Summary
This document evaluates Venus Prime’s performance following 12 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.
Relative contribution to protocol reserves:
- BTC: 2.6%
- ETH: 8.5%
- USDC: 24.36%
- USDT: 64.49%
New reward distribution proposal:
- BTC: 5% (0%)
- ETH: 15% (0%)
- USDC: 30% (-5%)
- USDT: 50% (+5%)
3-month reward distribution recommendations:
- BTC: 0.41 (-0.40)
- ETH: 30.24 (-15.68)
- USDC: 157,500 (-157,500)
- USDT: 262,500 (-142,500)
- Total rewards for 3 months: $525,000
Details
Considerations
The following analysis considers token prices and volumes at key block numbers: 32599510 (pre-Prime) and 42711932 (12 months, post-Prime). The token prices are considered for Oct 1 2024.
Deployment Performance
Graph 1: XVS Vault Staked Amount
Data from: Venus Protocol Dashboard
The net vault amount has consistently increased over the past 12 months, with an average monthly increase of approximately 1.12%. This steady growth indicates a positive response to the Venus Prime program.
Graph 2: Cumulative Users Minting and Borrowing Volume
Data from: Venus Protocol Dashboard
The introduction of Prime rewards has led to substantial growth in platform activity. Over the observed period, cumulative supply increased by approximately $3.5 billion, and cumulative borrow grew by approximately $1.2 billion. This reflects a strong positive response to the Prime incentives.
Adjustment Recommendations
Table 1: Proposed Quarterly Rewards
| Token | Current Rewards | New Rewards Proposal | Difference |
|---|---|---|---|
| BTC | 0.81 | 0.41 | -0.40 |
| ETH | 45.92 | 30.24 | -15.68 |
| USDC | 315,000 | 157,500 | -157,500 |
| USDT | 405,000 | 262,500 | -142,500 |
Total rewards in USD: $525,000
Table 2: Proposed Monthly Reward Distribution Change
| Token | Reserve Contribution | Current Proportion | New Proportion Proposal |
|---|---|---|---|
| BTC | 2.6% | 5% | 5% |
| ETH | 8.5% | 15% | 15% |
| USDC | 24.36% | 35% | 30% |
| USDT | 64.49% | 45% | 50% |
This change aims to adjust rewards for eligible users based on the current total budget for Prime, estimated at $558,522. With the new Tokenomics V4, which increased the Prime allocation from 10% to 20%, the average protocol monthly reserves from January 2023 to October 2024 are $196,486. 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 in the Converters, Prime Liquidity Provider and Prime 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.
