Summary:

Update APW’s tokenomics to a new emission schedule, in preparation of a migration to the ve(3,3) model.

Context:

For the past months, the Spectra team has thoroughly thought about an update of APW’s tokenomics, to better align the protocol’s various actors.

In V1, the APW token was following the classic ve model, i.e :

• Voters choose the pool to which they want APW rewards to be allocated
• Liquidity Providers earn the fees generated by the pool as well as the rewards determined by the votes.

This proposal presents updated tokenomics for the second version of the protocol.

Rationale:

In the V2, users are able to tokenize their Interest Bearing Token (IBT) or its underlying into Principal Tokens (PTs) and Yield Tokens (YTs) to trade them on the AMM. Liquidity of those tokens are handled by LPVaults, defined by the underlying token they receive as deposit (e.g. USDC) and their yield strategy (e.g. Morpho lending), their duration and renewal date. Liquidity Providers (LPs) deposit their PT and IBT in the corresponding pool, and are then entitled to yield from the yield strategy, swapping fees generated on the AMM, and additional potential incentives.

In this first bootstrapping phase, there will be no fees taken from the LPs, aiming to maximize their revenues and providing a competitive advantage as a liquidity venue.

It will also enable the protocol to make its initial growth and let the governance gather insights on where to extract the fees for the DAO and voters. We note the possibility to activate different fees at a later stage: liquidity vault performance fee, tokenization fee, swapping fee, fee on the YT yield or even fee on the idle liquidity yields.

To bootstrap Spectra’s launch and prepare for this new feature, we propose to define the incentives for Spectra’s participants.

Proposal :

To support the initial launch of Spectra, we suggest activating incentives for Spectra’s gauges as per the following timeline:

• In the first week, Spectra will make 87,747 APW available for distribution via the gauges.
• Subsequently, the weekly incentives will decrease to 98.9% of the amount from the previous week, continuing this pattern for 181 weeks.
• Starting at the 183rd week, incentives will stabilize at an annual rate of 2% of APW's circulating supply.

These rewards will be allocated to the gauges based on the proportion of votes they receive relative to the total votes. Additionally, voters will have the option to redirect APWs back to the DAO, the number of returned APW will also be proportional to the votes on this option.

Following these parameters, the upper bound curve for APWs supply would be the following :

Additionally, Spectra will natively support bribes directed at voters. This feature will empower any user to play a role in the incentivisation of markets.

We think that this new distribution will effectively bootstrap Spectra, and make the protocol ready for the transition to its transition ve(3,3) model.

Voting Options

• Yes, Use this distribution and emission for Spectra
• No, do not use this distribution and emission for Spectra
• Abstain