In the past week or so we’ve been actively discussing how to make sure that the project grows into the №1 community-owned money market in crypto (even beyond Ethereum). See here for context.
The community identified the strong need to expand the dev team to reach our immediate-to-long-term goals.
We have also witnessed first-hand that we need to continue incentivizing the money market before Percent distinguishes itself with the new features we plant to build.
Liquidity of the PCT token is another of these three major concerns we want to address.
We have about 2.8m PCT left for incentives that we need to distribute in a way that helps resolve the outlined issues.
Multiple scenarios have been proposed and analyzed across this forum and Discord to reach optimal results.
Below are the 4 options that i’d like to propose to put up for the vote. It makes sense to gather additional input from the community to finalize these options.
Consider the following options for the Phase III distribution to support: developer team expansion, money market growth, PCT liquidity. Here are the calculations behind the proposals, kindly provided by @Bluecrypt.
We use 100% of the remaining PCT to incentivize targeted money markets.
Currentl APYs are low due to the low price of PCT, yet if we initially target a 6month distribution we can still get at 5%-1,23% incentive for 10-40m TVL, respectively. We can retain the flexibility for the multisig to choose which markets to incentivize and also allow to adapt the distribution schedule to the appreciation in the token price, so that we can target certain PCT-incentivized APYs, rather than have a fixed amount of tokens allocated within a fixed amout of time.
2m PCT gets allocated to the money market, while 847k is put into a 75/25 Balancer pool to support token liquidity and allow Treasury to earn additional BAL rewards.
We put up a smart Balancer pool that starts as a 75/25 PCT/ETH pool and allows to change token weights and trading fees as token appreciates and liquidity rises - in order to maximize the BAL rewards for the treasury. The PCT supply in the pool is capped by the 847k PCT, so that only the Treasury tokens are added, but we source the ETH liquidity from the community providing additional incentives via the protocol - e.g. “better” collateral ratios for supplied stablecoins, or 1.5 boost in rewards (unpreferable).
This will allow the project to have a slightly better budget for hires, integrations and future growth, which is crucial at this stage.
Option 1 plus the following: We incentivize early PCT/WETH 50/50 liquidity providers by allowing them to unstake BPTs to get BAL rewards and offering incentives in the Money Markets.
We want to maintain the liquidity of PCT and allow early LPs make up for their impermanent losses as the token appreciates. We incentivize them to keep supporting the pool by allowing them to keep their BAL rewards (as opposed to having to stake their BPTs in order to earn PCT in Phases I and II) and providing them incentives in the money markets - e.g. “better” collateral ratios for supplied stablecoins, or 1.5 boost in rewards (unpreferable).
We initially do nothing and monitor the PCT/WETH pool liquidity after the incentives dry up
We put 100% of remaining PCT into a 75/25 smart pool and incentivise the money markets with BPTs from the pool over the period of 9 months.
This way the Treasury will be able to maximize the return on PCT before giving it all out while still benefiting from money markets growing.