TL;DR Summary
- Propose opening two supply-only markets on Seamless Protocol: one for the 3x wstETH/ETH ILM LP Token and another for the 1.5x ETH/USDC ILM LP Token.
- Utilize these markets for reward emissions ONLY (not lend/borrow), turning them into staking farms to emit SEAM, esSEAM, or other rewards on the LP tokens held by users.
- Request a budget of approximately 185k-200k SEAM from the Onchain Summer Rewards budget or the DAO to distribute as rewards over an initial two-month period.
- Aim to bootstrap interest, liquidity, and usage for ILMs through these initial rewards, with the goal of tapering off these rewards after the two-month period based on further discussions.
- ILMs have shown initial promise despite the minimal support/reward subsidies, particularly noting the high retention rate of the 3x wstETH/ETH ILM.
Proposal Summary
This proposal suggests opening two individual supply-only enabled markets on Seamless Protocol’s lend/borrow platform. One market would be for the 3xwstETH/ETH ILM LP Token, and the other market for the 1.5xETH/USDC ILM LP Token.
These “single sided” markets would then be utilized for reward emissions, effectively becoming staking farms to allow ILM users to generate SEAM, esSEAM or other types of rewards on the LP tokens they hold. No risk parameters suggestions are required as there are no plans to enable lending/borrowing for these markets.
Additionally, a small budget of SEAM or esSEAM rewards would be requested from the Onchain Summer Rewards budget or additionally requested from the DAO. These would then be loaded into emission reward schedules for these two markets.
This means:
- Opening a supply only market for the 3x wstETH/ETH ILM LP Token
- Opening a supply only market for the 1.5x ETH/USDC ILM LP Token
- Requesting a budget of ~185k-200k of SEAM, to be distributed as SEAM or esSEAM rewards to these two staking farms (two markets mentioned above) across an initial period of approximately 2 months
Context & Motivation
The Seamless Protocol ILM’s provide unparalleled across passive management, low costs and active yield generation. These ILMs have been live for a few months with minimal support from subsidizing with rewards to bootstrap these markets. This proposal aims to enable rewards to initially bootstrap interest, liquidity and usage for the ILMs, with the goal of tapering off these rewards after an initial 2 month period (based on further discussions). This will incentivize new users and entrants to discover and use ILMs, and assist in either gaining market traction for ILMs or allowing the DAO to decide on more optimal bandwidth/resource allocation to other priorities.
To date, ILMs have shown robustness in its technical build and operations, as well as a steady accrual of value to users (even when accounting for the initial LIDO sponsored rewards).
In particular, the 3x wsteth/eth ILM exhibits an initial stickiness/retention greater than 50% (i.e. long term holders/users of the vault). Once again - with minimal rewards or other factors that have subsidized, this appears to be a promising development that deserves more support and attention.
Specifications/Technicals
Exact payload and technical specifications will follow from technical contributors if the discussion/proposal moves forward.
For reference, anyone can view the pre-existing proposals and technical payloads that created similar “single sided” markets for DEGEN and BRETT.