I mostly agree with the intent of Omar’s proposal but I think we really need to factor in the short-term vs. long-term tradeoff. The basic idea here is that “high current revenue justifies cutting rewards” but, DeFi is super cyclical and insanely competitive.
Today’s revenue is mostly the result of past incentives or liquidations where future revenue depends on keeping demand strong. If we just chase short-term fee numbers, we could easily hurt long-term growth. As Omar’s analysis put it: ''Reducing token inflation and boosting XVS price” sounds great but only if it actually helps grow the ecosystem sustainably. If we just focus on what’s happening today (BNB Exploiter liquidation revenues), we might miss what’s needed to continue building and growing tomorrow.
Efficiency Measurement: I’m also not totally clear how “revenue efficiency” would be measured here. If it means fees earned per XVS distributed, that ratio is going to swing a lot. We might see high revenue this month, then cut emissions but when yields drop, efficiency falls again, possibly causing more cuts or reversals. That yo-yo effect could confuse users and mess with the stability of the platform. Usually, people look at metrics like revenue per TVL or overall APR but here, revenue is itself driven by incentives so, aligning emissions directly to revenue is risky.
Revenue Attribution and Lag: A lot of the Venus revenues come from borrowing activity, which itself depends on how strong the supply incentives are. Today’s revenue is already baked-in from emissions decisions made months ago. Based on this, If we slash emissions now, the real impact I would anticipate is even lower revenues. This might not show up until the next quarter. That lag (Delay) is super important but easy to overlook if you’re only looking at current data and revenues from of few big liquidations.
Risk of Over-Cutting XVS emissions: The other danger is being too aggressive. If every small revenue dip leads to a big XVS emissions cut, we get an unstable environment where users never know what to expect. Best practice for dynamic incentives (look at Aave, for example) is usually gradual, quarterly adjustments, not real-time overreactions. DeFi incentives move fast, but users and other dApps built on top of Venus still need some predictability.
At the end of the day, sure, cutting XVS emissions based on “revenue efficiency” might give the token price a little lift by lowering inflation but the downside risk to Venus growth and user base is real. Liquidity mining is the lifeblood of any lending platform. Slash it too much or too quickly and TVL shrinks, users leave and ironically, revenue drops. The exact opposite of what this is supposed to fix.
We have to balance the short-term wins against building a durable, valuable network. Honestly, most big DeFi protocols (Aave, Compound, etc.) only pulled back emissions once they had strong, sticky liquidity and multiple revenue streams already secured which is where Venus is lacking. Venus should absolutely think about evolving the model but it needs to be done carefully, flexibly and ideally, alongside building up other incentives and transparent revenue-sharing across the different sections of our Tokenomics with new sources of revenues.
If the community leans too hard into chasing short-term numbers, we might just end up damaging the long-term ecosystem we’re all supposedly trying to grow.
But hey, just my 2 cents… Looking forward to the community’s replies.
