The current KACY emissions will end on 21th of July, finalizing the second quarter of rewards.
While we’re testing the last bits of the on-chain governance interface, the new emissions for the next quarter (3 months) will be set by the core team instead of the governance itself. But nonetheless, we would like to hear from the community.
400k KACY was planned to be distributed over the second quarter, but in the end, we distributed 350k, with those allocations:
- 15k KACY for staking KACY without withdrawal delay
- 30k KACY for staking KACY with 15 days of withdraw delay
- 55k KACY for staking KACY with 45 days of withdraw delay
- 100k KACY for staking LP of KACY-AVAX (half png, half traderjoe)
- 75k KACY for staking aHYPE
- 75k KACY for staking K3C
The current KACY circulating supply is ~1.43mi KACY - the website is not up to date.
There are still 3.9mi KACY reserved to be distributed as rewards over the course of the next years.
Keeping the distribution the same as the previous quarter (350k) would keep the same APRs for all the pools. With this emission rate, the rewards reserve would end in ~2.5 years.
Given market conditions, product development stage, and token inflation metrics, should we lower the distribution for the next period? If your answer is yes, please explain what pools and how much you would reduce the emissions and APR.
Keep in mind that lowering rewards will impact not only price action, but market visibility, liquidity, and TVL.
Currently, we have a market cap of ~$130k, total liquidity of ~80k (png+joe) on KACY-AVAX, and ~$155k of TVL.
- Lower emissions
- Keep it the same
I’d say lower quarterly emissions to 300k, with q4 being 250k until market conditions are better.
I would maybe not lower, but definitely readjust the rewards, maybe get rid of one of the pools. Right now the numbers are unfair, there is no big benefit for those who decided to lock for the most time possible
The rewards are that way because our community is constantly locking it for the longest time. I see that there aren’t big benefits, but it is how it is because people keep seeing 45 days as the best option. Nonetheless, I agree with an adjustment. What would in your opinion be good APRs for the KACY pools?
I understand that it is changing since people always lock there and here, but maybe it should be readjusted time to time.
There is no answer what is a good APR since it comes with a cost of inflation, I would say it will be fair if the APRS where adjusted proportionally:
no lock pool: 1x
15 days lock: 2x
45 days lock: 4-6x? (it seems natural ti be 3x since its 3x the time lock but it may be too much)
or maybe 1x, 1.5x, 4x
If it could be adjust automatically to rebalance rewards great, but my opinion is that they should be readjusted so if I stake to the 45 days today, I know that in 45 days I will still get more then those who don’t lock or lock less
I think LP rewards is too high. 50k for staking LP can be good. I’m not sure what is the impact if we have to little TVL in LP pool…
I think staking aHype and K3C need to be high because is this products are the core of Kassandra value. So keep it or up the reward can be good to attract new people.
Staking KACY seems good for me. 15 days and 45 days have similar APR but it’s because people think it’s good to have few % more KACY rewards for 30 days more of locking.
I back the idea of lowering LP rewards.
Liquidity does its job of helping people to buy and sell without too much price impact and to have a less volatile token price. Lowering it would definitely hurt those aspects. But rewarding liquidity also comes at a price, today we’re rewarding LP with KACY, and this does have its impact on price.
Lowering LP rewards would decrease our liquidity, and make us more vulnerable to sell-offs, but it also would boost our appreciation in case of a new bull wave. It goes both ways, and it’s hard to gauge impacts.
I think the point is, how much liquidity do we need? How much is too much and how much is too little?
A helper to that question is our liquidity to mcap ratio, compared with other projects. We’ve $80k of liquidity with $130k of mcap, what would result us a 0.615 L/MC ratio.
A few L/MC ratio for a few Avalanche projects:
- YieldYak: 0.185
- Avalaunch: 0.157
- Crabada: 0.114
- GMX: 0.1
- BENQI: 0.098
I made this summing liquidity on https://dexscreener.com/.
Comparing our ratio with those projects, I can’t justify why we need that much more liquidity. It makes sense to have a high liquidity when you’re inflating your supply too much, and it may be better to have high liquidity to absorb our quite high rewards for products (aHYPE + K3C), in the case of people selling rewards, but I don’t think it needed to be that big.
If we lower our LP rewards in half, and this lowers our liquidity in half, we would still have the biggest L/MC ratio on the list.
What do you guys think about this point of view?
This makes a lot of sense to me. I’d say let’s just focus emissions towards the staking pools then and lower from the LP pools.
Seems good to me to lower LP rewards.
The new emissions have been deployed, and are already live! Thank you all that engaged in this post and gave their opinions and point of view.
Given the insights here and with the team, the emissions for the next 3 months will be as follows:
- 12k KACY for staking KACY without withdrawal delay
- 25k KACY for staking KACY with 15 days of withdraw delay
- 63k KACY for staking KACY with 45 days of withdraw delay
- 50k KACY for staking LP of KACY-AVAX (half png, half traderjoe)
- 75k KACY for staking aHYPE
- 75k KACY for staking K3C
Summing up 300k KACY, what is 50k less than in the last quarter.
Essentially, we slightly readjusted the rewards for the KACY pools, favoring longer locks, and halved the emissions for liquidity providers.
Adjusting rewards for KACY pools will keep providing enough incentives to people to keep KACY out of the market, without impacting too much on the ongoing dynamics. Those are the new reward rates after the update:
Halving rewards for LP had their halved APRs too. Beware that removing rewards from LP may impact our current liquidity in the following days and weeks. Let’s see how this plays out.
In this next quarter, half of our deployed rewards will be used to reward users that are using either K3C or aHYPE, fighting for awareness and adoption inside the Avalanche Ecosystem.
Thank you guys again, and I see you all in the next quarter on-chain, voting for emissions using your own voting power.
excellent take. Lowering LP rewards is a very good step here