Denominating incentives in agEUR €
As the DAO / Governance, we are looking at this from the number of ANGLE tokens available to distribute. From this perspective, the reduction will have the desired effect of saving 15% of the current amount of ANGLE tokens we are distributing.
Fixing those to agEUR would be positive for the DAO when ANGLE price is high, and negative when it is low. It would also prevent a potential growth of pools TVL from an increase in price, and require manual management of the issuance rate.
Many arguments that are making me think that it’s not a good idea to fix the issuance in agEUR.
Using agEUR as a payment token for liquidity incentives
I personally like this option, as it would make all LPs de facto agEUR holders. Their choice then becomes to 1) reinvest agEUR in the pools (increasing agEUR marketcap), 2) sell the agEUR, or 3) buy ANGLE (or any other token) using the agEUR.
The big inconvenient is that it would require to either:
- draw from the protocol reserves / surplus / revenue
- or sell the ANGLE tokens for agEUR.
Drawing from the protocol reserves would limit our ability to use revenue for other purposes. This is also limited by the protocol’s ability to earn yield on-chain. We would also have to find another way to distribute the ANGLE tokens in a fair and beneficial way for the DAO.
Selling the ANGLE tokens directly for agEUR would allow us to control this sale, rather than having LPs dump themselves. On the other hand, we would need to ensure that the market can absorb the continuous sell pressure.
It’s also important to keep in mind that some LPs provide liquidity to dump ANGLE tokens (-), while others do it to accumulate the tokens (+). The big question is which one has more impact on the protocol, and if the whole is positive or negative.
I will try to think more about these two options to distribute agEUR in the coming weeks and add a comment in the Research around ANGLE incentives effectiveness. I don’t think this should impact this AIP though.