Proposal to Modify TREAD & LFI Monthly Rewards
TREAD & LFI Storm of Value Rewards are quickly becoming the best thing to happen for both assets and the community supporting them. With unprecedented growth and new levels of adoption on the horizon, new factors need to be taken into account to protect the interests of the project and the community. This proposal is designed to outline potential problems we need to address as a community and put to a fair and equal poll as far as modifications are concerned. While I do believe changes are necessary to alter the monthly rewards structure and premeditatively protect our ecosystem, I'd leave any alterations up to the communities input. As should be the case with any potential changes in a community driven project.
Current Rewards:
The current rewards structure is based in rewarding liquidity providers to TREAD & LFI along with double incentives for providing liquidity between the two. TREAD & LFI are rewarded hourly, daily, and monthly depending on pooled pairs. Current pairs and requirements can be found at https://donttreadtoken.com/index.php/stellar-rewards
Key Takeaways from the Current System:
- Hourly rewards in 1 TREAD daily, distributed hourly in 6 different asset pairs based on percentage of pool held (currently at 6 TREAD daily + 2 more asset pairs to be released with the probability of more to be announced after the end of February 2024).
- Hourly rewards in 1 LFI daily, distributed hourly in 6 different asset pairs based on percentage of pool held (currently at 6 LFI daily + 2 more asset pairs to be released with the probability of more to be announced after the end of February 2024).
- Daily rewards in TREAD/LFI pool at 1 TREAD and 1 LFI distributed daily based on percentage of pool held.
- Monthly rewards in TREAD & LFI begin once a minimum of 100 TREAD or 100 LFI are held in any rewards pools. Snapshots are taken daily, and monthly rewards are calculated on average of minimums pooled for the month.
- Once monthly minimums are reached in either asset, interest in TREAD & LFI starts accumulating (102 TREAD on average for the total month = 1.02 TREAD. 125 LFI on average for the month = 1.25 LFI).
- Monthly rewards in the TREAD/LFI pool pay the same rate based on 100 minimums of both assets. Doubling incentives for that specific pool ( 115 TREAD/115 LFI on average in pool for the total month would reward 1.15 TREAD & 1.15 LFI).
- Hourly rewards are calculated every hour for distribution. Daily rewards snapshots are taken at random during any 24 hour period and distributed at random during every 24 hour period. Monthly rewards are calculated with snapshot averages for the month and distributed on the 1st of every month.
Potential Issues with Current Rewards Structure:
Firstly, I’d like to state I don't believe our current community at Liberty Crypto Syndicate would ever create issues within the current rewards structure. We have the most responsible community of knowledgeable investors in the Stellar Lumens ecosystem. I'm very proud of that fact. We host a community of folks who see the long term goals of building out TREAD & LFI, along with the entirety of connected communities and the broader Stellar ecosystem. The community of LCS understands we’re creating true store of value structures and repairing overall network liquidity while providing steep incentives to supporters.
However, new adoption and ever climbing rate need to be taken into account. The system as is could create potential issues for TREAD & LFI ecosystems if not corrected early.
Potential Issues:
- Monthly minimums are too high. We've experienced unprecedented growth and are reaching new ATH’s on a constant basis. When the minimums were established at the beginning of 2024, TREAD & LFI were a fraction of their current worth. Keeping the minimums as is, creates a situation where monthly rewards are unobtainable for the average investor. Therefore only heavy whales will be able to utilize the monthly rewards to their benefit. While the goal is rewarding the heaviest liquidity providers for long term holding, growth needs factored in, and new adoption needs considered. Investors will be more incentivized to join the TREAD & LFI rewards system if minimums are more easily obtainable.
- To lower the monthly minimums, the monthly APY has to be lowered as a trade off. This wouldn't affect the hourly or daily rewards structures. It would only apply to monthly rewards. Current monthly rewards once minimums are reached are 12.68% for combined regular rewards pools (i.e. TREAD/XLM, LFI/BTC…etc) and 26.8% APY for the TREAD/LFI pool.
Potential Issues Summary:
These two issues need ironed out, or we could face potential problems down the line. With monthly minimums at an unobtainable level for average investors, it stands to stunt growth as less people are inclined to join monthly levels of rewards. With the high levels of monthly APY on top of the hourly and daily rewards already being rewarded, it could cause damage to the rate once more adoption comes into play. Though our community is comprised of some of the best liquidity builders in Stellar, it would be foolhardy to assume all who enter the rewards structure in the future will be involved for the sake of building the network and utilizing TREAD & LFI as the interest building structure it was intended for. We will gain heavy handed holders who's sole purpose is to liquidate rewards. This is a common denominator with every rewards structure in blockchain. And these issues should be taken into account long term.
Solution: Monthly Minimums & APY Proposal for Modifications:
I’d like to propose changes to the current monthly rewards structure to be enacted at the start of next month. Changes would be as follows:
Tiers would be put in place for monthly minimums starting at 10 TREAD and/or 10 LFI from the current 100 minimum.
The tier structure for monthly rewards would be as follows:
- 100 minimum = .5% = 6.17% APY
- 80 minimum = .4% = 4.91% APY
- 60 minimum = .3% = 3.66% APY
- 40 minimum = .2% = 2.43% APY
- 20 minimum = .1% = 1.21% APY
- 10 minimum = .05 = .605% APY
The TREAD/LFI pool would be 1% and 12.68% APY factoring in the .5% doubled for that specific pool.
Tier brackets would reward the % of the tier minimum you qualify for. APY percentages do not compound as you gain higher minimums, but you'll achieve the higher APY tier. After the 100 minimum is reached, you can continue to gain at .5% uncapped exponentially just like the current system.
No changes would be made to hourly or daily fixed rate rewards based on percentage of pool held.
Proposal Summary:
Through lowering both the minimums and APY to a more sustainable level long term, we can attract more adoption while protecting the rate for our community. More adoption equals more holders building into the TREAD & LFI Storm of Value ecosystem. Lowered APY means better rate management to protect holders as new adoption takes place.
I'll be posting a poll to vote on this proposal in Liberty Crypto Syndicate at https://t.me/libertycryptosyndicate
The poll will be pinned directly after this proposal is pinned and published. Please only vote 1 time per person. The poll will run to the end of the month and the results will be enacted on March 1st 2024.
Poll Link: https://t.me/libertycryptosyndicate/182783
This marks the first true proposal put before our LCS community and I'm excited to see the outcome! The best way to cultivate fair and community driven decisions is community input. Without our community believing in our projects, we wouldn’t be the powerhouse we’re becoming at LCS. I can't wait to see what the rest of 2024 has in store. Thank you for considering this proposal!
**Update: Proposal passed on 02/29/2024 at 23:99 UTC with 86% FOR and 14% AGAINST**