Now that Althea L1 is entering the “Go Live” phase, it’s a good time for the community to contemplate incentives for providing liquidity to the iFi DEX.
During the bootstrapping and early stages of Althea L1, the community voted to enable 5% inflation, which provides rewards for early validators and token stakers during the time that the chain and iFi DEX were being built. Now, the chain and iFi DEX are live with transfers enabled, empowering Liquid Infrastructure (RWAs) to utilize the chain. Further, the Althea L1 router firmware is nearly ready for production deployment, which can bring fee revenue to Althea stakers in stables used in telecom networks.
This discussion is to propose reducing inflation by 1% to 4% of the chain supply per year, and then issue 1% of the supply per year from the community pool for incentives in the iFi DEX.
While this discussion is both of these topics together, there will be two separate proposals to vote on. One to reduce inflation and another to supply the incentives from the community pool.
The community pool represents 25.75% of the total supply of ALTHEA and is currently not refilled by inflation. It is possible for governance to stake the community pool but that would be a discussion for another proposal.
Allocating 1% of the total supply per year from the community pool for incentives could consume 3.8% of the community pool per year. For technical reasons this is easier than supplying the required tokens for incentives from inflation.
The total amount of incentives and how they are distributed between pools are separate considerations. Some proposed values for pool distribution are.
ALTHEA/WETH 85% (new pool) (rewards on Ambient liquidity)
ALTHEA/USDC 5% (rewards on Ambient liquidity)
USDC/USDS 5% (rewards on concentrated liquidity)
USDS/USDT 1% (rewards on concentrated liquidity)
USDS/SUSDS 2% (rewards on concentrated liquidity)
USDS/GRAV 2% (rewards on ambient liquidity)
Due to technical constraints concentrated liquidity rewards can only be deployed on stableswap pools.
A chain upgrade, Cardinal Upgrade, to allow governance management of rewards will be required before this can be implemented. A governance proposal will need to pass to create each incentives program and transfer the tokens. So every pool will be voted on individually when it comes to rewards.
Discussion and feedback is encouraged.