I’m not sure how much agreement I will get but I’d like to have a discussion at least about this.
Currently, I’m staked partially in REN but don’t want to unstake and lose the reward multiplier in my other larger pools so it’s kinda just sitting there not really doing anything outside of the ILP. Don’t get me wrong that part is good.
It doesn’t seem to incentivize people to stake BNT into anything but “the majors” if you lose multipliers after the rewards period runs out. I feel like this is an opportunity to course-correct to bring more of the non-BNT side of the pairings into the LPs.
I feel like the same thing is going to happen to me with GRT in a few weeks and I’m staked on both sides. Obviously, it’s not all about me but I’d imagine that others are thinking this as well when they pick a pool. Why would you pick a pool when there wouldn’t be an extension?
I remember when the stable pool rewards were cut this was a point of contention. It seems like as rewards aren’t extended they should be tapered off. If there are 30 days remaining in a rewards program but you aren’t sure it would be extended why would you stake into that pool? So you’re killing off any potential liquidity into those pools that aren’t getting extended or in some cases they aren’t even being voted on (REN extension wasn’t voted on to extend I beleive).
Maybe they should automatically go up for a vote in advance of expiration?
Somewhat along those lines, instead of the uncertainty of extensions, what if LM rewards were set for longer periods of time, say 3-months, 6-months, 12-months, etc, but with lower rewards or multipliers? Less uncertainty around LM extensions may viewed favorably by the market, and result in greater retention across all LPs.
I equate this rewards program to something that exists in the online poker world where you receive higher rewards (or Rakeback) for the more hands played. Something like that seems translatable to the network. Especially when you factor in swap fees and getting more people to trade on here. I know many of the CEX have reductions in fees as you trade more.
It seems, at least to me, that Bancor is giving everything away up front (yes I know it takes time to get to the 2x but does that even matter if the rewards aren’t extended on something that only has 30 days left?) which is great and it is hard to argue with the results of the amount staked into the different pools that are available but trying to attract additional capital into the network whether that be additional BNT staked or fees generated via swapping on the DEX. I feel like the uncertainty in the pools doesn’t help with this, especially on the non-BNT sides of the equation. Obviously, I could be wrong. Still, worth thinking about IMO.
As for the OP’s proposal, I think tapering off the rewards as a “cooldown” period lets both governance and the market move slower in terms of deciding whether or not to continue boosting the rewards while causing less discomfort to all in the process; in the long run it will be worth it.
I’m toying with the idea the duration of the cooldown period could be a function of the liquidity depth and/or how many times the rewards have been extended recently, but that’s a more implementation-oriented discussion best left to a future thread after the idea in general has been more thoroughly discussed here.