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?