Prime Adjustment Proposal
Summary
This document evaluates Venus Prime’s performance following 5 months of deployment. It proposes adjustments to its distribution, focusing on aligning more closely with each market’s contribution to protocol reserves. The changes are designed to more accurately reflect market dynamics and user participation.
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User participation increase after obtaining a Prime token:
- Supply: +305% (from $136,949,388 to $555,100,249)
- Borrow: +400% (from $31,673,624 to $158,482,905)
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Relative contribution to protocol reserves
- BTC: 0.2%
- ETH: 4.7%
- USDC: 38.2%
- USDT: 56.9%
-
New reward distribution proposal:
- BTC: 5% (0%)
- ETH: 15% (-10% )
- USDC: 40% (+10%)
- USDT: 40% (0%)
-
3-month reward distribution recommendations:
- BTC: 0.72 (-0.07)
- ETH: 71.35 (-1.04)
- USDC: 300,000 (+75,000)
- USDT: 400,000 (+100,000)
- Total rewards for 3 months: $1,000,000
Details
Considerations
- The following analysis considers token prices and volumes at key block numbers: 32599510 (pre-Prime) and 37463959 (6 months, post-Prime).
Deployment Performance
Graph 1: XVS Vault Staked Amount
- Overall Performance Improvement in Net Vault Amount: The net vault has increased by an average of 9% each week. This has led to consistent growth for XVS staked, rising from $6.5 million to $7.1 million, an increase of 8.3% during the initial six months of Prime.
Graph 2: Cumulative Users Minting and Borrowing Volume
- The introduction of prime rewards led to a strong growth in platform activity, with the cumulative supply increasing by approximately $1.35 billion and the cumulative borrow by approximately $691 million.
Table 1: User Token & USD Balance Before Prime (Block number: 32599510)
| Token | Supply Token Amount | Borrow Token Amount | USD Supply Amount | USD Borrow Amount |
|---|---|---|---|---|
| BTC | 1,157.91 | 6.93 | $82,594,375 | $494,399 |
| ETH | 12,273.88 | 1,873.83 | $44,776,300 | $6,835,903 |
| USDC | 4,373,735.74 | 13,486,056.70 | $4,374,169 | $13,487,975 |
| USDT | 5,204,387.83 | 10,855,603.49 | $5,204,070 | $10,854,942 |
| Grand Total | 9,591,555.35 | 24,343,540.95 | $136,949,388 | $31,673,624 |
Table 2: User Balance After Prime (Block number: 37463959)
| Token | Supply Token Amount | Borrow Token Amount | USD Supply Amount | USD Borrow Amount |
|---|---|---|---|---|
| BTC | 4,522.46 | 53.81 | $322,590,979 | $3,838,017 |
| ETH | 29,515.44 | 10,561.31 | $107,675,121 | $38,528,673 |
| USDC | 20,097,744.90 | 46,803,521.45 | $20,099,735 | $46,808,155 |
| USDT | 104,731,272.50 | 69,305,980.73 | $104,734,414 | $69,308,060 |
| Grand Total | 124,863,055.29 | 116,120,117.29 | $555,100,249 | $158,482,905 |
Table 3: User Token Balance Change After Prime
| Token | Increase in Supply Amount | Increase in Borrow Amount |
|---|---|---|
| BTC | 291% | 676% |
| ETH | 140% | 464% |
| USDC | 360% | 247% |
| USDT | 1912% | 538% |
| Average | 676% | 481% |
The Prime program has resulted in an average supply and borrow increase of 305% and 400%, respectively. Prime users have increased their supply positions from $136,949,388 to $555,100,249 and their borrow positions from $31,673,624 to $158,482,905.
Adjustment Recommendations
Table 9: Current quarterly reward distribution and relative revenue performance
| Token | Current Rewards | Current Proportion | Revenue Proportion |
|---|---|---|---|
| BTC | 0.79 | 5% | 0% |
| ETH | 72.39 | 25% | 5% |
| USDC | 225,000 | 30% | 38% |
| USDT | 300,000 | 40% | 57% |
Table 10: Proposed quarterly rewards
| Token | New Rewards |
|---|---|
| BTC | 0.72 |
| ETH | 71.35 |
| USDC | 300,000 |
| USDT | 400,000 |
- Total rewards in USD: $1,000,000
*Note: The new rewards will follow the previous distribution pattern, as the change will impact revenue starting from Q2 2024. This will be considered in the next quarterly adjustment.
Table 11: Proposed monthly reward distribution change
| Token | New Proportion Proposal |
|---|---|
| BTC | 5% |
| ETH | 15% |
| USDC | 40% |
| USDT | 40% |
This change aims to adjust rewards for eligible users based on the current total budget for Prime, estimated at $1,619,897. By taking into account the average Prime allocation over the last six months ($234,806), this budget is expected to be sustainable for over 12 months. However, future adjustments will be made to further refine and optimize Prime rewards for eligible users.
The proposal is to implement this configuration for the next three months. After this period, a new performance evaluation will be conducted to continue improving the program’s effectiveness.
Thanks to the release of the income allocator and token converters, the reward amounts are already on the Prime Liquidity Provider contract, so no transfers are needed.
Conclusion
The Venus Prime program has shown impressive performance, significantly increasing user engagement and market participation. The proposed adjustments are evaluated based on the program’s performance and are optimized for user rewards and protocol growth.
