[IIP-31] IDLE incentives distribution update, Euler staking PYTs as new yield sources for BY

[Biaf]

Authors

Treasury League and Development League

Summary

This proposal focuses on two initiatives

1. IDLE incentives distribution update
2. Euler staking PYTs as new yield sources for BY

Rationale

1. IDLE incentives distribution update

For a comprehensive analysis of the initiatives, we suggest visiting the related governance post.

The DAO voted in favor of two proposals linked to the incentivization programs on IDLE

@Biaf

1. Continue the Liquidity Mining program

The Best Yield strategy has been incentivised through the Liquidity Mining program with different distribution rates (3205 → 2215 → 1000 IDLE/Day). We suggest continuing its incentivization but also decreasing its distribution rate.

• From 1000 IDLE/day to 500 IDLE/day for the next 3 months

The IDLE needed to fund this extension can be taken from the Ecosystem fund .

During the discussion we pointed out how a reduction of the daily distribution to the BY strategy together with a program extension could have multiple benefits:

• retain the current Best Yield’s liquidity (mainly sitting in the DAI, USDC and USDT markets)
• reduce significantly the selling pressure on the DAO governance token

The second proposal discussed, focused on the incentivization mechanism behind the Perpetual Yield Tranches, i.e. the Gauges system

@Biaf

2. Pause the Gauges distribution

The Perpetual Yield Tranches have been incentivised through the Gauges system for over ten months at a constant distribution rate of 990 IDLE/day. We suggest pausing this distribution.

• From 990 IDLE/day to 0 IDLE/day.

The main reason to pause the distribution of the Gauges system is related to the composability issues faced by partners when integrating Idle’s strategies.

@Biaf

The performances of the Gauges distribution for PYTs are encouraging, but we see side disadvantages that made us think to pause the rewards on this strategy. Specifically, the Gauges architecture breaks composability with integrators calling for ad-hoc solutions and increases the effort needed to ship new partnerships. Due to this composability issue, integrators are benefitting only minimally from the rewards distributed to the Tranches.

We will then move 45,000 IDLE from the Ecosystem fund, change the daily distribution rate on BY from 1000 to 500 IDLE/day and pause (0 IDLE/day) the distribution on the PYTs’ Gauges.

The Gauges system implemented will anyway stay in place and can be re-activated in the future if the DAO agrees.

2. Euler staking PYTs as new yield sources for BY

For a comprehensive analysis of the initiatives and a background on Euler, we suggest visiting the related governance post.

The DAO voted to upgrade the yield sources of the USDC, USDT and WETH Best Yield vaults.

@Biaf

Today we want to open the discussion on some new integrations: the Euler staking PYTs

• Euler staking (Senior) PYTs for the USDC, USDT and WETH markets, with specs available on GitHub here

Similar to previous integrations, Euler staking ones would benefit doubly the Idle ecosystem

1. Increase BY’s returns for the USDC, USDT and WETH vaults.
2. Add a stable source of funding to the Euler staking Senior tranches and consequently incentivize the onboarding of new Junior liquidity.

@Biaf

Currently, the Euler staking markets offer the following returns

Token	Supply APY	Staking APY	Base APY
eWETH	1.59%	1.96%	3.55%
eUSDC	1.84%	4.24%	6.08%
eUSDT	2.05%	2.84%	4.89%

We could then expect to have Senior PYTs returns in the 2-3% range.

We will then add the Senior tranches of Euler staking PYTs as new yield sources for the idleUSDC, idleUSDT, idleWETH Best Yield vaults.

Specifications

The code for the IIP-31 can be found on GitHub here and consists of six actions.

IIP-31 actions:

• 1 action to set the PYTs Gauges distribution rate to 0
• 1 action to transfer 45k IDLE from the Ecoysystem Fund to the idleController
• 1 action to set the new distribution rate of the Liquidity Mining program in the idleController to 0.0698324 IDLE per block, i.e. 500 IDLE/day
• 3 actions to add the Euler staking wrappers to the idleUSDC, idleUSDT and idleWETH BY vaults.

Where the Euler staking (Senior) PYTs wrappers addresses are:

• Euler staking USDC AA PYTs 0x6C1a844E3077e6C39226C15b857436a6a92Be5C0
• Euler staking USDT AA PYTs 0xAB3919896975F43A81325B0Ca98b72249E714e6C
• Euler staking WETH AA PYTs 0xC24e0dd3A0Bc6f19aEEc2d7985dd3940D59dB698

Next Step

The temperature checks for the above proposals have already been successfully closed. In ~24 hours, we will open the on-chain voting phase for this Idle Improvement proposal.

[Biaf]

On-chain Voting Phase

Cast your on-chain $IDLE vote here: HERE
End date: 2023-01-27T07:00:00Z

$IDLE stakers (stkIDLE holders) can vote here: HERE
End date: 2023-01-26T16:45:00Z

The threshold to make the off-chain poll valid (both metrics should be reached):

• 20% of circulating stkIDLE voting the poll (min. ~140k stkIDLE)
• at least 70% on the same option.

The stkIDLE voting calculator will be used to calculate the final results.

Make sure you have been delegated to participate in this voting round.

[Biaf]

Voting results and IIP queuing

IIP-31 passed with 1,237,228 $IDLE votes in favour and has already queued for execution