[ARC] LDO Emission_Admin for Polygon v3 Liquidity Pool


Title: [ARC] LDO Emission_Admin for Polygon v3 Liquidity Pool
Author: @llamaxyz @MatthewGraham
Dated: 2022-11-05


Simple Summary

In preparation for distributing incentives on the Aave v3 Polygon Liquidity Pool, @llamaxyz proposes amending the Emission_Admin address to enable the distribution of LDO rewards.

Abstract

In collaboration with Lido, Llama seeks to distribute LDO incentives to the stMATIC Reserve on Polygon Aave v3. In order to achieve this, the EmissionManager contract needs to assign an owner to the Emission_Admin permission allowing LDO rewards to be distributed, [1,2]. This can only be achieved via the governance process.

This proposal assigns the Emission_Admin permission to LDO rewards to the following address 0x87D93d9B2C672bf9c9642d853a8682546a5012B5. This address is controlled by Lido.

Motivation

The motivation of the proposal is to enable LDO rewards to be distributed on the Polygon v3 Liquidity Pool.

Specification

The Lido Liquidity Mining Committee determines the emission rate and duration at which LDO rewards are offered. Standard practice is for the council to meet and determine the next 30 days of LDO rewards on a rolling basis. This means each month, the committee will determine if to extend the LDO rewards, or change the amount of LDO being offered across the Polygon v3 Liquidity Pool.

The Emission_Admin is not limited to a specified Reserve and is linked to the token being distributed across the Liquidity Pool. The EmissionManager determines the LDO Emission_Admin and not the stMATIC Reserve. The Emission_Admin can distribute LDO anywhere across the Aave v3 Polygon Liquidity Pool.

Implementation

Set Emission_Admin permission for LDO on the Polygon v3 Liquidity Pool to Lido’s address: 0x87D93d9B2C672bf9c9642d853a8682546a5012B5

References

[1] Rewards - Developers
[2] aave-v3-periphery/IEmissionManager.sol at master · aave/aave-v3-periphery · GitHub
[3] Staked MATIC (PoS) (stMATIC) Token Tracker | PolygonScan
[4] $1.12 | Lido DAO Token (PoS) (LDO) Token Tracker | PolygonScan
[5] Creative Commons — CC0 1.0 Universal

Copyright

Copyright and related rights waived via CC0, [5].

5 Likes

oh llama, here we go again:

shouldn’t we disclose conflicts of interest?

https://lego.lido.fi/retrospective-grant-to-llama-for-listing-stmatic-on-aave-v3-polygon-1-st-part
https://lego.lido.fi/retrospective-grant-to-llama-for-listing-stmatic-on-aave-v3-polygon-2-nd-part

~$20,000 for listing an asset which is part of your $1.5M mandate.

it looks like perverse incentives … a slippery slope you climb.

watching, always.

We’ve made it very clear that we only charge Aave for the risk assessments involved in asset listings, not for the AIPs and coordination involved outside the risk assessment. We were encouraged to do this by various Aave stakeholders. See our proposal deliverables under asset listing risk assessments.

Note that we only charge Aave for risk assessments of specific assets, not for the AIPs and coordination involved outside of the risk assessment. We will liaise with individual communities and support new asset listings, with all efforts outside of the risk assessment funded by those respective communities.

LDO rewards seems like a solid incentive for users to deposit on Polygon V3.

Can we see this discussion happening in Lido, in terms of what amount will be allocated towards Aave?

For the Emission_Admin role, what sort of risks are introduced? Is it exclusive to one address / DAO to hold this role? Does this role only grant rights to the Polygon V3 market - or across all of V3?

Sorry for the slew of questions.

Hi @fig,

The ‘Emission Admin’ role already exists and in the past the Optimism team used this functionality to distribute OP rewards. The role is specific and limited to a single address which can determine how LDO is distributed on just Polygon v3. If LDO was to be distributed on a different Liquidity Pool, Optimism v3, then a new proposal is needed requesting an LDO Emission Admin be assigned to a specific wallet address. If another team wants to distribute a token, say stMATIC, then a new governance proposal is required to assign a stMATIC Emission Admin.

I believe Lido has a Rewards Committee that determines if and how much LDO rewards are distributed across the ecosystem. The November LDO distribution can be found here.

1 Like

From a technical perspective, we can confirm that the procedure of adding an emission admin for LDO rewards doesn’t really introduce any meaningful risk on the Aave liquidity protocol, or big dependency on an external entity (in this case, Lido). The Aave v3 system was designed precisely to have this as a regular procedure.

The system of activation of incentives from the mentioned aave-v3-periphery is modular enough to connect to the protocol in a non-invasive way: whenever a program of rewards of asset X is enabled to an asset listed Y on the pool, the protocol will just “notify” the RewardsController of the current accounting of the incentivized asset.




So, high-level, the emission admin only has permission to:

  • Activate rewards of their assets to different sides on an Aave pool (e.g. LDO to specifically people depositing stMATIC). This is done by defining an “emission per second” (can be understood as giving X amount of LDO per second per stMATIC supplied) and a “distribution end” (exact timestamp where the rewards emission will stop).
  • Define a transfer strategy for the rewards: usually consisting of having approval from a vault from where the system will pull the rewards (e.g. LDO) to then transfer to users of the stMATIC in the Aave protocol.
3 Likes

Thanks for the informative replies here @bgdlabs @MatthewGraham !

1 Like

Hi Everyone :wave:

We have create a Snapshot vote for everyone, link here. Voting is due to start later today after posting the Snapshot yesterday.

We hope everyone can participate in this vote and we thank all participants in advance for taking the time to vote.

1 Like