Optimizing liquidity for the CNC-ETH pool with vote incentives

[Figue]

TL-DR: Move liquidity mining rewards to vote incentives on Quest to grow Conic’s liquidity and align veCRV & vlCVX users further

Hello everyone, we’ve been watching Conic grow from the sidelines and believe now would be an excellent time to switch from Liquidity Mining to Vote Incentives, as many community members previously mentionned.

Context:
Conic has been incentivizing liquidity on the CNC-ETH Curve pool at the rate of 50,000 CNC / month (which is divided by two every year).

At this point, the campaign has attracted 1.5M$ of liquidity and the LPs are benefiting from 122% APR.

We believe it is possible for Conic to attract more liquidity by switching from liquidity mining to vote incentives on Quest.

Rationale:
Timing this switch with the upcoming release of the protocol would be relevant as Conic would start distributing its CNC to veCRV and vlCVX* holders instead of LP. This means that on top of rewarding LPs, we would effectively be doing an indirect marketing campaign to Curve & Convex holders, helping them discover Conic.

Additionally, there is currently a 20% discount on vote incentives. This means DAOs pay 1$ of incentives and their gauge benefits for 1.2$ of emissions. Conic could get more rewards, with the same budget. With its current budget, we expect Conic would get ~41,000$ of weekly emissions. This would imply a 23% boost in rewards for LPs.

Another side effect of switching LP rewards for LPs is the LP arbitrage happening on the Curve interface.There rarely are yields above 60% because some people farm whatever is highest on the interface.

Means:

• Create a proposal and enable a gauge;
• 150,000 CNC over 3 months;

Sustainability:
This is a 3 month trial, if the proposal passes, we will collect data over this period and see if this is viable for a longer term.

Voting Options:
Yes/No/Abstain

*Quest is the only platform that allows to incentivize veCRV & vlCVX holders simultaneously

[Figue]

• Yes
• No

[CCC]

I’m not sure I understand proposal

"We believe it is possible for Conic to attract more liquidity by switching from liquidity mining to vote incentives on Quest. "

“This means that on top of rewarding LPs, we would effectively be doing an indirect marketing campaign”

Is it:

1. moving LP rewards from CNC LP farming to quest and giving them to vecrv ans vlcvx
2. boosting more rewards on top of already existing LP rewards?

Only based on amount of proposal (150k CNC for 3 months) I assume it is 1).

If you plan to go full blast and get exposure, I would counterproposal that you move current LP rewards from Conic website UI to the Curve itself (you need a gauge anyway) PLUS use some of treasury funds (unclaimed CNC?) for bribes.

[Figue]

Apologies if the post lacked clarity, indeed the idea is to move the current LM budget to vote incentives to make it more efficient, not raise it.

Conic’s gauge is bound to be launched since the project has drawn so much attention from both Curve & Convex’s community. Someone even launched a gauge proposal independently.

The goal of this proposal is to enable Conic to raise its APR from 122% to a maximum of 145% (on Curve, not Convex) if the Quest is full.

*The APR are highly volatiles and dependant on CNC & CRV prices.

[Lauriii]

Since there seems to be no real downside for this I’ll also vote in favor

[commander_cony]

1. Small detail: the inflation rate is not divided by two every year, but multiplied by 0.4 (just had a look at the contract).

2. The gauge proposal was already passed, but then killed. So should not take long to get it live. But it would probably be good to write a thread on the Curve gov forum nevertheless.

3. I agree with your overall point on paying out CNC as bribes. Perhaps I’m missing something, but what’s the main reason for having a Quest on Paladin opposed to just posting the reward on Votium for vlCVX holders? Is it just the fact that both veCRV and vlCVX holders are incentivized?
   If so, is this really what we want? On Votium it seems as if the demand for vlCVX bribes is much higher than for veCRV bribes. Wouldn’t there be an argument to not dilute the bribes too much and just focus on vlCVX?

Depending on when this will kick off, the total bribe amount for 3 months would probably be less than 150k, given that the inflation rate decreases in April. So it’d be slightly lower I think.

[r2d2]

Great points. I think this can be split into two votes:

1. What should happen with CNC rewards once the AMM staker contract gets shutdown? The rewards could be used for bribes or as extra rewards in the Curve gauge (or both).
2. Depending on the outcome of the first vote, the second vote could be on which platform should be used for the bribes.

Will write a separate proposal for this.

[Figue]

Thank you for all the precisions.
The idea of using Quest instead of Votium is indeed that you can reach both layers. The demand for vlCVX is not that much higher:

• Incentive volume also 3x higher, which means you have more competition;
• Several DAOs like Frax put large bribes and re-capture and significant part of it, so a large part of the volume is fictional;

Being on both layers has several advantages:

• You can arbitrage between which layer has the biggest discount to emissions (right now its veCRV) and pay emissions cheaper;
• You reach a broader public, which is ideal since Conic is going to be for all Curve LPs, not just Convex’s.

All in all I am not sure I understand the argument for dilution. For the sake of the argument, if there are less veCRV votes wouldn’t most votes come from vlCVX anyway?

Additionally that it creates a more predictable $/vote, which is usually appreciated in the kind of market we are in.

[braz]

Agreed with r2 in splitting this proposal in two separate ones, since Q1 is likely consensual while Q2 is going to be various vote-rewards platforms vying for the CNC volume

We’ll see how it goes when Q2 is debated, but my personal opinion is that it’s in Conic’s best interest to use the platform which has the most visibility: for Conic to squeeze the most out of those incentives, it needs to be sure that everything it spends is spent efficiently. Votium is clearly #1 in terms of mind share, and its ecosystem big enough that all gauges get an equal impact per $ spent thanks to people arbing everything to harmony. No effort. If a less known platform was chosen, Conic would also have to actively evangelize it to make up for the platform’s lesser visibility.

Again I don’t think we need to debate things in this thread, r2 will create one where the choice of the platform is the main focus, but I’m posting this here because I plan on posting that same point of view in the dedicated thread