Data Statistics and Optimization of SIP-34: SPA Instrument Implementation Plan $SPA Incentive Emission Suggestions

Product feedback
1

Based on data analysis of 16 available flow pools on Demeter farm, interesting situations were found:

  1. There is a serious imbalance between the TVL scale and $SPA reward ratio between pools, with low TVL and high reward: USD/USDC, plsSPA/SPA, SPA/USD, fxUSD/USD, ARB/USD

The TVL of PLS/USD and VELA/USD accounts for 91.15%, holding USD accounts for 90%, and $SPA rewards account for 56.87%. The TVL of USD/GMX, BFR/USD, ROUL/USD, WETH/USD, USD/gDAI, SDL/USD, L2DAO/USD, PDB/USD accounts for 8.85%, holding USD accounts for 10%, and $SPA rewards account for 43.13%. For example, BFR/USD and ROUL/USD have a total TVL55762.50, with $SPA rewards accounting for 41.12%;

  1. Stable currency trading has a serious imbalance in rewards, such as USD/USDC and fxUSD/USD, which are currently ranked first and fourth in terms of TVL scale on Demeter farm. The total amount of USD accounted for 42.22% and 5.91% respectively, accounting for 1.94% of all $SPA emission rewards. Based on the unit price of $SPA of $0.0043, the annualized value of TVL is approximately 2.47% and 0.29%, respectively. Only the annualized value of USD is approximately 4.51% and 1.05%, respectively, with almost zero incentive effect.

  2. The value of TVL is not significant, and the key indicator depends on the scale of USD. USDs/USDC

SPA/USD, PLS/USD, ARB/USD, fxUSD/USD, USD/GMX, USD scale accounts for 91.29%, and $SPA rewards account for 32.7%. The proportion of USD/TVL in many pools is imbalanced, almost all of which are third-party tokens competing for $SPA token rewards. PDB/USD, PLS/USD, USD/gDAI, WETH/USD, USD/GMX, USD/USDC, SPA/USD, ARB/USD, VELA/USD, SDL/USD, fxUSD/USD, BFR/USD, L2DAO/USD, and ROUL/USD have USD/TVL values of 100.50%, 94.83%, 87.61%, and 83.03%, respectively. 63.67%, 54.71%, 52.00%, 48.07%, 37.78%, 28.23%, 27.91%, 23.78%, 16.19% 15.46%。 How high is the moisture content of visible TVL;

  1. Based on the $SPA reward APR of USD, the current pool yield analysis is calculated at the unit price of $SPA of 0.0043 US dollars as follows:

ROUL/USDs：4349.05%

BFR/USDs：1535.63%

VELA/USDs：381.50%

PLS/USDs：151.02%

SPA/USDs：72.67%

L2DAO/USDs：56.34%

WETH/USDs：43.63%

USDs/GMX：23.20%

SDL/USDs：7.13%

USDs/USDC：4.51%

fxUSD/USDs：1.05%

ARB/USDs：0.67%

USDs/gDAI：0.66%

PDB/USDs：0.00%

Suggestion 1: Considering the limitations of TVL and multiple reward combinations, it is recommended to cancel the APR indicator based on TVL, while considering the stabilizing effect of SPA and SPA derivative locking on the price system. It is recommended to introduce a calculation of $SPA reward APR based on USD and SPA value, that is, calculate the value and return rate based on USD and SPA in the pool.

Suggestion 1: Considering the limitations of TVL and multiple reward combinations, it is recommended to cancel the APR indicator based on TVL, while considering the stabilizing effect of SPA and SPA derivative locking on the price system. It is recommended to introduce a calculation of $SPA reward APR based on USD and SPA value, that is, calculate the value and return rate based on USD and SPA in the pool.

Suggestion 2: Develop a standard plan to optimize the existing reward allocation plan and avoid serious imbalances, such as using fixed interest rates for stable currency trading, and a linear decrease in the USD/TVL ratio imbalance reward.

2

A large number of cheap $SPA tokens have flowed out of the market through ultra-high yield pools, similar to free money, continuing to clear and sell!

2 Likes
3

I get some sense what you are proposing but it is difficult to understand completely. If you are more comfortable in any other language please feel free to use that. We would be able to translate it at our end.

What you are proposing is we should reward the pools which are leading to a growth in USDs TVL and where SPA is locked the most. I totally agree with you, but this should be theoretically be achievable through the current market forces. If veSPA holders allocate a lot of the rewards towards pools which are not leading to a growth in USDs TVL, then the value of SPA tokens will go down. veSPA holders should then take action and restructure their allocation to make sure the rewards go to the correct pools. We should certainly do a proposal to allocate some bribes towards the ARB/USDs pools. Love the overall direction of the proposal, but to implement what you are suggesting needs a lot of detailed discussion.

4

On a high level your observation is fair: USDs TVL is relatively small and the team needs to work further to improve USDs market cap and in parallel to motivate users to own/lock SPA. This is and will be the priority.

However, when we go to the analysis of the causes and consequences - we need to address details. Appreciate if you can comment - taking into account the following:

as per imbalance of the pools:
All the farms are powered by Uniswap V3. With UniV3’s concentrated liquidity mechanism it is absolutely natural that the pools where one token is stable (USDs) and the other is volatile are never balanced 1:1 in a sustainable way.

as per imbalance of the rewards
Rewards are emitted by the gauge based on veSPA holders voting.
And veSPA holders decided to direct less relatively less SPA rewards per 1USDs TVL in big/mature farms and more SPA rewards per 1USDs TVL to young/growing farms. This decision of veSPA holders IMO reflects usual way how business works: young/new projects are invested, and big/established projects require less investments.

as per suggestions:
Suggestion 1: As SPA rewards directed to each pool are decided by veSPA holders bribed by other protocols - how can we (Sperax) infuence veSPA holders to vote differently? Shall we bribe more to compensate influence of other protocols? But this will increase SPA emissions even more - that was just the point you’ve challenged.

Suggestion 2. This suggestion effectively means Demeter shouldn’t use Uniswap V3. One token - USDs - is stable and second is volatile. When volatile token appreciates the share of USDs in the V3 pool will grow and when the volatile token depreciates - the share of USDs in the pool will fall.

Good to have more comments for an in-depth discussion.

5

@woshizhazha I believe we can do two things here.

  1. Sperax protocol should create a new separate mechanism to distribute veSPA instead of just SPA to the two major pools, SPA/USDs and USDs/USDC

  2. Sperax protocol should bring in a proposal to reduce emissions overall. And wait till there is enough product market fit to increase emissions.

  3. Sperax protocol should launch Demeter pools with other major DEXs like Camelot, Saddle, TraderJoe as soon as possible.