Proposal: Update of Indigo Tokenomics

Temp Check Discussion
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Background

Since Indigo’s inception, the emissions schedule has largely remained unchanged, with Proposal #27 extending the emission timeline but maintaining the same emission rate. During this time, the protocol has undergone significant economic changes, while the emission strategy has continued to play a crucial role in balancing utility and interest within the system.

The current emission schedule was essential to fuel Indigo’s launch phase. However, evolving market dynamics have prompted the introduction of emissions modifications, as outlined in the Treasury proposal. This approach empowers the DAO to manage emissions proactively with the guidance from its elected working groups and general members.

It’s Labs’ belief that quarterly reviews of emissions in a rapidly changing market would be an appropriate strategy going forward, especially for 2025 as volatility is expected.

Proposed Adjustment to Emissions Allocation

This proposal does not alter the overall emission schedule or extend the 2030 end date. Instead, it reallocates 20% of the current reward emissions to the Treasury fully, maintaining total emissions but redistributing how they are utilized.

By rerouting these emissions, the protocol strengthens its long-term sustainability and runway while ensuring continued rewards for Stability Pool (SP) and Liquidity Provider (LP) participants . This reduction also better aligns with the current market dynamics that suggest that the time is opportune for this adjustment. In addition, by rerouting the funds to the treasury, no change in the electorate calculation for AQB is necessary.This results in not requiring an upgrade to the protocol to account for an electorate change.

Emissions Allocation Before the Proposal (per epoch)

Stability Pool (SP) Rewards:

  • iBTC: 3,606.189970 INDY
  • iETH: 1,176.909993 INDY
  • iSOL: 1,000.000005 INDY
  • iUSD: 15,406.670030 INDY
  • Total SP Rewards: 21,189.769998 INDY

Liquidity Provider (LP) Rewards:

  • MinSwap: 6,263.060 INDY
  • Sundae: 3,711.080 INDY
  • WingRiders: 482.090 INDY
  • Total LP Rewards: 10,456.230 INDY

Combined Total of SP and LP Rewards: 31,645.999998 INDY

Emissions Allocation After the Proposal (per epoch)

Stability Pool (SP) Rewards:

  • iBTC: 2,884.951976 INDY
  • iETH: 941.5279944 INDY
  • iSOL: 800.000004 INDY
  • iUSD: 12,325.336024 INDY
  • Total SP Rewards: 16,951.8159984 INDY

Liquidity Provider (LP) Rewards:

  • MinSwap: 5,010.448 INDY
  • Sundae: 2,968.864 INDY
  • WingRiders: 385.672 INDY
  • Total LP Rewards: 8,364.984 INDY

Combined Total of SP and LP Rewards: 25,316.7999984 INDY

Impact of the Proposal

  • Treasury Allocation:
    The 20% reduction from SP and LP rewards (6,329.200000 INDY per epoch) will be reallocated to the Treasury.
  • Emission Cap:
    The emissions cap remains unchanged, and the reallocation does not affect the total INDY emissions or the planned end date of 2030. Instead, it ensures a more strategic use of INDY, balancing immediate rewards with long-term protocol growth and stability.

Impact on SP HRA

INDY price 1.8 $
% reduction in rewards 20%
iAsset SP SP INDY HRA
SP balance Asset Price ($) Existing New Existing HRA New HRA
iUSD 5,294,801.26 1 15406.67001 12325.33601 38.23% 30.59%
iBTC 17.518765 94500 3606.190027 2884.952022 28.62% 22.90%
iETH 330.96 3352 1176.910008 941.5280064 13.94% 11.15%
iSOL 5,011.69 191 1000 800 13.73% 10.98%

Proposal Summary

This proposal introduces a plan to reduce emissions systematically, starting with an initial one-time reduction of 20% in INDY incentives for the Stability Pool and Liquidity Providers. Upon approval of this proposal via on-chain vote, a one-time 20% reduction in rewards will take effect.

9 Likes
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Very clear and simple, thanks. I am in favor, less emissions should help with the sell pressure each epoch brings

4 Likes
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Well written, I believe this is a good proposal.

3 Likes
4

Looks good! Quarterly reviews sound appropriate in the current climate

3 Likes
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In favor of making this necessary adjustment and stabilizing the treasury :muscle:t2:

3 Likes
6

It seems like a short term move to relieve selling pressure on INDY…

It would equally mean that Treasury will accumulate more INDY, faster (the other source being buybacks…

Some questions:

  1. is there an expected other move or event (more than a long term hope) that we think would generate buying pressure so that treasury could diversify its holding ? E.g. increase in revenue though the launch of twin protocol, proposal to burn some INDY from treasury…

  2. if not, what could be done with treasury INDY holding without increasing selling pressure ?

  3. is treasury participating to governance ? (My understanding is no, as foundation is the executive arm for use of treasury funds only based on voted proposal, but just a check)

1 Like
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Well as the proposal suggests, there will/should be quarterly reviews of emissions going forward. I think it would be safe to assume further reductions in the future if the market suggests they’re appropriate and another proposal passes. All tbd of course.

  1. Continued innovation and feature upgrades to the core protocol. Sister system launch involving a strategic utility and economic boost to INDY. PoCoP grassroots marketing efforts. An upcoming Indigo Affiliate program. Just a few Things in the works.
  2. NA
  3. Correct, the Foundation does not participate in governance with Treasury or Foundation held funds
3 Likes