Abstract
There is broad agreement on the need for liquidity incentives that @knoshua outlines in the Liquidity Incentives forum post. We would like to suggest an outline for an Incentives Management Committee (hereafter IMC) outlining guiding principles and governance. Please see RPIP-10 for governance details that apply to all Management Committees.
Motivation
The Rocket Pool protocol has had various phases of growth in its history. These phases have been characterized by an imbalance towards an abundance of Node Operators or an abundance of rETH demand. Finding a harmonious balance was the goal of the initial commission system, however, upon abandoning that the protocol lost its only variable way to influence rETH demand.
The protocol is billed as a Liquid Staking Solution and thus the protocol has an obligation to hold certain values. These principles will help build confidence that Rocket Pool aims to truly be liquid.
In addition to the initial goals captured in RPIP-11, this update captures a secondary need for RPL liquidity, especially for security.
Specification
Guiding Principles
- The IMC’s chief mission SHALL be to support low slippage exchange between ETH and rETH on major platforms where this trading occurs.
- The IMC SHALL expand access to rETH across major DeFi protocols.
- The IMC SHALL manage funds allocated to and/or rewarded to the pDAO for liquidity purposes. in accordance with any conditions those funds were received upon.
- The IMC SHOULD minimize costs and prioritize long-term capital-efficient strategies to build liquidity.
- The IMC SHOULD sustainably build rETH exchange volume.
- The IMC SHOULD support the oDAO rETH:ETH ratio as the focal point in designing liquidity
incentives.
- The IMC SHOULD NOT, however, add incentives that would serve only to boost demand with marginal benefit from added liquidity.
- As a lesser goal, the IMC SHOULD support RPL/ETH TWAP oracle safety
- As a lesser goal, the IMC MAY act to improve accessibility of RPL; efforts for this goal SHOULD NOT exceed 10% of resources
- The IMC SHOULD be sensitive to market actions and adjust emissions accordingly to reasonably maintain the aforementioned principles in adverse markets.
Governance
In addition to the “Management Committee Governance” section of RPIP-10, the IMC will follow the following:
- Initial allowlisted member addresses SHALL be nominated through an informal method on the forum and/or Discord.
- The initial nominated members SHALL be accepted by a separate snapshot vote from the one for this RPIP.
- The IMC Treasurer SHALL publish a budget detailing planned incentive spending one week before the
start of the next rewards period.
- If the pDAO starts a vote between the release of the budget and the start of the next rewards period which limits the IMC, the IMC SHALL NOT spend funds (to the extent possible) in the new rewards period until the vote has been resolved.
- A vote SHALL be considered to “limit the IMC” if it: prevents or decreases disbursement of funds to the IMC, takes back existing funds from the IMC, or modifies the IMC membership.
Rationale
The main goal is to establish a starting liquidity budget and provide for a quick initial state where funds can be allocated and spent.
The community believes that it’s important to start spending on liquidity incentives as quickly as possible. The liquidity bucket amounts to 67.5k RPL, or 1,087 ETH at market prices, annually. For a theoretical run of 1 reward period (28 days), this gives ~83.6 ETH or ~140,200 USD to work with. In light of parallel discussions about tokenomics changes, this amount serves as a conservative starting point.
Membership
Current and historic membership is recorded in RPIP-36.
Copyright
Copyright and related rights waived via CC0.
Citation
Valdorff, "RPIP-20: Updated Incentive Management Committee Charter," Rocket Pool Improvement Proposals, no. 20, April 2023. [Online serial]. Available: https://rpips.rocketpool.net/RPIPs/RPIP-20.