Incentivizing the 3-crypto to grow admin fees

Proposals
#1

TL;DR : Allocate 240,000 CRV from Curve DAO’s vested treasury to incentivize the tricrypto2 over a month in order to deepen the pool and grow its volume.

Context :
Curve has been averaging 170M$ of daily volume lately, with tricrypto2 representing over 20% of its volume on average. Because admin fees are proportional to volume, the tricrypto2 pool is a major provider of trading fees revenue for the Curve DAO (~225,000$ / week)

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While Tricrypto2 is responsible for 20% of the protocol fees, it only receives 11.4% of emissions (60M veCRV), and this is after external incentives. From this gauge weight, 66% come from a core team wallet, and the rest (33%) are incentivised by a 60,000 weekly CRV bribe on bribes.crv by the same address.

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Furthermore, we can observe that the volatility in volume seems very correlated, with a little delay, to the volatility in total supply of LP token, thus, to the TVL. The correlation coefficient is also likely to be very high on the upside.

Rationale :
Raising the depth of the tri-crypto should also raise its volume, enabling it to capture more of the trades between USDT, ETH & BTC, hence bringing more fees to the Curve DAO.

By incentivizing votes directed towards the pool, Curve DAO should raise its admin fees durably.

Quest is the ideal tool to get more veCRV holders aligned with tricrypto2:

  1. Our Governor Quest module enables the DAO to entirely operate this on-chain (from governance to execution), with just a multi-sig to set up custom parameters if needed.
  2. Quest users are mostly organic veCRV holders, it’s in their best interest to align with the protocol growth, hence directing the CRV emission toward the most profitable pool seems logical.
  3. Our Dark Quest module would allow the DAO to blacklist any address on-chain. This is especially relevant knowing that the biggest voter of the pool has been deliberately avoiding claiming any bribe whatsoever.
  4. Quest is the only unified marketplace for all veCRV wrappers (vlCVX, sdCRV, veCRV and more soon), which means that the external incentives are currently only aimed at veCRV holders who double the number of potential votes being targeted.

We recommend testing out the solution for gauge incentives of the same size as what has been allocated on bribes.crv for a month’s period (60,000 CRV * 4) before discussing a longer partnership.

Means :

For:

Spend 246,000 CRV to grow the 3-crypto TVL

Against:

Do not spend 246,000 CRV and let the 3-crypto as is

7 Likes
#2
  • For
  • Against

0 voters

5 Likes
#3

It is true that increasing the Liquidity depth on the tricrypto2 would bring much more volume on Curve

You just have to simulate USDT <> ETH <> BTC swap on aggregators like Paraswap or 1inch to realize that Uniswap takes a large part of the volume on these pairs. It seems totally appropriate (IMO) to incentivize this pool and give it a try to Paladin Quest

4 Likes
#4

Very good point !
Quest is the most efficient bribe marketplace, and now the cheapest for Ecosystem partners such as Curve. An important advantage of Quest is the ability to define the amount of vote needed, and a price accordingly which avoids over spending.
It means that if the target isn’t reached, the Curve DAO can withdraw back remaining rewards minus the 2.5% fees, instead of distributing 60k CRV to a lower amount of voters.

Considering that the 3crypto is already bribed, it makes sense to migrate the incentives for a 1 month trial on Quest.
Full support on this proposal :fire:

2 Likes
#5

TC2 is the bread and butter of Curve and needs to be incentivized more to gain more market volume share vs Curve’s competitors.