Author
Treasury League
Background
- $IDLE token
- Governance Mining program - Jun 2022
- $IDLE incentives distribution update 1 - Aug 2022
- $IDLE incentives distribution update 2 - Jan 2023
Summary
A proposal to discuss the next steps of the $IDLE incentivization, aka the Liquidity Mining program, on Best Yield strategies ending in April 2023.
Rationale
And later with IIP-31 until April 2023
We will then analyze how the program performed at this new distribution rate and list some incentivization proposals for the future.
To be complete, we need to remember that the DAO treasury manages these two funds for incentivization purposes:
- Ecosystem fund with 1.1m IDLE
- Long-term rewards fund with 2.6m IDLE
Performance analysis
For an analysis focused on the governance participation among IDLE token holders, we refer to the one done in August 2022. We do not expect to see significant drifts from the trend seen given the extended bear market conditions affecting the crypto ecosystem.
It can still be interesting to see how the financial performances of the LM program evolved since the last analysis.
Financial analysis
To understand the financial performance of the incentives program, it can be useful to understand the dollar cost, aka the acquisition cost, of the fees generated by the Idle strategies for every $IDLE incentive distributed.
How many fees were generated by the Idle strategies vs the $ amount of IDLE distributed?
We have already analysed two different distribution periods:
- Distribution 1 from 01/01/2021 until 08/06/2022 with 3,205 IDLE/day
- Distribution 2 from 08/07/2022 until 12/31/2022 with 1,990 IDLE/day
Today we will add a third part
- Distribution 3 from 01/30/2023 until 13/03/2023 with 500 IDLE/day
Distribution 3
The Best Yield strategy received around 21k $IDLE incentives, i.e. 47% of the funds, (for an average dollar value of $9k with IDLE price equal to $0.42) and generated around $22k in fees for the DAO.
- For every $1 spent in $IDLE incentives, the BY strategies generated $2.49 in fees
These results seem to suggest that the incentivization program for Best Yield is strategic and helped retain the TVL. We should anyway weigh this analysis taking into consideration its short length. Due to the Euler exploit happened on March 13th, multiple strategies were paused. Hence the the analyis lasts only ~40 days.
Proposals
We will list three ideas as next steps for the Liquidity Mining program:
1. Continue the Liquidity Mining program for 3 months
The Best Yield strategy has been incentivised through the Liquidity Mining program with different distribution rates (3205 → 2215 → 1000 → 500 IDLE/Day). One option is to extend for another 3 months the program at the same distribution rate.
- 500 IDLE/day for the next 3 months
The IDLE needed to fund this extension can be taken from the Ecosystem fund.
Extending the incentivization length of the LM program can be strategically smart to retain the current liquidity (mainly sitting in the DAI, USDC and USDT BY markets). Even more, now that the Best Yield and the Yield Tranches strategies can work synergetically.
This emission rate would not affect the rewards return for the BY strategy (+0.2% at current prices).
2. Continue the Liquidity Mining program for 3 months and update the distribution rate
Another option is to extend for another 3 months program but adjust its distribution rate.
- From 500 to 250 IDLE/day for the next 3 months
The IDLE needed to fund this extension can be taken from the Ecosystem fund.
This emission rate would affect minimally the rewards return for the BY strategy (+0.1% at current prices).
3. Pause the Liquidity Mining distribution
One last option is to pause the Liquidity Mining program.
- From 500 to 0 IDLE/day
From a DAO treasury perspective, this option would stop emission of IDLE and reduce significantly the selling pressure on the DAO governance token. The emission rate would affect the rewards return for the BY strategy and stakers.
It is important to remember that the Liquidity Mining program started in November 2020 with different rate of distributions and strategies affected.
The DAO may also think to update the Integration Partners program and create ad-hoc solution for integrators that count on the additional return given by IDLE on the Idle strategies.
Next steps
We would like to gather the sentiment of Idle DAO toward these proposals:
- Continue the Liquidity Mining program for 3 months at a 500 IDLE/day
- Continue the Liquidity Mining program for 3 months at a 250 IDLE/day
- Pause the Liquidity Mining program
This post will be open for discussion and in less than 24 hours, if there are no objections, we will proceed with the Temperature Check.
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* For a matter of clarity, in this analysis, we are showing daily distribution rates. $IDLE incentives distribution happens instead on a per-block basis, hence some rounding has been applied.
** In this analysis we used average YTD prices such as IDLE = $0.42, WETH = $1,643.
Poll for $IDLE holders: 
Polls will close on 
