Tokenomics considerations

Proposals
1

Hello everyone,

I want just to bring your focus on some data i checked out and use them to consider the sustainability of XVS Tokenomics.

I snapshotted the Venus lending markets in 2 random days in the last month:

13.04.2022 (some coins are missing but not relevants)

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image520Ă—733 9.47 KB

02.05.2022

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image475Ă—733 11 KB

What we desume from this analysis?

  1. Venus actually generates new reserves for an amount between 20 - 30 K$ daily;

  2. Coins that produce more revenues for the platform are the ones who have highest external (from Venus) staking/earnings APY (CAKE) or those that can be used for external purposes/launchpads (BNB-DOT);

  3. Taking data from point 1 we can desume that quarterly the protocol produces something more than 2 M$, of which 400K $ will be used to burn XVS and 400 K$ for staking rewards. These 2 elements are the profit for the investors (800K$ quarterly).
    On the other hand the protocol issues 6.800 XVS every day, that means 610 K XVS quarterly (around 5M $) and this is the cost for investors to incentive the usage of the protocol on the crypto lending market (with a net loss of 4,2M$ quarterly).
    In this moment the price that would balance the above incomes and costs is around 1,30$ per XVS.

Conclusions

We should focus on 2 different aspects

  1. Reason and decide on which coin add to the listings in considerations of them “external incentives” to increase platform revenues;

  2. Decide how to decrease the XVS distribution incentives to lenders/borrowers. It could be gradually and generally by cutting a certain percentage on all the coins every certain period of time or, what i think is better, review and vote coin by coin how to adjust the XVS distribution incentives. For instance, i don’t think a CAKE supplier/borrower are interested in getting a 0,6% interest in XVS considering that that APY is almost always over 50%. It would be a 50XVS saving per day.

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2

Wow this was interesting.
Building on from what you said, Venus should open up a high risk liquidity section where we can collateralise and take out loans against more farming tokens. This could become a open platform where any token can be offered as collateral provided there’s a lender willing to accept the terms and risk for higher interest repayments. This should be done in coordination with the liquidation bot to minimise risks and connect directly to 1inch or openocean for maximum liquidity.

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