Saddle Finance as well as many other projects operating on the ARBITRUM network received -1,545,242 $ARB ~ $2.12m due to the airdrop. My proposal is that these awards should be partially used to reward people who have an impact on the saddle project, i.e. $SDL and veSDL holders and people who add liquidity to the ETH/SDL pair.
Background
$SDL token looks very weak. For 8 months, when the listing of SDL on the kucoin exchange took place, the token has fallen by over 80%, the volume is also very low - mainly in the range of $ 10k-$ 20k / 24h. The number of veSDL holders also did not increase - it actually decreased. We need funds to encourage people to buy SDL tokens - we got such an opportunity thanks to the $ARB airdrop that can be used as incentives to lock their funds on the Saddle.Finance website.
Such actions had a positive impact on the Optimism network, where projects did not get a direct drop, however, they can apply for rewards in the form of OP tokens with which they can influence the involvement of people in their project by rewarding them with OP tokens.
Saddle needs decisive action to encourage people to interact with the SDL token. - the ideal solution is to reward holders with ARB tokens.
Specification
Saddle should create a single SDL staking on the ETH/ARB network, veSDL staking already exists on ETH network, an ETH/SDL pool should be created on the Arbitrum network because on the ETH network it already exists…
The amount of $ARB token rewards should be determined by the team.
Saddle should create a CLAIM section - where users who locked their SDL in 1 out of 3 places (single staking SDL, veSDL or LP SDL/ETH) could claim their rewards on the ARBITRUM network in the form of $ARB tokens.
Thanks for your post Kriss! Lots of good thoughts here, and I appreciate your supporting evidence.
I love the idea of increasing SDL liquidity and having some of that be on the arb network. Using our ARB either directly as POL, or by using it to purchase SDL liquidity would be great.
I’m not as big a fan of single-sided staking pools; I’d rather have people use our existing veSDL infrastructure for that purpose and then also get the benefits of ve-boosting in their LP positions. Maybe we could run a competition where the top x people who stake the most/longest during the window get ARB prizes?
Looking more towards long term value, we could also use Arb as grants for community/growth projects like integrating with new partners or aggregators. Ideally we’d use the lion’s share of this grant to grow saddle’s fee revenue in some way.
We should also consider that we’re not going to use all $2m at once, so what should we do with it in the mean time? I’d like to see us earn revenue from it by either lending it out, or borrowing against it (conservatively!) and performing some LPing / yield farming. Let’s turn that $2m into $3m. That could be a great reward for veSDL holders in the meantime, and it doesn’t deplete our treasury.
Finally if we do decide to use a portion of our airdrop for a mini airdrop of our own to veSDL holders, I propose using logarithmic scaling or somehow balancing the payout levels in another way.
We should also keep in mind that we want to use this airdrop to benefit both SDL holders as well as the Arb network to the extent that we’re able to.
Edit: fast maths
$2.12m // ARB airdrop
$1.06m = 2.12m * 50% // borrow at conservative liquidation price
$318k = $1.06m * 30% // LPing with 30% yield, eg in the Frax pool. Could even lock some reward for veFXS voting
$6,115 = $318k / 52 // estimated LP rewards per week. Equivalent to $15m of weekly volume with 0.04% fee
I think the most important people here are those with $SDL, veSDL. If it wasn’t for the buyers/holders, the bribes you pay for adding liquidity in the protocol wouldn’t make sense. You may have noticed that the supply of $SDL is greater than the demand, so you want to reduce the emission of SDL.
My idea is I think it’s a good one - of course assuming you have x=100% - $200k - you can balance them according to the difficulty of the task.
Encourage with bribes to increase liquidity in the SDL/ETH pair - 50%
Convert SDL to veSDL - 30%
Single SDL staking 20%
Loans - I’m generally bearish about it.
Marketing - I think you should also spend some of your funds on marketing because you are very, very poor at this topic - Marketing combined with the ARB prize pool for having SDL, blocking, adding LP. It would be something loud. People like free money.
Saddle currently pays $SDL bribes to liquidity donors. If you pay with a token that is really useless outside the DAO - the conclusion is clear - straight to zero.
Saddle needs to get people to interact with the $SDL token to raise its price. They should allocate part of the funds to this - not 100%.
You are right, bribes do not make sense as long as the trokenm has no use beyond the DAO, for example there is currently no incentive to open liquidity in Arbitrum or Optimism for the SDL token.
I think it would be appropriate to incentivize the liquidity of the same token, so that it is attractive for liquidity mining and more people can participate.
