TL-DR: Incentivizing the growth of our delegation address by helping the protocol defend the peg of its wrapped asset
Context:
Quest is now compatible with vlAURA and vlCVX votes. These assets have delegation enabled, which allows us to create auto-voters, optimizing votes and offering a floor number of votes to potential clients.
Rationale:
Over the past few weeks we have been focusing on the distribution of Quests in order to pull off the best product of the market. One of the most evident channels for votes for both Votium and Hidden Hands seems to come from their internal delegation address. At the time of writing this Votium controls 50% of the vlCVX through its own, and Hidden Hands controls 18% of the vlAURA.
We believe simply releasing a delegation address will not be sufficient to have a competitive edge. For efficiency purposes, we would like to focus on vlAURA delegation. As such we have prepared the following:
Our delegation address will be the only one covering all bribe marketplaces, not just our own.
We will contribute in defending the auraBAL peg for next two months (8 rounds) by creating a Quest for the B-80BAL-20WETH which will help make it the most competitive pool of the market, by pledging the equivalent of 5% of the total delegated votes to aura.palvote.eth
Means:
100,000 PAL
With 23% of all veBAL, Aura controls ~33,000 BAL emissions a week, this means that we would subsidize up to 10,000$ of incentives a week (if we had all the vlAURA votes under management).
The delegation address on vlCVX and vlAURA is really cool
Not sure I understood everything, so I have a few questions:
You mean the auraBAL/BPT 80-20 BALWETH right ?
Do we know how much is used to vote on the auraBal/BPT ?
If I understand properly, the PAL incentives would cost us 4375$/week at the current price, to be able to earn up to 10K$ if we have all the vlAura delegated ?
If yes, we’d not be profitable below 44% of the vlAURA delegated ?
I’m relieved to see that i am not the only one that is struggling to grasp everything on the first read!
I assume this statement is for both Balancer and Curve?
So when you say all marketplaces, does that means: Quest, Hidden Hand, Votium and bribe.crv.finance?
Are there any other bribe marketplaces?
I just want to confirm, that means that votes delegated to Paladin would be allocated to HH or Votium rather than Quest if the APR on those markets is better?
As dydymoon asked, can you confirm if it is the B-80BAL-20WETH/auraBAL that would be incentivized?
is there a minimum level of votes we’d expect to reach for this approach to make sense? 5% of the votes pledged might not be much overall?
Am i understanding correctly that the 100k PAL would be used as the incentives for the Quest over 8 rounds? So that’s 12,500 PAL per week?
Have we estimated how much vote we’d want to attract, and will that be achievable with approx 4,000$ a week?
I understand the 23% veBal controlled by Aura and how you came up with the 33,0000 BAL (given the current 145,0000 weekly emissions), but i don’t get how the 12,500 PAL a week in incentives would result in 10,000$. Can you explain or break down the calculation?
Aside from that, on a higher level, the creation of a delegation address and focusing on vlAURA seems seems like an exciting new development. I’m for it.
Aplogies, it seems my proposal was awfully written, despite the multiple internal re-reads.
The delegation address is live for both vlAURA & vlCVX and will fetch bribes from Quest, Hidden Hands and Votium Convex, it cannot fetch incentives that aren’t targeted at vl holders.
The resquest for incentives is indeed to defend the auraBAL peg ( B-80BAL-20WETH/auraBAL), but it is for a maximum of 12,500 PAL / week. The idea is we probably won’t need more than this to accomplish our plan.
I hadn’t thought of it this way, but it is true that it basically drives incentives in our pool which drives revenue to our DAO if we don’t have more Quests live. One vlAURA drives 0.17$ of incentives and costs ~0.08$, which we’d subsidize 5% of (0.004$). The expected return per PAL spent is 4200% if we own 100% of the pool
No, not at all, we would not allocate 5% of the votes, but an equivalent in Quests, paid un PAL.
Why would direct all of the votes towards our pool? The goal of this delegation address is to maximize yield for delegators and provide more votes to live Quests, not dump all the votes on our own whether or not the cap of incentivized votes is reached. So no, all of these maths are wrong
One vlAURA yielded 0.088$ (now down to 0.066$/vote), since we incentivize 5% the equivalent of 5% of what was delegated to us: 0.088*0.05=0.004.
Now, if we’re the only quest live, that means we get 1 vlAURA for 0.004$ + 0.063$= 0.067$. Because we get 0.098$ / vlAURA, we’re still in the green by 47%
To summarize the idea of the proposal:
We’re asking up to 100,000 PAL to incentivize delegation of vlAURA to our address for the next 4 rounds.
These 100,000 PAL will be used to create Quests on the auraBAL/B-80BAL-20WETH every Aura gauge round, with an equivalent of up to 5% of vlAURA delegated to us in order to defend the auraBAL peg.
Unless other questions or suggestions are posted, we will begin the vote on the subject tomorrow.
Thank for bringing this up. I guess we were never able to find a way to properly design a system to attract delegates with PAL incentives.
To be frank, the delegation address is outperforming by close to 2x any other competitor, and we’re slowly scaling our algorithm to have a sensible advantage over everyone. I think simply out-delivering is a better strategy than unsustainable rewards.
Oh great then, where can we compare the weight of each delegation address ?
Yes it’s much better if incentives are not needed.
What do you think is the reason why we outperform competitors ?
