Summary
This TIP outlines the next step in the DAO’s strategy towards sustainable liquidity (per TIP-05, TIP-11 and TIP-18) and a more gaming centric user base.
It proposes to transition the MAGIC-ETH LP rewards from 650k tokens per month (current) to a more sustainable 200k by October 2023 through a staggered schedule. The team - in conjunction with our market maker Flowdesk - will be monitoring total liquidity (eg. DEX, CEX, fiat onramps) and will retain the ability to flex LP rewards up in a given month if required (exception basis).
Context
- Treasure has matured beyond the ‘bootstrap’ phase and into a gaming centric ecosystem
- Strategy to build out multi-channel liquidity that caters to a broad spectrum of users
- Historically crypto native centric (eg. majority of liquidity via DEX)
- Initiatives to drive protocol owned liquidity (POL) of the MAGIC-ETH SLP were successful (~70% of the LP is POL); recently ratified by the DAO to shift Balancer Crystals from MAGIC-ETH SLP to GMX’s GLP to diversify the treasury (TIP-18)
- Recently partnered with Flowdesk (TIP-17) - a professional market maker - to better manage liquidity across all major channels
- Listed with FTX, a T1 CEX as part of simplifying onboarding for users.
- Our next focus is reducing friction for onboarding the next wave of target users - gamers including non-crypto natives
- Fiat on/off ramps
- Simplified wallet creation and abstraction
- Seamless onboarding user journeys / engagement loops
- CEX (where relevant).
- As such, and in line with our broader goals for sustainable liquidity, LP rewards will be transitioned down.
Rationale
- Build out a multi-channel liquidity strategy that caters to and balances a broader spectrum of users which will be increasingly non-crypto native gamers.
- Phase down higher incentives for crypto native focused liquidity (eg. DEXs) to more sustainable strategies reflective of our gaming focus and maturity.
- High level of protocol owned liquidity of the MAGIC-ETH LP derisks illiquidity in the pool, notwithstanding we expect liquidity to diversify across other channels.
- Ability to closely monitor total liquidity across channels via professional support by Flowdesk strengthens liquidity and helps to mitigate volatility.
- Staggered reduction with latitude to flex up where reasonable allows for balancing where required.
- Execute the strategy outlined in TIP-05, TIP-11 and TIP-18.
Proposal
Reduce the MAGIC-ETH SLP rewards from 650k MAGIC per month to 200k per month by October 2023 on the below schedule:
- End Oct to Nov → 650k (current)
- End Nov to Dec → 550k
- End Dec to Feb → 500k
- End Feb to Mar → 400k
- End Mar to Jun → 300k
- End Jun to Sep → 250k
- End Sep to Dec → 200k
With Flowdesk, the DAO will monitor closely the impact that reducing LP incentives has on total liquidity across all channels (eg. including CEX and fiat onramps). Flexibility will be retained to increase the MAGIC-ETH SLP incentives within the above bands where required (eg. exception basis only).
Polling Period The polling process begins now and will end at 02:05 UTC on 7 November. If quorum is reached, a Snapshot vote will be put up shortly after.