Title: Set SPA Gauge Starting Budget and Inflation Rate
Author(s): Sperax Team
Reference: Arbitrum AMA Jan 30, 2023
Created: Jan 31, 2023
Labels: [#Governance, #LiquidityMining]
As the Demeter genesis campaign comes to an end, the SPA Gauge will take over the responsibility of distributing SPA to liquidity pools. How much SPA emitted to each pool is determined by a monthly gauge vote by veSPA holders. Protocols can bribe veSPA holders for votes. This proposal suggests the Sperax treasury fund one year of gauge activity, the total campaign would inflate the circulating supply of SPA 7%.
The current circulating supply of SPA is 1.593 billion tokens, which is 34.5% of the current total supply (total supply reduces with SPA burn). SPA from the SPA gauge are distributed with every block, ready to be claimed by USDs and SPA liquidity providers. The SPA budget will start at 12.435M SPA every 30 days and reduce by 20% every 90 days.
SPA inflation from the SPA gauge is distributed to liquidity pools according to the results of the monthly gauge vote. The number of SPA distributed depends on the SPA budget. The budget will start based on the current emissions rate and reduce by 20% every 90 days. During the first year, the total inflow will be 110 Million SPA. This initiative would inflate the SPA supply by 7% over the next 360 days.
A significant portion of SPA is held within the SperaxDAO treasury and must be distributed to continue maturing the protocol.
This can be done with four primary focuses
Decentralize SPA governance
Incentivize the minting and depositing of USDs into liquidity positions
reason for Arbitrum DEXs to promote USDs trading pairs
Ensure deep liquidity of SPA and USDs
The SPA gauge needs a starting budget for veSPA holders to allocate with votes and bribes. When considering budgets to begin the campaign, we will use current emissions and reduce aggressively with time.
The soon to be concluded Demeter Genesis campaign matched partner rewards according to $ value.
When the rewards for the last refill were calculated (Jan 19,2023), the price of SPA was $0.0039, nearly an all time low. This resulted in the SperaxDAO emitting the most SPA per day compared to any other time in protocol history.
Let’s look at a breakdown of the current weekly SPA emissions to Demeter pools. This is the proposed starting emissions rate for the SPA Gauge. The idea is to start with the highest emissions, reducing every 90 day epoch.
Currently, 414,500 SPA / day are distributed to the pools being added to the gauge:
Reducing Inflation In 2023
To attract early usage of the gauge and to make bribes lucrative, the starting budget will start high and after every 90 days, decrease by 20%. This rate is subject to change via SIP. This rate of decrease may need to be adjusted if the USDs supply SPA price appreciation flywheel stalls.
Ensuring SPA and USDs Liquidity
SPA bribes will be provided by the SperaxDAO to ensure veSPA holders vote for SPA/USDs and USDC/USDs. A SIP is in active discussion to redirect SPA emissions from veSPA holders to the gauge where veSPA holders can earn the SPA by voting to direct SPA emissions to the major Sperax pools.
Allocate ~110,000,000 SPA to finance the SPA gauge.
Day 1-90 budget
Day 91-180 budget
Day 181-270 budget
Day 271-360 budget
If additional USDs or Demeter farms are added to Demeter before the launch of the gauge, the emissions from this pool will be considered in the starting budget. RageTrade and VELA for example have been approved for Demeter Genesis but have yet to launch their farm. They will be automatically added to the SPA gauge.
Approve proposed budget and inflation schedule
Deny budget and inflation schedule