We at Lucky Friday remain strong supporters of Interlay through both vault operations and the provision of RPC services at no cost, but are voting NAY on this proposal for the following reasons:
The premise of modified vault rewards from prior referenda has been to create a dynamic adjustment mechanism for vault rewards as capacity grows (or shrinks) on the network. There is currently a significant undercapacity of iBTC in the ecosystem. Over the recent months, total capacity has shrunk by more than 20%. Given this capacity is far below targets, common sense (and prior protocol design assumptions) would suggest that the existing reward rate is too low to induce new collateral into the vault system. If anything, the yield to collateral providers should be increased – although we do not propose a change now, given the low DeFi liquidity overall.
Nevertheless, further reducing the incentives for vault operators to maintain collateral and establish new vaults will guarantee that the “heartbeat” of the Interlay protocol (according to the whitepaper) slows to a near halt.
Furthermore, this current lack of iBTC capacity has created a significant “trapped collateral” problem for which no solution has been proposed. A premise of prior reward reductions has been that always-available capacity would allow existing vault operators to exit positions. This has simply not borne out. The large percentage of iBTC supply that currently resides in the HYDRA DX Omnipool exacerbates the problem due to the significant slippage associated with the acquisition of iBTC of any substantial volume. Thus, not only are the rewards too low to incentivize the creation of more iBTC but the collateral for existing iBTC is effectively trapped.
This proposal does nothing to address the creation of actual demand and utility for the INTR token. Instead, it simply dampens the heartbeat of the ecosystem (i.e., the vaults), which have genuine operating and capital costs. And without circulating iBTC, no such utility design can ever be actuated as a practical matter. Finally, by shifting rewards away from vaults toward staking yield (we note that Lucky Friday also has a significant amount of staked INTR), the staking yield will increase while the overall protocol value declines. (How can any value accrue without more iBTC?). This doesn’t help any stakeholder in the ecosystem.
Until there is straightforward utility for the INTR token and, therefore, demand to buy and hold it, we believe a reduction of vault rewards from emissions achieves nothing other than making it even more difficult for iBTC to become an economically relevant DeFi asset.
mmm it doesn't make sense, I'll have more apy, but I won't receive the rewards for 266 days?
It's as if I didn't receive anything, since I understand that the rewards go freely to my wallet, and I can do whatever I want with them now.
If my staking expires in 4 months, and I want to withdraw everything, will I still claim the other percentage in 4.4 months after my expiration? Don't see fair
Or i missing something