Summary
As part of Venus Protocol’s expansion to Unichain, Venus is proposing to deploy with two markets on day one: (WETH and USDC). I propose distributing XVS incentives worth $100,000 over an initial 90-day period with option to renew and adjust emissions as the community sees fit for the following period (s) or to adjust initial emissions as new markets are being supported. These initial incentives would be distributed in the form of 18,000 XVS across both supply and borrowing sides to stimulate TVL growth and borrowing activities with the objective to drive Venus presence and adoption on Unichain.
Key points:
- Total XVS Incentives: 18,000 XVS tokens to be distributed over a period of 90 days.
- Markets: WETH and USDC.
- Justification: The goal is to effectively allocate incentives to promote liquidity growth and borrowing activities to rapidly position Venus as a leading money market on Unichain.
Incentives Structure
Table 1: XVS Monthly Distribution
| Market | Month 1 | Month 2 | Month 3 | Total | Distribution (%) |
|---|---|---|---|---|---|
| WETH | 2,000 XVS | 3,000 XVS | 5,000 XVS | 10,000 XVS | 55.55% |
| USDC | 2,000 XVS | 2,500 XVS | 3,500 XVS | 8,000 XVS | 44.44% |
| Total | 4,000 XVS | 5,500 XVS | 8,500 XVS | 18,000 XVS | 100% |
Supply and Borrow Distribution
Table 3: Proportional Distribution for Supply and Borrow
| Market | Supply | Borrow |
|---|---|---|
| WETH | 75% | 25% |
| USDC | 75% | 25% |
- Supply Side: 75% of the allocated XVS will be distributed to the supply side of each market.
- Borrow Side: 25% of the allocated XVS will be distributed to the borrow side of each market.
XVS Vault Rewards on Unichain
In addition to the liquidity incentives, I propose we commit to a small amount of XVS vault rewards in order to promote rapid on-chain growth of XVS liquidity that would allow XVS to be used as a collateral asset on our core pool.
Table 4: Proposed XVS Vault Rewards for Unichain (First 90 Days - 3 months)
| Month | Rewards |
|---|---|
| M1 | 200 XVS |
| M2 | 500 XVS |
| M3 | 800 XVS |
| TTL | 1,500 XVS |
By increasing monthly emissions in accordance to TVL growth and market incentives, we ensure the Governance vault APR doesn’t get diluted as we grow. It remains an attractive option to stake and it also promotes on-chain liquidity.
Details
The emissions schedule is focused on a balanced approach to drive liquidity growth and borrowing activities.
The distribution proportions are designed to attract liquidity providers by offering a larger portion to the supply side, while an incentive is still allocated to borrowers allowing them to offset their loans cost.
DEX Bootstrap Liquidity
I propose an initial pool to be seeded on Uniswap with 5000 XVS and 3000 UNI tokens to make sure enough liquidity is made available to users wishing to convert their XVS tokens to other assets or vice-versa, without excessive slippage. This will also encourage users to provide DEX liquidity as with more volume comes more trading fees and with more trading fees comes more rewards.
Conclusion
I am proposing to deploy on Unichain with a different incentives distribution system, where rewards are increasing as TVL does. The objective is to reward XVS to users providing real value and liquidity to the platform, not to reward opportunistic users.
This strategy aims to ensure the long-term sustainability of Venus Protocol on Unichain.