This AELIP proposes to amend AELIP-22: OP Distribution which outlines the planned use of the 900,000 OP tokens received through Phase 0 of the Optimism Governance Fund. Specifically, this proposal suggests increasing the allocation of OP tokens used to incentivize deals and to increase the incentive provided to sponsors and users who participate in deals.
After observing the use of OP token incentives so far it appears that we can be more aggressive with our OP incentives used to attract users to deals on Aelin since Velodrome has proven to be a highly capital efficient method of securing deep liquidity.
If implemented, this proposal will increase the allocation of OP tokens allocated to the pool incentive program from 60% to 75% and decrease the allocation to LP stakers from 40% to 25%. Further, the pool incentive program terms will be increased from providing a 3% rebate to investors to now provide a 5% rebate to investors and a 1% bonus to the sponsor for finding the deal.
Based on the number of remaining tokens currently allocated to incentivize liquidity, current value of the OP token ($1.65 when calculated), and efficient usage on Velodrome we have approximately 140 weeks worth of Velodrome bribes. While many factors could have impacted this, the 3% rebate of OP tokens did not appear to be a significant motivator for users to participate in the most recent raise on Aelin. Incentivizing sponsors to bring deals to Aelin and users to participate in those deals is our highest priority as it brings more attention to Aelin, generates revenue, and provides more examples of successful raises to point to when pitching the protocol to groups considering using the protocol for their capital raise.
Currently the council is bound by AELIP-22 regarding the allocation of OP tokens. This proposal will increase the amount allocated to the pool incentive program from 60% to 75% and decrease the allocation to LP stakers from 40% to 25%.
The terms of the pool incentive program will be amended from previously providing a 3% rebate to investors to now provide a 5% rebate to investors as well as a 1% bonus to the sponsor for finding the deal.
The allocation between liquidity incentives and pool incentives as well as the terms of the pool incentive program will be configurable by ACCP going forward so a new AELIP is not required if we find that we need to be even more aggressive to incentivize deals.
Deal flow is the most important metric to Aelin so increasing our incentivization of this is critical. At the current price of the OP token, this incentive will result in approximately $18.5m of deal flow on Aelin and protocol revenue of $370k.
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