SCCP-22: Reduce Rewards On Curve

Simple Summary

Decrease SNX incentives to the Curve pool by around 30% to 48,000 SNX per week

Abstract

64,000 SNX per week from inflation rewards are given to the sUSD pool on curve which incentivizes liquidity provision to the sUSD/ DAI-USDC-USDT pool.

Motivation

In previous SCCPs the sETH incentives has been decreased gradually to 8k. Despite this the respective pegs on the sUSD and sETH pools have remained stable. Therefore, lowering the rewards on the sUSD pools would provide information on the impact on the current state of the peg and on the willingness of participants to add liquidity to the pool for lower incremental rewards. Other reasons include:

1. It is important to not consistently overpay when incentivizing the pools, as it is effectively a transfer of value from snx minters to pool contributors. The incentive should be calibrated depending on the state of the system to pay the least amount of incentive required that achieves the desired effect of peg stability.
2. The 64k currently paid was chosen partially based on previous experience on how much is paid on Uniswap. This number is bound to be adjusted as per the state of the system (peg, supply of synths,...). However, given that the assumed price risk is somewhat lower for stable coins against ETH, it is only normal to pay lower incentives on Curve. This is partially offset thought by the protocol risk of stable coins (versus the less risky protocol risk of ETH).

Copyright

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