Summary
The Algofi Core Developer team will allocate the 1.25M ALGOs from the Algorand Defi boost according to the proposed allocation over the existing allocation used for BANK emissions.
| Contract | existing allocation | proposed allocation | estimated APR* |
|---|---|---|---|
| USDC L&E | 26.75% | 26.75% | 10.8% |
| USDT L&E | 2.00% | 2.00% | 5% |
| ALGO Borrow | 0.50% | 2% | 0.52% |
| USDC Borrow | 0.50% | 0.5% | 0.1% |
| goBTC Borrow | 0.25% | 0% | 0% |
| goETH Borrow | 0.25% | 0% | 0% |
| USDT Borrow | 0.25% | 0.25% | 0.87% |
| STBL2 USDC Market Supply | 32.50% | 32.50% | 6.2% |
| STBL2 ALGO Staking | 8.00% | 9.50% | 45.9% |
| STBL2 goBTC Staking | 2.00% | 4.00% | 31.3% |
| STBL2 goETH Staking | 2.00% | 2.50% | 34.7% |
| USDC ALGO Staking | 7.00% | 7.00% | 36% |
| ALGO Vault | 10.00% | 5.00% | 0.08% |
| STBL2 BANK Staking | 4.00% | 4.00% | 81.9% |
| ALGO BANK Staking | 4.00% | 4.00% | 73.9% |
Proposal
Use the 1.25M ALGOs according to the proposed allocation over the existing allocation used for BANK emissions.
Motivation
The focus of the incentives should be shifted a bit more towards DEX liquidity, especially STBL2 LPs, to make sure people can effectively swap on the Algofi DEX and make use of the established STBL2 router. Additionally, farming rewards need to stay competitive with other DEXs who will use their ALGOs exclusively for farming purposes. Furthermore, rewards for borrowing ALGO and the use of ALGO lending pools should be raised a bit to ensure people who want to liquify their vALGO by borrowing ALGO can do this at a lower borrow APR (to learn about lending pools click here). To achieve these goals the allocation was slightly changed based on the following ideas/observations:
- The use of the vault is incentivized enough through Defi governance rewards so the vault allocation can be reduced. Most of the vault supply comes from VCs which results in negligible additional estimated APR even by using a way higher allocation than 10%. Those rewards can be used more effectively for other purposes and make a difference there.
- goETH/goBTC borrow APR was always pretty low and BANK incentives result in ~0.7% APR already which seems to be enough. The additional ALGO rewards for borrowing those assets would result in almost 0% borrow APR effectively which might lead to rehypothecation.
- ALGO-STBL2 is the most important LP on Algofi besides USDC-STBL2 especially after the introduction of the STBL2 router (more info on the router here ). People who have ALGO are able to use the STBL2 liquidity present on the DEX without the need to actually buy STBL2. And because of the design of lending pools incentivizing this LP might lead to more supply of ALGO in the lending protocol and again less ALGO borrow APR.
- ALGO farming rewards for BANK pairs are already estimated to be quite high, so they dont need additional percentages. The BANK rewards for these pools are on a similar APR level so currently people would get >120% APR paid in BANK + ALGO combined for farming those LPs.
- Bring ALGO rewards for goBTC and goETH farms to the same level (goBTC-STBL2 farm has higher TVL so it needs more ALGO rewards).
Temperature Check: here
Proposal Staging: here
Terms and Conditions of Targeted DeFi Rewards approved by Algorand governors: here
* Estimates are based on liquidity levels on March 29th (before the period ended), 1A = 0.23$ and the pay out cycle being April 21st till 30th June (70 days). Only ALGO rewards from the Algorand Defi boost are considered. Note that these are different from the ones posted in the Temperature check because 90 days were used in the APR calculation there. No guarantee for correctly calculated estimates.