BOND Subsidy for AAVE on Polygon

With SMART Yield launching on Polygon next week, it’s time to consider how we go about incentivizing junior tranche deposits, if at all. I wanted to kick off the conversation by anchoring it with a few salient points:

  • AAVE Polygon currently has about a third of the TVL that AAVE v2 holds. When looking at specific stablecoins, DAI’s Polygon market is about ~2/3rds the size of the v2 equivalent, whereas both USDC and USDT come in at ~1/4th the size.

  • Both Curve and Balancer are on Polygon. This poses a unique opportunity to pilot secondary market incentivization as opposed to just rewarding primary deposits.

  • SMART FIAT will augment SMART Yield’s functionality and should prove to be a recalibrating point for both mainnet and Polygon rewards. Furthermore, more L2 solutions (e.g. Arbitrum) will be live at that point (i.e. September) as well that could shake up the rewards strategy.

My personal preference would be for a DAI-weighted rewards program running through the end of September that would accept LP shares from either a Curve or Balancer pooler composed of bb_poly_aDAI, bb_poly_aUSDC, and bb_poly_aUSDT. Getting through Curve governance has been a bit of a struggle but we’re hoping to have clarity by end of week.

What does everyone think?

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Hi Max. I thought there will be incentives in Matic like on AAVE. In that case there would be double incentives in MATIC from AAVE app and BB app. Do we need another incentives? Or there will be no incentives in MATIC? Last time I asked you told me that you working on it could you tell as more about MATIC incentives so we could see bigger picture here? :slight_smile:

Because AAVE already receives MATIC rewards, SMART Yield on Polygon will not be. SMART Exposure potentially will, however, be eligible for MATIC rewards - still discussing with their team.

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we would gain MATIC like we do the stkAAVE? or will the Token be different?

Correct, so the question posed here is to what extent we offer BOND rewards alongside those MATIC rewards.

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I am all for providing BOND incentives secondary markets. Polygon opens up the opportunity to test it out.
Yes I am for, but please don’t go nuts. So having it at 2,500 BOND per week per pool is fine.

Non related question, since Polygon is kind of like a ‘testing ground’, will we launch more SMART Exposure pairs there or just the 2 we have on ETH mainnet?

I am all for providing incentives to help BOND gain traction on MATIC, but I do not have a grasp on what a conservative amount would be, compared to an aggressive amount. Can you share your thoughts on a range that would be appropriate, so the members that do not have the time to break down and process all the intricacies can have a good starting place to discuss.

I think @dirkava provided a good anchoring point. We’re currently giving out 18,000 weekly for AAVE v2 - given that the stablecoin volume on AAVE Polygon is a small fraction of what it is on mainnet (most are using it to borrow against their ETH / WBTC), I would probably advocate for somewhere in the range of 2,500 - 5,000 BOND.

The fact that we’d want to target these rewards at secondary pools will make for an interesting dynamic as well, since users would be taking on more risk to get these rewards.

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I think incentivizing the Polygon launch to a certain extent would make sense. I agree with somewhere in the range of 2,500 - 5,000 BOND weekly. Would that be split up for the three secondary pools or per pool?

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SY on polygon strongly needs BOND incentives. Not only will we test secondary markets for jtokens but we also can observe the markets appetite for seniors in a “gas-less” environment. Couple of personal preferences:

  • LP BOND incentives should be equitable across all assets with BOND distributed proportionally to $LP positions.

  • I’d strongly prefer a curve pool over balancer for jtoken swaps but understand the timing and potential heavy governance lift.

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I agree 100% with this. Will add that I would support a weekly allocation of 5k BOND for 10 weeks. I believe 50k BOND would be a worthwhile investment considering the additional risk LPs would be taking, the importance of testing out SY on L2, and the overall value of attracting as much TVL as possible early on.

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Well if there will not be incentives in MATIC I support to incentivize it with BOND. I hope senior side will do well on Polygon so we need to incentive juniors for better senior conditions.

Maybe 1500 BOND per week for DAI, 2000 BOND per week for USDC and 500 BOND per week for USDT. It can also be less. Like usual I would like to save $BOND in the treasury for the future. :smiley:

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I would scrap USDT SY pool altogether and save the incentives… I mean, even Curve is starting to cut USDT out - they launched on FTM with only 2pool (Dai / USDC).

All in all, Yes I am in the mindset that USDC and DAI incentivization to the tune of 5K a week for 10 weeks is a minimum must for polygon network.

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Like the idea of the bb_polyaDAI, bb_polyaUSDC, bb_polyaUSDT pool: on Balancer such decisions don’t require a wider governance vote (pools can be deployed permissionlessly, and appear in the UI).

Could also pair one of those up with ETH and provide a new onramp via the vault, plus generate some further awareness potentially too as Balancer is being used by a good number of LPs on Polygon already.

(Not to mention could create a BOND pool so people have somewhere to trade Bond on Polygon too, all at the same DEX)