[MRC-13] Red Bank Deposit Rewards Extension

Proposals MRC (Mars Request for Comment)
1

Summary

This proposal aims to 1) obtain 2M MARS from the community pool and 2) use these funds to reward deposits of the following assets into Red Bank for 60 days: ATOM, OSMO and axlUSDC.

Abstract

The objective of this proposal is to reward early users of the Red Bank with governance power to ensure that they have a strong voice in the parameterization of the Mars protocol in the future. In order to do so, such users will be rewarded with MARS tokens as set forth herein.

Motivation

This proposal intends to keep interest and activity in the Red Bank by rewarding the deposits of OSMO, ATOM, and axlUSDC into the Red Bank.

Specification

This rewards program sets out the distribution of rewards for each of the three assets listed on Red Bank.

Asset Deposit Rewards [MARS]
OSMO 1.5M
ATOM 400k
axlUSDC 100k

Risks

There is no guarantee that MARS recipients retain their MARS or use it in governance.

Implementation

The duration of this program is strictly for 60 days only. The program should go live on Thursday, March 9th 2023 at 18:15:01 UTC, soon after the current rewards program ends.

The MARS community fund is held on the Mars Hub blockchain. Accordingly, if the proposal is approved, the required MARS would be IBC’d to Osmosis from the Mars Hub and directed to the MARS rewards contract.

Disclaimers/Disclosures

This proposal is being made by Delphi Labs Ltd., a British Virgin Islands limited company. Delphi Labs engages in incubation, investment, research and development relevant to multiple ecosystems and protocols, including the Mars Protocol. Delphi Labs and certain of its service providers and equity holders own MARS tokens and have financial interests related to this proposal. Additionally, Delphi Labs is one of several entities associated with one another under the “Delphi Digital” brand. Delphi Digital’s associated entities and/or equityholders or service providers of such entities may hold MARS and may have financial interests related to this proposal. All such entities, service providers, equity holders and other related persons may also have financial interests in complementary or competing projects or ecosystems, entities or tokens, including Osmosis/OSMO. These statements are intended to disclose relevant facts and to help identify potential conflicts of interest, and should not be misconstrued as a complete description of all relevant interests or conflicts of interests; nor should they be construed as a recommendation to purchase or acquire any token or security.

This proposal is also subject to and qualified by the Mars Disclaimers/Disclosures. Delphi Labs may lack access to all relevant facts or may have failed to give appropriate weighting to available facts. Delphi Labs is not making any representation, warranty or guarantee regarding the accuracy or completeness of the statements herein, and Delphi Labs shall have no liability in the event of losses or damages ensuing from approval or rejection or other handling of the proposal. Each user and voter should undertake their own research and make their own independent interpretation and analysis of all relevant facts and issues to arrive at their own personal determinations of how to vote on the proposal.

3 Likes
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Curious to know how you’ve chosen the amounts for each asset?

OSMO goes from 60% share to 75%
ATOM goes from 27.5% share to 20% share
USDC goes from 12.5% share to 5% share

Definitely agree that the share to USDC needed to drop and was probably way over incentivised initially.

Concerned that a drop in ATOM reward share places staking ATOM, or holding an ATOM LSD as better utilization of ATOM than depositing to the Red Bank & you may see some liquidity outflow.

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Hey ser, Jonathan from Delphi Labs here. Sorry for the late reply, but here it goes:

The methodology we’re using targets to offer a certain APR at full caps for each of the markets. Currently the caps are:

  • OSMO: 10,000,000 OSMO (~$9,000,000 USD)
  • ATOM: 350,000 ATOM (~$4,500,000 USD)
  • USDC: 1,500,000 USDC

If we targeted the same APR for each market at full capacity, we’d have the following rewards distribution: 60% to OSMO, 30% to ATOM and 10% to USDC. However, this would obviously be a naive approach to set the target APR. Our objective setting the APR is to offer a competitive APR for depositors. As you mention, both OSMO and ATOM offer a ~risk free rate, which is the staking yield. As such, we use the staking APR as the floor APR depositors should get. Having said that, what we’ve noticed is that OSMO is significantly more sticky than ATOM, as shown by the different rates at which Red Bank deposits have been made (ATOM cap was filled fast while OSMO cap isn’t even full yet), which suggest that OSMO depositors may require an even higher APR relative to ATOM. As such, the targets for these assets were:

  • OSMO: 1.5x Staking APR
  • ATOM: 1x Staking APR

It’s also worth noting that we’ll be posting a proposal to list stATOM soon, which we expect to generate significant organic demand for ATOM, increasing its organic deposit yield.

Lastly, in terms of USDC we targeted a competitive yield versus other alternatives across DeFi.

Hope this answers your question!

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I think we should remove all axlUSDC rewards asap as one single wallet has most of the 1.5 million deposited and is a threat to the Mars council, rather than this proposal of rewarding them with 100k more mars.

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This was one reason we (cosmosrescue) thought about voting no on the proposal. That particular wallet has been continuously dumping the MARS rewards, too.

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agreed. If users are just looping to take all the incentives is that the goal? Helps for testing the protocol but it’s bad distribution & hurts community sentiment.

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Agree with @Trix here. Not sure how much the supply side needs to get incentivized, protocol testing is fine but at some point there should be enough demand side liquidity coming in from usage (which isn’t there yet obviously).

Currently this incentive program uses 12M MARS or ~1.9% of the community pool annually.