SIP-33 Redirect SPA from veSPA emission to bribes

Governance proposals (discussed) Approved SIPs
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Title: Redirect SPA from veSPA emission to bribes
Author(s): Sperax Team
Reference:
Created: January 28th, 2023 (Updated Jan 31, 2023)
Labels: Product-Features, Governance-Discussion

Simple Summary

In 2023, SperaxDAO must reduce SPA emissions and increase SPA burn. This can only be done by reducing unnecessary SPA emissions and increasing USDs circulating supply. Redirecting SPA paid directly to veSPA stakers to be instead used to bribe stakers is under consideration.

Abstract

Every week, 383,550 SPA are distributed across SPA stakers. This SPA is sponsored by SperaxDAO treasury and doesn’t directly incentivize USDs circulating supply growth, the revenue driver of our ecosystem.

Motivation

Eliminating SPA emissions that don’t directly increase USDs circulating supply will reduce SPA sell pressure and eliminate a source of SPA emissions without decreasing the circulating supply of USDs and revenue of the protocol.

Ensure SPA/USDs and USDC/USDs receive adequate emissions and veSPA stakers receive healthy SPA rewards from bribes.

Overview

Over the course of 2023, SperaxDAO has the opportunity to make SPA deflationary. To do this, SPA burned from the USDs revenue share + redemption fees must outweigh the new SPA entering the market. The SPA subsidy for veSPA doesn’t directly correspond to USDs circulating supply increase, so this should be eliminated to help achieve SPA deflation.

This SPA will be retained by the SperaxDAO treasury for bribing the upcoming SPA Gauge. The gauge will pay SPA to USDs trading pairs. This mechanism is designed to increase USDs circulating supply, increase DAO revenue and quantity of SPA burned.

This means that the 383,550 SPA that was once sell pressure, can be converted into bribe revenue for veSPA holders and increase USDs circulating supply.

Technical Specification

  1. Stop SPA emissions of 383,550 SPA / week paid to veSPA stakers.
  2. Bribe veSPA voters with the 383,550 SPA / week for SPA and USDs liquidity.

Voting

For:

Redirect SPA from veSPA emission, use this SPA to bribe veSPA holders.

Against:

No change.

  • For
  • Against

0 voters

1 Like
2

Very interesting! I see different benefits from this SIP, even if community decides “no”! It definitely brings some speculation about spa token, it reminds DAO that they can change direction of project, in case of yes it really reduces inflation and not only that, in case of no maybe we are at the beginning of SPERAX wars.

1 Like
3

how does that benefit veSPA stakers?

4

it doesn’t, it’s equivalent to throwing them all under the bus and driving over them several times.

If the VeSpa staking is non-viable, then propose a better solution for the people already commited to your protocol

1 Like
5

Is it possible have a taper on emissions of SPA to veSPA stakers as well as a rage quit mechanism for veSPA stakers? Taper emissions (linearly, parabolically, etc…) over 9-12 months or so while concurrently introducing the gauge incentive system to replace that inorganic yield for organic yield for veSPA stakers?

You could have a system where the emissions are tapered linearly, and if you want to rage quit, the longer you refrain from quitting, the greater your share of SPA tokens you get to retain from your original holdings…you rage quit, your forfeited share of tokens goes to the other veSPA stakers.

Buys the protocol time to develop their bribe market and create organic yield while also decreasing sell pressure of the token on the market while also letting folks who feel duped a way to exit the system without too much harm to others. Lots of ways to skin that cat, I think.

1 Like
7

An inorganic emission of SPA to the stakers is referred to in the docs as “bootstrapping”, means - a temporary measure. The route cause of relatively low staking APR is low USDs circulating supply, and this supply can’t be improved by continuing inorganic (bootstrapping) emissions. Instead, SPA emissions will be redirected to the gauge system that will switch on the bribing of veSPA stakers by all the protocols that work on Demeter. The protocols will compete for the stakers’ votes encouraging them to direct SPA rewards to farms in the way that is defined by the market mechanisms.

The benefits for SPA stakers (=veSPA holders): USDs circulating supply will grow with gauge launch and 25% of the growing yield goes to the veSPA holders. Also, veSPA holders will get bribes from all the protocols that use Demeter when the gauge is launched.

1 Like
8

Voted escrow mechanism is proven to be viable by many protocols, at the same time its realization/parameters might differ depending on each protocol, tokenomics, maket phase etc… Let’s think of optimizations together.

For the users who would like to get staking APR but can’t commit for lockup - Sperax has already implemented a liquid staking with PlutusDAO. Liquid stakers do not have lockups, but in return they sacrifice their voting rights.

1 Like
9

I understand the concerns, however the SPA will instead be used in gauges to boost SPA LP/price!

veSPA holders will start earning bribes for their votes!

I’m actively participating as a protocol on many gauges over many chains, this will be a much needed positive EV for all veSPA/SPA holders!

*fBOMB will be making a LP and we will be issuing bribes as well, for eg!

12

The retained SPA will be used to bribe important Sperax pools such as SPA/USDs and USDC/USDs.

This results in the SPA still going to veSPA holders, SPA and USDs will have liquidity.

1 Like
13

Bribes will be allocated 4:1 to the SPA/USDs pool vs the USDC/USDs pool, following the current ratio of emissions toward that pool. This will be included in the snapshot vote

14

I don’t think the community is fully understanding this proposal based on the commentary and voting thus far.

The proposal isn’t cutting the amount of SPA emissions that end up in the hands of veSPA holders, it’s making the current emissions productive for the protocol. Instead of 383,550 SPA being emitted directly to veSPA holders weekly, that SPA or a portion of that SPA will be directed toward the SPA-USDs gauge.

The veSPA holders who want to keep staying SPA will vote for the SPA-USDs gauge, they then earn the SPA bribes. This is also a benefit to the protocol because it directs some of the overall gauge emissions towards SPA-USDs (builds liquidity), and gives SPA further utility.

Let me give an example…

Let’s say the Sperax Gauges distribute 1,000,000 SPA weekly and there are 10 gauges across all different protocols including GMX-USDs, jUSDC-USDs, etc.

GMX and Jones both bribe with $10k of rewards hoping that veSPA voters will vote for their LPs and direct a large % of emissions in their direction. If these rewards aren’t shifted to bribes, no one will be voting for the SPA-USDs LP and there will be no liquidity for SPA.

Sperax needs to use this SPA as bribes instead of pointlessly paying them out as veSPA rewards as they currently do. Without this, there is no liquidity, protocols won’t want SPA emissions due to low liquidity, and there won’t be bribe revenue.

The proposed system above is the only way this works.

I also think it’s a bit confusing that the vote is “Continue sponsoring SPA emissions” and if you agree with the post you have to vote “Against” this.

Personally, I’m against the idea of continuously emitting SPA to veSPA stakers instead of paying it out as bribe revenue.

I did a quick thread on Sperax regarding this last week as well - https://twitter.com/SmallCapScience/status/1619405710743441409?s=20&t=q9R8Kk_oY9mkd8WaARawoA

3 Likes
15

Thank you for this feedback, this proposal has been updated.
The post now clarifies how the SPA will be redirected and used to bribe veSPA holders instead.

16

Emissions will reduce 20% every 90 days per the SPA gauge inflation logic. Please weigh in on the discussion here: SIPX: SPA Gauge Starting Budget and Inflation Rate

17

I support this proposal.

Making this change will improve SPA on-chain liquidity while letting veSPA claim bribe yield in SPA if desired.

For veSPA holders worried about reduced APR, this proposal doesn’t limit the ability to collect comparable APR in SPA. Instead of SperaxDAO paying users directly to stake (in the form of SPA emission to veSPA), the SPA is instead delivered as a bribe. The users who vote for SPA/USDs or USDC/USDs will earn SPA as yield revenue.

18

This topic was automatically closed after 4 days. New replies are no longer allowed.

19

Two additions:

  1. The current emission breakdown is 4:1 - 4 parts SPA/USDs to 1 part USDC/USDs. This ratio will be applied to the bribe breakdown as well.

  2. plsSPA/SPA is also a Sperax primary pool and needs bribes. This pool can take 1 of the units of bribes from the SPA/USDs pool. Once the plsSPA/SPA pool is added to the gauge, the new bribe breakdown will be 3:1:1 SPA/USDs USDC/USDs plsSPA/SPA.