Beets Budget 5 (Q1 2026)

Introduction

Since its launch on Sonic, Beets has adopted a quarterly budget system designed to provide governance-controlled flexibility, allowing the protocol to adapt emissions to changing market conditions while safeguarding the token supply and community interests. Under this system, the Music Directors present a BEETS budget for DAO approval every three months, covering the upcoming quarter. Each budget outlines the number of BEETS to be minted and their allocation within the ecosystem. It also specifies the distribution of protocol revenue for that quarter.

The 2025 Q4 budget (October–December 2025) will conclude at the end of December. The 2026 Q1 Budget will cover the period from January through March. We first introduce an overview of the 2025 Q4 Budget so far (excluding December) and then provide the proposal for the 2026 Q1 Budget.

Overview of the 2025 Q4 Budget

Total budget for Q4 was 8,000,000 BEETS tokens:

The table below shows the total Q4 allocations alongside the values as of the end of November:

By the end of November, 4,623,438 BEETS tokens had been used in total from the Q4 Budget. The remaining Budget is expected to be spent by the end of December as follows:

1. 1,050,000 BEETS - BEETS distributed based on the gauge vote results
2. ~1,100,000 BEETS - BEETS distributed based on the MD Discretion

The Music Directors planned their distribution with a reserve of tokens to cover potential specific use cases. If these tokens are not utilized, the Q4 budget will likely conclude with a total surplus of approximately 1,250,000 BEETS.

Protocol revenue distributions have followed the allocations outlined in the Q4 Budget. The table below details the revenue sources and their respective allocations: *(Treasury - Towards DAO treasury; maBEETS - Towards BEETS buybacks to be used as protocol bounties on Sonic gauges votes; BEETS BB - Towards BEETS buybacks to be used in the next budget; Other - Extra incentives and revenue share with partners) With the launch of v3 on Optimism we have different fee structures for v2 and v3 pools and thus the total Optimism allocation percentages are an approximation.

By the end of November, a total of 3,836,099 BEETS had been bought back from the open market. Of this amount, 2,065,057 BEETS were used as protocol bounties for Sonic gauge votes, while 1,771,042 BEETS were reserved for the next quarterly budget:

Extrapolating from this data, we estimate that approximately 2,500,000 BEETS will be available for the 2026 Q1 Budget from Q4 buybacks.

Proposal for the 2026 Q1 Budget (January - March)

Based on the current figures for the 2025 Q4 Budget, we estimate an expected surplus of 1,250,000 BEETS, along with an additional 2,500,000 BEETS from buybacks, to be carried over to the 2026 Q1 Budget.

BIP-100 approved the closure of the BEETS bridge from Fantom to Sonic beginning in 2026. It also authorizes the use of unmigrated BEETS held in a designated multisig wallet (~42M tokens) for quarterly budgets. Instead of minting new BEETS, we propose repurposing tokens from this unmigrated supply.

For the 2026 Q1 Budget, we present three options for DAO members to vote on. The options are summarized as follows:

Option A – Maintain a budget similar to the current one, with an emphasis on BEETS buybacks and low BEETS emissions. Option B – Maintain high BEETS buybacks and increase direct maBEETS incentives, with an emphasis on direct maBEETS rewards. Option C – Increase gauge-vote allocation and maBEETS protocol bounties, with an emphasis on gauge-votes and maBEETS voting incentives.

### 1. BEETS to be Repurposed for the Upcoming Quarter

The table above shows the amount of BEETS that would be repurposed from the unmigrated token supply under each option. For reference, a total of 5,163,102 BEETS were minted for the 2025 Q4 Budget, meaning all proposed options remain well below that value. These figures are approximations; the final amount will be determined based on the complete Q4 results.

2. BEETS Allocation for the Upcoming Quarter

The 2026 Q1 Budget will cover a total of 12 weekly deposits and a total of 90 days.

Option A maintains the current structure – 5,000 BEETS/day in direct maBEETS incentives, 210,000 BEETS/week allocated according to gauge votes results and up to 300,000 BEETS/week from MD Discretion (with an extra 400,000 BEETS reserve). MD Discretion is intended to boost incentives for high-priority pools, help bootstrap new pools, and support usage of stS across the Sonic ecosystem.

Option B increases direct incentives from 5,000 BEETS/day to 10,000 BEETS/day. Since the previous budget increased the percentage of revenue used for BEETS buybacks, the additional token availability could support this higher incentive level.

Option C increases gauge vote allocations from 210,000 BEETS/week to 250,000 BEETS/week. Over two-week epochs, this equates to 500,000 BEETS per gauge vote. This change would be paired with an increased percentage of protocol revenue dedicated to gauge vote protocol bounties.

3. Protocol Revenue Allocation

*Optimism DEX Fees are an approximation based on the partnership agreement between Beets and Balancer.

Under Options A and B, the revenue distribution remains unchanged from the current budget. This structure prioritizes BEETS buybacks, which are then used to fund the next quarter’s proposal, reducing the need for newly minted or repurposed tokens.

Option C introduces a change to stS fee allocations, directing a portion of these fees toward gauge vote protocol bounties distributed to maBEETS voters. Note that under the current protocol fee processing mechanics, using additional revenue sources for this purpose would be cumbersome.