Discord. I will outline guiding principles, an accountability scheme, and some action items.
The Rocket Pool protocol has had various phases of growth in its history. These phases have been characterized by an imbalance towards an abundance of Node Operators or an abundance of rETH demand. Finding a harmonious balance was the goal of the initial commission system, however, upon abandoning that the protocol lost its only variable way to influence rETH demand.
The protocol is billed as a Liquid Staking Solution and thus the protocol has an obligation to hold certain values. These principles will help build confidence that Rocket Pool aims to truly be liquid.
- The committee’s chief mission is to support low slippage exchange between ETH <> rETH on major platforms where this trading occurs.
- The committee will aim to minimize costs and prioritize long-term capital-efficient strategies to build liquidity.
- The committee will aim to expand access to rETH across major DeFi protocols to build a resilient price-feed oracle.
- The committee will aim to sustainably build rETH exchange volume.
- The committee will support the oDAO rETH:ETH ratio as the focal point in designing liquidity incentives except in such cases where the committee would be required to add incentives that would serve only to boost demand with marginal benefit from added liquidity.
- This committee will manage funds allocated to and/or rewarded to the pDAO for liquidity purposes in accordance with any conditions those funds were received upon and with the approval of the broader pDAO with equal accountability reporting.
- The committee will be sensitive to market actions and adjust emissions accordingly to reasonably maintain the aforementioned principles in adverse markets.
- The committee will respect the will of the broader DAO and respond to feedback from monthly reviews in earnest.
Initial whitelisted addresses will be approved through rough consensus from the core team and community. Thereafter, committee members will structure transactions and execute them from a multisig. All related addresses are to be included in the monthly report. New members are to be added over time to increase the security profile of distribution. A future debate may arise about compensation for these multisig signers for gas expenses.
The committee will be tasked with electing a treasurer to handle communications and bookkeeping. Duties will include but not be limited to publishing a monthly report on locations, amount, justification, and efficacy of incentives for each platform distributed. This report will also request a tentative budget for the following month in $RPL to be allocated as they see fit within that budget and with community feedback taken into consideration during each reporting period.
A reporting period will be 3 days of community feedback followed by a vote only if feedback is contentious or changes outcomes.
I propose an initial committee member review within the first 6 months pending proposal approval to discuss change management and/or areas for improvement. Prior to this review, existing members may vote to remove a member with a supermajority consensus. This period of time should also serve to establish a formal onboarding and offboarding procedure.
The treasurer should serve a variable term as set by the committee whilst respecting any wishes the broader pDAO may have.
In order to facilitate broader discussions around tokenomics, I propose based on the pDAO Budget Definition thread and further discussion in the rETH Liquidity Incentives Discord thread the following budget:
Incentives (e.g., LP bonuses) - 50%
Grants and Bounties - 30%
Reserve Treasury - 20%
The major alteration from the original budget discussion is the removal of the Marketing allocation from the pDAO budget. This was suggested as the core team has recently hired a Marketing team member from their funds and the Bankless marketing blitz is likely sufficient coverage for the time being.
This amounts to 67.5k RPL, or 1,113.75 ETH at market prices, annually. For a theoretical run of approximately 1 month, this gives the committee ~93E or $154,000 USD to work with. In light of parallel discussions about tokenomics changes, this amount serves as a conservative starting point.