TL;DR
Proposing a comprehensive token emissions and budgeting strategy to align with Seamless Protocol’s priorities, upcoming GTM initiatives, and roadmap milestones.
Key Proposal Highlights:
- Increase Emissions? YES, proposing an increase to emissions to create demand on various Seamless markets. Up to ~10% of total token supply for the period starting from now to end of 2025
- Key Areas for Rewards? Lend Borrow Platform, ILMs, Aerodrome DEX Incentives, Near Term Product Rollouts, Tokenomics
- Annual Budget Setting with Quarterly reviews
Context:
Seamless Protocol has made significant strides across product development and user engagement, with key milestones achieved over the past six months (i.e. surpassing 250k total wallets/users who have used the protocol).
Despite market fluctuations and competitive dapps entering the ecosystem, the protocol has maintained a steady TVL while expanding its product suite with ILMs. These efforts have reinforced Seamless’s position as a key player in the Base DeFi space, but there is always room and opportunity to grow and retake a leading DeFi position atop the charts.
Motivation:
The proposed emissions increase (detailed below) is a strategic move to position Seamless Protocol as a leader in the evolving Base ecosystem during a period of favorable macroeconomic and market conditions. Analysis of other successful Base DeFi projects reveals that aggressive reward emissions early in their lifecycle have propelled them to top positions. However, this approach has left many of these protocols with depleted treasuries, potentially limiting their ability to sustain long-term growth.
Seamless is uniquely positioned to take advantage of this moment. With a rewards treasury capable of sustaining emissions for nearly 20 years under current parameters, the protocol is not constrained by the same budgetary pressures as its peers. While longevity is an asset, success is ultimately determined by seizing opportunities at the right time.
As such, the proposed emissions increase reflects the DAO’s strategic priority to accelerate growth during an anticipated period of heightened crypto momentum. The motivation for this proposal stems from:
- Market Opportunity: With bullish sentiment due to macroeconomic trends, now is an opportune moment to position Seamless Protocol for capturing increased TVL and user activity.
- Product Expansion: The addition of new markets, new ILMs, and new products requires competitive incentives to drive adoption.
- Sustainable Growth: With ~55% of token supply held by the DAO and budgeted for rewards, turning up emissions in the early years, the DAO can maximize market presence while building a long-term framework for emissions decay and sustainability over time.
The current market environment offers a rare “stars-aligning” chance to capitalize on increased activity and user interest in Base. By ramping up emissions in the near term, Seamless can amplify its total value locked (TVL), attract new users, and strengthen its competitive position as the go-to lending/borrowing platform on Base. This approach will allow the protocol to regain mindshare and establish itself as a top choice for users and liquidity providers as Base continues its growth trajectory. In the medium to longer term this should translate to increased fee generation and rewards via tokenomics.
A thoughtful allocation of emissions ensures existing markets continue to grow while dedicating resources to newer products that represent future growth engines for the protocol.
Specifications/Technicals:
Under this proposal, the emissions schedule will be adjusted to distribute a maximum of ~10% of the total token supply from now through the end of 2025 (this represents 10,000,000 total SEAM). This strikes a balance between increased emissions/leaning into the aforementioned opportunity while still maintaining budget for future use. The suggestion is to maintain a framework that provides flexibility for emissions adjustments based on market conditions and product performance, ensuring sustainable deployment over time - perhaps with a quarterly revisiting cadence (similar to the bi-monthly cadence that is currently followed on lend/borrow reward emissions). For reference, even if the aggressive stance was maintained for multiple years there would be budget for over 5 years remaining; however, in all likelihood the budget would fluctuate (increase when market is good and decrease in the opposite case) - as such, we conservatively estimate the reward budget would still be able to last 6-10 years quite easily, which is much longer than early DeFi projects have maintained rewards (such as Compound, AAVE, etc).
The specific proposal for the 10% of total tokens, or 10,000,000 SEAM is to be emitted as either SEAM or esSEAM depending on the situation.
Note: remember these represent maximum values, emissions may start with a lower rate or budget to gauge efficiency, and be adjusted overtime with community input. That also includes the case where overall budget may be adjusted as well based on market conditions, efficiency and community decisioning.
- Emission Distribution:
- 30% (3m SEAM Tokens) for Legacy TVL Incentives: Gradually reduced as Seamless Morpho Flagship vaults gains traction.
- 30% (3m SEAM Tokens) for future ILM, vault or strategy launches: This may cover future ILM launches, second generation ILMs, or other types of vault launches under consideration (such as Morpho curated vaults)
- 15% (1.5m SEAM Tokens) for Safety Module: Set aside to bootstrap tokenomics currently being discussed in this proposal [GP] Activating SEAM Tokenomics, with a target delivery date of early Q1 25
- 10% (1m Seam Tokens) for Aerodrome Bribes: Aimed at generating strong onchain liquidity for SEAM and to kick-start the DAO POL strategy as approved in this proposal [GP-5] - Aerodrome Allocation. Will target minimizing costs overtime by accumulating veAERO holdings and allowing for organic long-term liquidity formation. Note* This budget has already been approved and will come out of the Seamless DAO Aera Treasury Vault.
- 15% (1.5m SEAM Tokens) Uncategorized: Reserved for unforeseen opportunities, product launches, airdrops, community marketing, etc.
- Emission Rate:
- Look at adjusting on a quarterly basis (every 3 months) based on market conditions, analyzed efficiency/metrics and community input
- Look to potentially increase or decrease overall annual budget on an annual basis, likely seeing fluctuations in the near term, but in the longer-run seeing decreased annual emissions, in order to stretch the emissions schedule to 9–10 years if needed.
- Implementation Process:
- Emissions will be sourced from the DAO’s reserves
- Final technical payloads, including specific on-chain transactions, will be presented post-discussion period pending positive community feedback.
Next Steps
- This emissions strategy represents a robust approach to incentivizing protocol growth while maintaining long-term sustainability and community alignment. Feedback is welcome to refine this proposal further.
- Initiate the ~5 day discussion period. Afterwards, follow the typical GP process for a Snapshot Labs vote to memorialize the overall decision (pass or fail).
- Later down the road, move to onchain governance payloads (there may be many individualized onchain votes overtime for each category/each timeline).
Referencing past Protocol Reward Refresh Governance Proposals for community reference: