Warden Finance - Base Liquidity Incentives

Warden Finance - Base Liquidity Incentives

Hi everyone,

Upon the passage of the proposal to promote Warden Finance as market rewards manager on behalf of the DAO, we wanted to share our rewards distribution plan for the upcoming year and also provide an update in regards to the first changes we have made.

We are happy to answer any question or provide further details if you need. Feel free to follow up in this thread or reach out to me directly (TG: @hboisselle, Discord: @hboisselle)

Base Rewards Distribution Plan

In order to provide better user experience, our rewards distribution model aims to be as consistent as possible through time. We will use an emission schedule with epochs of fixed duration (28 days) with a gradual increase in allocation.

Total amount: 217,500,000.00 WELL
Epochs: 13
Epoch duration: 28 days

Epoch # % per epoch Total per epoch Start timestamp Start date
1 5.000% 10,875,000.00 1691791200 Fri Aug 11 2023 22:00:00 GMT
2 5.449% 11,850,961.54 1694210400 Fri Sep 08 2023 22:00:00 GMT
3 5.897% 12,826,923.08 1696629600 Fri Oct 06 2023 22:00:00 GMT
4 6.346% 13,802,884.62 1699048800 Fri Nov 03 2023 22:00:00 GMT
5 6.795% 14,778,846.15 1701468000 Fri Dec 01 2023 22:00:00 GMT
6 7.244% 15,754,807.69 1703887200 Fri Dec 29 2023 22:00:00 GMT
7 7.692% 16,730,769.23 1706306400 Fri Jan 26 2024 22:00:00 GMT
8 8.141% 17,706,730.77 1708725600 Fri Feb 23 2024 22:00:00 GMT
9 8.590% 18,682,692.31 1711144800 Fri Mar 22 2024 22:00:00 GMT
10 9.038% 19,658,653.85 1713564000 Fri Apr 19 2024 22:00:00 GMT
11 9.487% 20,634,615.38 1715983200 Fri May 17 2024 22:00:00 GMT
12 9.936% 21,610,576.92 1718402400 Fri Jun 14 2024 22:00:00 GMT
13 10.385% 22,586,538.46 1720821600 Fri Jul 12 2024 22:00:00 GMT
Total 100.0000% 217,500,000.00

2023-09-01 Rebalancing of Base Token Liquidity Incentives

On September 1st 2023, we have rebalanced the reward rates for the ongoing epoch ending on Sept 8. (epoch #1)

Issues addressed by the update

  • ETH utilization is high (has spiked close to 100% and currently stands at 75%, at kink)
  • DAI borrow activity is non-existant even though supply is quite high
  • cbETH supply is non-existant. cbETH IRM and rewards are prohibitive and non-attractive.

Description of changes

  • Allocate supply-side rewards to cbETH market to help bootstrap liquidity. The proposed allocation has high probability to attract >$1M total cbETH supply given the aggresive yield:
    • 16% APR supply-side rewards at $1M cbETH total supply
    • 8% APR supply-side rewards at $2M cbETH total supply.
    • 4% APR supply-side rewards at $4M cbETH total supply.
  • Maintain ETH rewards high to stimulate more supply in order to decrease ETH market utilization
  • Allocate supply-side rewards to DAI market to keep liquidity levels high until borrow activity is bootstrapped

Specification

Reward distribution cbETH DAI USDbC ETH
WELL supply rewards (% of allocation) 0% → 20% 0% → 20% 55% → 25% 45% → 35%
WELL borrow rewards (% of allocation) 0% 0% 0% 0%
Reward speeds cbETH DAI USDbC ETH
WELL supply rewards speed (WELL per second) 0 → 0.90 0 → 0.90 2.47 → 1.12 2.02-> 1.57
WELL borrow rewards speed (WELL per second) 0 0 0 0

Transactions

3 Likes

love to see it, looks good to me.

2023-09-08 Rebalancing of Base Liquidity Incentives

We have reviewed the impact of the rewards allocation for epoch #1 and subsenquently applied minor updates for epoch #2.

Epoch #1 Review

  • :green_circle: cbETH market liquidity was successfully boostrapped with over $2M supply once rewards were allocated to the market on Sept 1st.
  • :green_circle: DAI total borrows increased by 700k (+660%) once supply-side rewards were added.
  • :red_circle: ETH market utilization remained high throughout the epoch, even with the relatively aggressive rewards allocation.

Epoch #2 Updates

Issues addressed by the update

  • ETH utilization is constantly high (>75%). High utilization poses risk for ETH lenders and makes it harder to fulfill liquidations.

Description of changes

  • Increase ETH rewards share to stimulate more supply in order to decrease ETH market utilization.

Specifications

Epoch # % per epoch Total per epoch Start timestamp Start date
2 5.449% 11,850,961.54 1694210400 Fri Sep 08 2023 22:00:00 GMT
Reward distribution cbETH DAI USDbC ETH
WELL supply rewards (% of allocation) 20% 20% 25% → 20% 35% → 40%
WELL borrow rewards (% of allocation) 0% 0% 0% 0%
Reward speeds cbETH DAI USDbC ETH
WELL supply rewards speed (WELL per second) 0.90 → 0.98 0.90 → 0.98 1.12 → 0.98 1.57 → 1.96
WELL borrow rewards speed (WELL per second) 0 0 0 0

Impact

We are already seeing a decrease in WETH utilization immediately after increasing WETH market rewards allocation.

References

Dune Analytics - Moonwell on Base dashboard

Transactions