Well, I assume if the initial model is working well, it will be prolonged for more than 6 months (hopefully a few years), hence the need to address the lockers dilution problem from the beginning so the the initial model can be sustainable.
Just one person opinion though, if I am the only one for which this is an issue, then just ignore my comments.
No you are not the only person with that concern. The problem lies in the Ribbon protocol being far more finished compared to the emission schedule. What to do about it?
Surplus tokens canāt be burned since they have already been promised away. Accordingly the only burnable tokens belong to the community and burning those are not going to help the development of the protocol.
Because of this the direction taken is to postpone emissions with only 0.65% of total supply emissioned over the next six months. This is of course a bandaid solution that is not going to change the underlaying basic fact that the number of circulating RBN will increase 1900% towards May 2024.
Then how about accelerating the emission rate? Well that would most likely see the value of RBN drop, at least in the short term, and no existing holder wants that. But it would remove the downside risk of RBN which would be a huge plus.
So how about this then:
This will bring RBN distribution and protocol development in sync. The value of RBN will most likely see a small drop, but since the downside potential is largely removed, any Curve type mechanism or incentivized vaults is now much more likely to succeed.
Bullish on the really good conversation on this the past few days!
I hacked a diagram together of my current understanding of the proposed ribbonomics in its end state.
The text in red exists in YFI tokenomics, but not explicitly called out in the proposal here. If they arenāt being proposed for RBN I will remove them.
@chudnov, does this match what youāre thinking? Anything missing?
Edit: corrected photo to remove vault gauge RBN reward penalty
I will say that I think RBN stakers still receive a vastly outsized reward for the risk they take, given the possibility of early exit and the lack of backstopping required of them.
Listing out the benefits (+) and risks (-) of each stakeholder here under the new ribbonomics:
Vault Users
(+) Receive incentives for staking Vault Tokens from the protocol
(+) Receive rewards from bribes to enter into vaults
(-) No backstops in the case of exploit or significant vault losses
RBN Stakers
(+) Staking incentives + boosting
(+) Voting rights
(+) Rev share
(-) Early exit fees (but not locked)
Ribbon Treasury
(+) Soft locked governance tokens
(+) Vault TVL should go up for the duration of the incentivization program
(-) Risk of down only tokenomics if stakers are subsidized mostly by RBN instead of rev share
To me, the Vault Depositors should be the most highly incentivized participants in the protocol. Instead, it seems that RBN stakers are a bit too well incentivized, vs the vault depositors. I think re-adding the backstop feature or some other kind of insurance will balance this out better than simply providing higher RBN subsidies to the vault depositors.
I am not sure I see the benefit of boosted RBN emissions or RBN emissions at all. In Curve, the LP is not the customer. The LPs add liquidity so that the pools are more liquid and protocol works better for the users who want to exchange tokens. Incentivizing LPs helps the protocol function better for users. In Ribbon the LP themselves are the customer (unless you want to take the position that Ribbon exists to serve the options protocols, which I donāt think is the case). I suppose my concern is that as Ribbon pools get larger, they could perform worse as their strategies get saturated and crowded.
There is an interesting dynamic at play with who Ribbon exists to serve. The vault holders or RBN holders, and thereās kind of a tradeoff here between smaller more profitable vaults which are good for the vault holders and larger ones that are probably better for RBN holders.
My thoughts are to keep RBN emissions low (which this proposal does do).
On the idea of stablecoins vs RBN buy backs, Curve settled on stablecoins to avoid people frontrunning buybacks. It also keeps the distributions predictable. In the absence of very good reasons, Iād favor that approach.
When you mention
Take the premiums from all the vaults (ETH, WBTC, USDC) and buy back RBN from the market and distribute that to veRBN holders. On one hand this creates constant buy-pressure on RBN similar to xSUSHI. On the other hand if RBN is not doing well, the profit sharing APY will be low.
Do you mean the 10% and 2% fees collected for performance and management or actually profits from options being sold? I am confused on some of the wording in that paragraph because it seems to be about the performance and management fees but then also mixes in the option premiumsā¦
Agreed with @BlockEthusiast the options for distrubuting the rewards where as buy back/ burn RBN or conversion to stables. Why not just pay out in the token the premiums are earned in?
While I dont expect veRBN to have negative affects, I donāt think that the incentivized uv3 staking program was meant to either. Although it clearly did with the rise of one tick dao etc. The uv3 program was irreversable once it was deployed and just needed to wait it out for 3mos. Appreciate the optionality mentioned in upgrading the system
let me clarify. āTake the premiumsā = performance/management fees from each vault
