Proposal to reduce the market incentives to $25,000 per month
Summary:
This proposal wants to reduce the monthly market participation rewards from 25,000 LQ (Proposal 46) to 25,000 USD.
Reasoning :
This change offers the advantage of capping the total market rewards in USD rather than LQ.
The recent increase in LQ’s price has made the current reward scheme too costly for the protocol.
Additionally, as observed last week in Liqwid’s stablecoin markets, their efficiency is hindered by the limited liquidity of stablecoins on Cardano in terms of both supply and volume.
High incentives have not resolved this issue, highlighting the need to adapt the market rewards. This proposal serves as an update to the previous proposal.
The change takes effect immediately after the on-chain vote is completed.
Conclusion
Do you support this proposal to reduce the market participation reward?
I would think that this has continued. It would be nice to update this to support this proposal further.
notably point #2Liqwid Protocol - Data analytics over the past 12 months
Regardless, the reference to Proposal 29 is sufficient in this Temp Check.
I want to add a nominal supplement of up to USD 2,000 for additional Aquafarmer Utility. Any wallet participating in the market can boost its reward by 2,4,6,8% for the AF it is holding. This assumes this is a low technical feat to add and not a high resource for the team.
I think that the reduction from 25.000 LQ to 25.000 USD is to much imo.
With LQ being at ~ 6 ADA and ADA being at ~ 1 USD the reduction from 25.000 LQ (= 150.000 USD) to 25.000 USD would roughly mean that Market Partizipation rewards will be 1/6 of what they are now if the proposal passes.
It might be true the LQ incentives might not had too much if an impact for suppliers, with rising prices of LQ and ADA this might not longer be correct.
This change is premature and should not be done at this moment in time.
Before this change is made, LQ should be allocated 100% to markets that generate interest. Not to 50% to interest repaid and 50% to interest generated. Suppliers cannot control repayment of the assets by borrowers, but suppliers should be fully rewarded in the stablecoin markets for generating interest.
This would provide a higher amount of APY for suppliers to supply more assets. Once the impact of this change (if any) is observed then the protocol should consider reducing LQ market participation incentives.