TL-DR: Move incentives for the Curve palStkAave pool to a Balancer 80/20 pool;
In order to bolster the integrations of palStkAave we introduced an Aave / palStkAave pool that we have been incentivising for the past few months. While it has proved to be an efficient entry / exit opportunity for users, the $ spent to attract TVL and the chosen AMM have posed some problems.
During the past quarter we have considerably upped our game in liquidity management for PAL.
This has led us not just in optimizing the yield from our POL but also making us Quest’s biggest user, which not only allows us to confirm its efficiency in broad daylight but also keep tweaking it to create the 10x product we’re looking to unleash on DeFi.
The palStkAave core pool is suffering from a strange parameters problem where it is currently impossible to arbitrage the pool without incurring loss. Furthermore, we have been inefficiently spending the LM budget for this pool, as most LPs have shown very little stickiness.
To top it off, the price tracker comes from a Sushi pool we have deployed and that is way too deep to enable leveraged opportunities for the token.
We propose to move the incentives to a Balance 80/20 pool. This will have the following positive effects:
Create a deeper tracked pool that could potentially be then used to enable palStkAave as a lendable asset;
An 80/20 pool palStkAave pool would, unlike the current 50/50 pool, push users to have more of their LP in the palStkAave side, which implies more potential deposits;
Additionally, Balancer v2 allows user to auto-compound yield to their LP token and use the part the protocol takes as fees to be re-used in a bribes, which would create BAL incentives on top of the ones we could create with PAL bribe (more efficient than simple LM);
Not more than what was currently deployed in the LM program (PGP-12).
What do you mean when you say LPs have shown very little stickiness? It seems to me that the deposits have been stable since March, so LPs must be satisfied with the current 40 to 50% APR.
or do you just mean that the amount of incentives spent by Paladin for the stkAAVE TVL is too high?
Why would it be different with a 80/20 pool on Balancer? Are you thinking we’d attract a higher number of LP, or that we could just reduce the incentives which would be offset by the additional yield from balancer bribes if we get recognised as a Core pool?
when you say “not more than what is currently deployed on the LM program”… are you thinking about reallocating the entire PAL incentives from the Curve to Balancer pool at the same rate per month, or would you reduce it to distribute over a longer period?
it’s not the first time you mention small bugs or problems (which is fine, no protocol is perfect from the get go), but it would be nice to get a small writeup that’s understandable by non-techies that have been LPs in that pool for several weeks now. I’m not sure from this post if the issue was negatively impacting users swapping on the pool, the LPs or both.
I’m not sure i understand the sushi pool price tracker reference. Is there anything i can read up to understand how this works?
I am assuming/hoping that the veBoost market for Balancer is coming soon (or that the pool would be added to Aura as an alternative)? It would be a shame not to max boost the APR on the newly created pool.
it’s already been mentioned multiple times, we are all curious to find out more details about minting GHO… I am assuming there is no impact, whether we have all the palStkAAVE in a Curve or Balancer pool.
Damn, apologies, it seems this topic wen under my radar.
I meant to say LPs are not attracted very much by the incentives. IMO 50% is extremely high, and it has been consistent in not getting diluted out. At some point we tried to double the APR, had no new deposits, and when we went back to normal amounts we lost half the TVL…
I’m not saying it’s going to be different in this sense, I’m saying it’s saying it’s going to be more logical all around.
This pool will be its own oracle (unlike Curve)
It will enable to showcase Quest and drive more volume there
The pool will push for muhc more stkAave deposits in Paladin
Users will farm BAL instead of PAL, which is better for us as we have noted it was more logical for us to disitrubte tokens to voters than farmers.
Same rates, but through Quest.
Can you ping me on the public Discord ? I’ll give a more thorough answer there. Here is not the most appropriate place for this.
It’s a normal Sushiswap pool, but Curve doesn’t give access to its internal pricing mechanism, so the price displayed by Curve is actually the one from Coingecko (which doesn’t display Curve price, so you need another LP)…