Update Emissions Schedule

jai

Summary:
Update emissions schedule to bootstrap a treasury and create a long-term liquidity mining program to ensure that the protocol can stay competitive over the long-term.

Background:
Currently, Rari’s issuance stops at the end of the sixty days of liquidity mining. There were 10,000,000 $RGT distributed over this period. At the time of writing this, more than 5% (500,000) have been burned. While the viability of burning is questioned later in another proposal, I see value in having long-term issuance that delivers value to token holders over time.

Abstract:
My proposed emissions plan lasts five years and proposes the creation of 10,000,000 new $RGT (+100%). The new tokens will go to two distinct places: the Community Treasury and Liquidity Incentives. 70% of the new supply will be used to bootstrap the Rari Community Treasury (managed by the DAO of token holders) whereas the next 30% will be used for liquidity initiatives.

Distribution
70% - Community Treasury

20% - Rari Capital
50% - Remaining

30% - Liquidity Initiatives

7.5% - First Year Liquidity Program

The Community Treasury will be built with the mission: to further the Rari Protocol on all fronts. The pursuit of these goals will be facilitated by the DAO, or rather, token holders.

This proposal also aims to allocate 2,000,000 $RGT of the Treasury to the Rari Capital team to continue as a developer of the protocol. This 28.57% of the Treasury will be delivered to the Rari Capital team on a quarterly basis for the next five years following the same rate of emissions (33% in the first year, 26% in the second year, etc). Since it is being delivered on a quarterly basis, governance can stop the spend at any time if they deem that the Rari Capital team is not justifying their value. The Rari Capital team is expected to continue their work on various fronts: creating new strategies, pushing governance forward and accruing value towards the ecosystem. The rest of the assets in the Treasury is at governance’s discretion for deployment.

The Liquidity Initiatives will all be built with the mission of: to increase liquidity of the Rari Token and further incentivize deposits within the platform. This piece of the proposal is independent from straightup liquidity mining incentives which aims to increase liquidity using burnt tokens.

I propose for 750,000 $RGT to be taken from within the Liquidity Initiatives to be deployed in the First Year Liquidity Program. This directs incentives for: basic depositors and stakers. Depositors will be eligible to earn 33.33% of the First Year Liquidity Program rewards. These will reward depositors for entering into any of the pools (based on fiat amount proportional to TVL), similar to the previous Liquidity Mining program. The staking rewards will be 66.66% of the 750,000. These staking rewards are incentives for locking RGT and UNI-LP: RGT-ETH. If no relevant staking proposals pass, the portion delegated to staking will be merged into the basic deposit rewards, then representing 100% of the initiative. This program will last twelve months but may be renewed at governance’s discretion.

We begin with 33% of the new supply being distributed across the first year but the rate of increase slows down after the first year. By the final year (Year 5) of the plan, only 750,000 new $RGT are made. We feel that there is value in decreasing emissions over the five years. It is important to understand how this affects the token distribution as it stays true to our effort of having a community-owned protocol. The original founding team is getting diluted along with everyone else while the Rari Capital team will begin maintaining the rest of the protocol. A large advantage of the new voting system ensures that early participants don’t hoard all of the tokens and thus the voting power. Again, we’d like this to be a community-owned protocol.

You can view all of the charts (for inflation and also how the distributions will be affected) and data outlined here:
https://docs.google.com/spreadsheets/d/1tDHhf2oCUCJKUNrPJgFerEGePIJgVlfvjmtmOlhDf7I/edit#gid=0

Motivation:
In crypto, emissions or rather inflation can be thought of as taboo, maybe because the central banks did such a horrible job with it. However, it can provide net value to the ecosystem as I believe it will here. It will be able to incentivize new users, promote protocol growth, and lay the foundation for the Rari Ecosystem, as managed by the DAO.

The long-term emissions schedule will be the start of the Rari Ecosystem by pioneering the Rari Community Treasury. This treasury will be deployed in ways to provide exponential returns to RGT holders through smart investments and by bootstrapping future supplemental protocols.

yinxiang

It is not recommended to issue additional tokens. Many instances have proved that whenever the official issuance of additional tokens, it will directly affect the valuation of the existing $rgt, which will cause losses to the previous $rgt investors, and may also be caused by the precedent for additional issuance. Follow-up damage to reputation, as you said, "In crypto, emissions or rather inflation can be thought of as taboo,"

Jes

Inflation will only benefit for the team. Since we have solid products, the exist products and future products can bring us outside attention, cash inflow and etc. Actually the RGT should stay the same forever as the governance token, like YFI.

moreover, what suspicious is, the team decided to distribute 50% protocol gain to a unknown charity ((which was without community vote) Now the team want to create new token and 70% for treasury fund. If the team is truly for the project, they should use all the protocol gains for the project rather then propose new token generation

So if you are a RGT holder you should vote against this for protecting your own benefits.

don

Jes The charity funds are held in an Endaoment wallet and have not been touched since. I thought it was a cool idea if not a bit too soon, but they're definitely not stealing that money (that'd be pretty ironic). The treasury fund is owned by token holders and as they said in the proposal, the amount diverted to the team can be changed or stopped if token holders decide to do so.

yinxiang

As for follow-up incentives, it is recommended to increase liquidity
https://forums.rari.capital/d/18-liquidity-provider-incentives-as-mining-ends
Depositor incentives: the strategic benefits after depositing funds
Developer incentives: https://forums.rari.capital/d/21-new-fee-structure
Earnings of $rgt holders: pledge $rgt to obtain part of the income from the treasury in the future https://forums.rari.capital/d/21-new-fee-structure.

yinxiang

Regarding the sales pressure that is about to be fully released, we can adopt a model in which the fund depositor locks a certain amount of $rgt to get a discount on the strategy income cost. At the same time, it cooperates with other #defi projects to effectively use REPT, RYPT, and RSPT tokens, so that depositors can get greater and higher capital utilization.

yinxiang

don Why did the team consider issuing a new $rgt before mining ends? Why not reserve future development funds at the beginning of the project? When it is about to end, if you propose to issue a new $rgt, would anyone who bought it at a price of $10 million during this period consider it to be diluted? I think these issues should be considered at the beginning of the project, so I feel deceived and even suspect that they thought so at the beginning. This may be a conspiracy theory, I just hope it can reasonably explain why such a big change has happened suddenly.

don

I think perhaps a less is more approach should be taken here. It's better for existing token holders if liquidity rewards are too low and we have to scale them up than if they're too high and holders get diluted.

I can't imagine anyone objecting to 3-5% annual inflation, but when it starts getting up to 20-30% I understand the concern.

yinxiang

don I am also a $MLN holder. I know that when I buy $MLN, it will inflate by 30% every year, but I think the team is honest because the team wrote in the white paper in advance and informed the possible uses of these tokens in the future. Of course, other policies will be changed later through dao, but I think there should be no policy that can be worse than 30% inflation. Facts have proved that they are now also developing in a better and better direction through community suggestions.

yinxiang

I don’t hate inflation, but knowing beforehand is completely different from knowing afterwards. This is why the cryptocurrency circle is tired of changing the total amount afterwards. In the recent example of the announcement of $cover, you can see the community The reaction at the time.

don

yinxiang I see where you're coming from and I agree with you that generally its less about the inflation and more about knowing what it will be in the future. I only joined the community a week or so ago so I can't answer on why this was not more planned initially. However, I think it is clear that some level of inflation will need to occur to sustain the project.

So: I think the goal should be to devise a plan that is A) long-lasting, B) sustainable, and C) fair to existing holders. I do think that they've tried to do that with these proposals but I also feel the numbers given may be too high and would, as you pointed out, push away existing community members. Hence the less is more comment above.

Of course, this is the point of decentralized governance. At the end of the day, its what we the community decide that will go into effect 🙂

don

don If you follow me on twitter @poseidefi, maybe we can try to throw together some edits that make the proposals more palatable? At the end of the day, most of the things proposed would be really valuable (smart treasury to more responsibly handle earnings, staking to create a new supply sink, dev incentives for strategies, liquidity mining rewards, and incubating/incentivizing projects that will build on Rari). The key is to strike the right balance between trying to achieve those goals and ensuring the welfare of stakeholders, because both drive each other.

yinxiang

don Basically agree. I just made a comment on the issue and put forward my own views. I also know that this is just a discussion, but I must clarify my point of view. The additional issue may harm the vital interests of existing holders and should be treated with caution. . And the amount of additional issuance is too large, I think it is completely unnecessary. If a project can only benefit from the issuance of additional tokens, it indicates that there is a problem with the model of the project. We should think of a healthier and lasting plan that is interesting to all parties.

tob

Totally agree that this emissions schedule doesn't make sense.

I am okay with issuing new RGT to compensate liquidity providers for an ETH / Stable - RGT pairing, but I don't see any reason distributing 70% to the treasury.

Rari already has a pretty high management / performance fee, I don't think we need to dilute the tokens people have accrued further if it's not working to stabilize the price.

TacMan

I vote no.

Osprey

I am a big fan of the intention here by Jai, but not how many different decisions are being lumped into one.

Specifically, taking 20% of the supply we are inflating and instantly providing it to the Rari team should be decided through a second RIP. If the whole idea of the DAO controlled treasury funds is to allowed the holders to make decisions for how it should be spent, then that initial 20% going to the Rari team, while well deserved, should be handled through a second proposal.

I will be voting no with the hopes that these decisions are separated into, at least, two separate RIPs.

Make sure we shift the conversation to the proper thread here.

nottruner

Having some kind of breakdown or reporting on the Rari capital 20% would be helpful. A straight discretionary payment with no visibility into project plans or goals leave a lot of room for problems down the line.

Transparency as much as is possible beats opaqueness and sets a low bar for future proposals that will request funds from the treasury.