I am thinking if this proposal actually advantages the large farmers whom lock up minimum CRV to get their 2.5x boost because with this proposal, they will be earning CRV from their veCRV holdings.
It seems from first thinking that that will be true, but what about the second order effects? What if new non-LPs/smaller LPs buy CRV tokens because they want the admin fee & CRV incentive? Would it tilt the game mechanics & voting to be fairer?
While I think waiting to see if the trading fees flowing to veCRV holders will help, I donât think itâs enough based on the length of time required to get 1:1. A 4 year lock is an insane amount of time in DeFi, especially with many bag holders nervous already after all the selling pressure and with the chart being the nightmare that it is, I donât see any other option but reducing boost for non VeCRV holders,
Really, the team is getting an absurd amount of CRV with only 750K going to LP holders so we are left with less than great options if cutting that enormous supply is not an option. UNI understood this and its reflected in their tokenomics which as I understand are the majority of the tokens going to community.
If more of the boost goes to veCRV holders, even temporarily, we can put a dent to the bleeding caused by the absurd minting of tokens. I donât know that itâs enough but farm and dump is going to destroy whatâs left of the CRV perceived value.
We all know once volumes lift long term this can turn things around, but a little confidence in CRV token will go a long way in motivating more locks. I personally wonât lock all my CRV because I need to manage my position and be able to take losses for taxes strategically after being punished for holding while 1.2m gets minted daily to the team.
Incentivize Locking --> Lower Supply --> Higher CRV --> Higher APY --> More trading fees
Well said. The APY for veCRV is highly inflated because that APY is assuming you lock up for 4 years. If you were to lock up for a year, your APY would get cut by 4. If you lock up for a month, your APY would get cut by 48 times.
For now, I do not see any reason why anyone would lock up CRV above their required 2.5x boost. Rewarding people with CRV (from the inflation) for locking up CRV gives an additional incentive on top of the admin fees. This would attract more people to lock up CRV above their required 2.5x boost.
50% of the admin fee doesnât seem appealing to you? I have locked up earned CRV beyond that needed for 2.5 boost, though I admit I have yet to buy CRV beyond what Iâve needed for my 2.5 boost. I likely will when the price demonstrates that itâs found a floor, but the inflation is still super high right now.
If some of inflation will go to veCRV holders , who will freeze\hold their CRV for 4 years - it will help to cut inflation from the market on 4 years - finally LP will get a little less of CRV but with higher price - and LP will be motivated more to stake rather then sell immediately on market. LP in $ wonât lose, but it will help a little to stop price falling, because holders scary to hold CRV on 4 years when price can go to zero - thats why we need more initiatives like that
You canât depend on the fact that veCRV holders wonât sell freshly minted CRV just as fast as LPs. This assumption that theyâll hold CRV more readily is not demonstrated anywhere.
We should be fixing the root problem which is making CRV more attractive to buy in the first place.
Minted CRV going to LPs attracts liquidity which makes the platform better for users which adds admin fees which makes veCRV value go up and everyone more likely to lock. I think this flywheel is much more important to get right than guessing who will be more or less likely to sell and distributing to them.
The assumption is not that veCRV holders wonât sell the freshly minted CRV. The assumption is that paying veCRV more (total APY) makes locking up CRV more attractive. Yes, some of the veCRV holders will sell the new CRV tokens, but more reasons for them to lock up additional CRV now.
The way I see the situation now is that most (not all) LPs just lock up the minimum veCRV required to get 2.5x boost. They will just sell CRV above the requirement.
Currently the admin fee is about $13,000 a day. If just 10% of the 750k daily inflation is allocated to veCRV holders, it would increase the veCRV yield from $13,000 to $58,000 per day (assuming $0.60 CRV price). This would significantly increase the attractiveness for people to lock up CRV tokens. This also fixes the âroot problemâ by making CRV more attractive for people (other than LP) to buy CRV.
With lesser selling (from LPs) and more buying (from non-LPs), the price of CRV would go up, increasing APY for liquidity providers. I see this as win-win for veCRV holders and Liquidity Providers.
I lock the majority of the CRV I earn. Iâve only sold one small batch. I bought enough for 2.5x and keep almost all earned ones beyond that. As the CRV price stabilizes I bet more will do the same as the project has a very bright future. Directing CRV to veCRV holders seems like an unnecessary gimmick to me. It would also heavily skew the distribution of CRV even more to the team, who already have an enormous amount of CRV and therefore likely veCRV. I love the team, but I want to attract more people into CRV without it feeling like a rigged game.
Team has less than 10% veCRV right now
Team has less than 10% veCRV right now
Thatâs good to know, but will it remain that way? what will keep it that way? the teamâs promise or some real guardrails? should we design the system based on the assumption that the team wonât have substantially more vecrv in the near future?
It looks like the team/early insiders will have (or at least receive) the majority of CRV until 2027 at the earliest, and if this proposal passes they may always have a majority of CRV since theyâll be given a bigger chunk of minted CRV.
Itâs a complicated situation because the current voting power we hold is too low to ensure quorum is reached where we need it but having a bigger share is something that upsets the community. We had a poll and people suggested they 20-30% is what they wish we would hold and we are thinking about it for now.
I hope this subject gets revisited⌠We have less crv locked up now than when we started this conversation.
why is this a problem? more fees for you + other vecrv holders, no?
we should wait some time until the other CIPs like Uniswap LP and veCRV distribution are put in place to get a better sense of %. However, I do think this needs to come again afterwards and be implemented.
It might be a decent idea if plausible to only reward veCRV that is locked for 3+ years to incentivize a LT focus much like vesting periods.
Actually having a vesting period for the the CRV payout to veCRV holders sounds good.