[VIP-33] Bribe vlAURA holders through Hidden Hand to vote on 80VCX/20WETH

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Summary

In the near-term, begin incentivizing liquidity in the 80VCX/20WETH pool by bribing vlAURA holders to vote on our gauge through their Hidden Hand market. This program should eventually be replaced by a more sustainable approach involving treasury allocations.

Value proposition

This initiative is designed to boost liquidity in the 80VCX/20WETH Balancer liquidity pool (Balancer). This pool plays an integral role in VaultCraft’s veTokenomics:

1. VCX Liquidity


First, it is the primary liquidity source for VCX. Deep liquidity is important for price discovery and slippage minimalization.

In just under 3 weeks, this pool has accumulated ~$240K in TVL, >$455K in volume, and >$4.5K in fees.

2. veVCX lock token


Per the veTokenomics, the 80VCX/20WETH LP token is used as the lock token for veVCX. veVCX is then used to vote on oVCX gauge emissions, create governance proposals, and boost Smart Vault APYs.

To date, up to 37% of 80VCX/20WETH LP tokens have been locked for veVCX, with a current average lock duration of 2.09 years.

3. Boost yield using VaultCraft products

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The LP tokens locked for veVCX also determine your Smart Vault boosted reward APY (up to 5x). This directly affects not only the amount of oVCX directed to your pool, but the proportion of pool rewards you are eligible to receive.

Additionally, veVCX holders maintain long-upside exposure to VCX, claim bribes for voting on incentivized gauges (Paladin and Hidden Hand coming soon), and earn Balancer pool trading fees.

To date, $16K+ in oVCX rewards have been emitted resulting in an 4-digit reward APY for some vaults.

Check out the oVCX boost calculator here: [Unofficial] oVCX Boost Calculator - Google Sheets

Implementation


This program would rely on the 75M treasury VCX dedicated to ‘Liquidity’. Budgeting 30M of this for market makers, 45M VCX remains for liquidity provisioning, bribing, or other related activities.

An initial budget of 10M VCX could be split evenly across 100 periods (~4 years) of 100K VCX each. At current MP, this is $1750 in bribes per period (2 weeks for Aura).

Aura currently holds 48.99% of veBAL, with their Hidden Hand market offering $0.0171 Incentive $/vote and $0.0274 Emission $/vote

($1750 bribe) / ($0.0171 Incentive$/vote) = ~102,339.18 votes
(~102,339.18 votes) * ($0.0274 Emission $/vote) = $2,804.09 incentives

Meaning it is 60.23% better value to bribe through Aura, than to liquidity mine the pool with direct incentives.

Additional consideration

This is possible due to the recent listing of the 80VCX/20WETH gauge on both Balancer and Aura. Although bribing vlAURA holders is cheaper than direct liquidity mining, many other protocols choose to balance their gauge incentivization strategy between bribes and accumulating voting power themselves through veBAL, auraBAL, AURA, or some combination.

In the future, this program should be phased out for a more sustainable incentivization strategy involving treasury positions instead of solely-VCX bribes. See here for example:

https://twitter.com/karpatkey/status/1712759441144037863

5 Likes

yes, im in for this. Creating liquidity is always important for the token and ecosystem!

1 Like

Am okay with the idea

Let move it… I’m in for it. it is important for the ecosystem

1 Like

I also believe that liquidity is an important aspect for any token .