Indexed

Summary

We recently submitted a proposal to create a new program for liquidity mining/staking that uses a fork of MasterChef to distribute rewards.

We are proposing launching this program by funding the first quarter with the remainder of the tokens allocated to the Sigma program.

Context: Staking Rewards Proposal

We recently submitted a proposal to create a new system for staking that uses a fork of MasterChef to distribute rewards. This system is more dynamic than our current distribution system, which uses a separate contract for each staking token and requires static durations and reward amounts. The contract overseeing the rewards program allows governance to set a “points allocator” account which is able to decide the relative rewards given to stakers of each token.

This proposal also included a rewards schedule for distribution that would last two years, with a linear decay on the amount of NDX distributed in each block that begins at ~3,490 NDX in daily rewards and ends at ~618 NDX in daily rewards.

Snapshot Vote Approving Distribution: https://gov.indexed.finance/#/ndx.eth/proposal/QmPbdL6GLJpqaKg6Sez1PuY46xqZHVFSfX3kzwC15hsvJs

Discussion Thread: https://forum.indexed.finance/t/proposal-update-ndx-emissions-schedule/639

Proposal Body

When the Sigma program was created, the Indexed DAO allocated 600,000 NDX to a timelocked address controlled by the Sigma committee to hand out as LP rewards on newly created index ETFs. Of these tokens, there are 527,500 remaining.

We propose that instead of funding the full amount assigned to the liquidity mining rewards program from the Treasury (1.5 million NDX), we begin by using the remaining Sigma program tokens to fund the first 1,091,000 blocks (out of 4,778,182). In this way, we create a ‘checkpoint’ relatively early on that allows the DAO to evaluate the efficiency of the program and decide whether to fund the remainder from the Treasury.

We further propose that the Sigma committee initially be given the role of points allocator for the new rewards contract, meaning that it has the ability to assign rewards per staking token.

Governance will retain both the ability to cancel the rewards program early and reclaim the remaining tokens to the Treasury, and the ability to replace the Sigma committee with another account to set the reward allocations.

Priorities

In managing reward allocations, the Sigma committee will have three priorities:

• Ensuring that external markets for our ETFs are sufficiently liquid that the average user can swap, rather than mint or burn, with low price impact.
• Growing the AUM of the Indexed protocol.
• Incentivizing liquidity on secondary markets for our ETFs, such as lending, options, leveraged trading, etc.

The exact method of allocating rewards is likely to shift over time as data is gathered and different strategies are assessed. The Sigma committee will keep the community informed as to how we are allocating rewards and what we are learning about it, and will attempt to develop specific formulaic methods of allocation that can eventually be moved to a smart contract.

Action Points

If this proposal is accepted, we will:

• Deploy the staking rewards contracts,
• Set the Sigma Gnosis safe as the points allocator,
• Give ownership to the Indexed Treasury, and
• Queue a transaction to transfer 527,500 NDX to the rewards contract.

After seven days have passed (the amount of time required by the Sigma timelock), the tokens will be transferred to the rewards contract and staking rewards will begin.