Gm ! Despite contributing to TokenLogic, and working on the SM proposal update, I didn’t co authored this post so sharing some thoughts:
Agree that the DAO is overpaying and introducing emissions cycles is smart, however since it’s not necessary for an immediate reduction, it’s probably safer to implement it once the SM strategy goes live so it’s not a blocker to increase emissions back if the SM is ready before the estimated timeline.
About the duration, 3 months seems fine, otherwise it could be increased to 4 months (relative to some strategic assets lock period).
About the amount, can you confirm that the overall budget can be increased back when new assets are added in the SM ?
If yes, agree that reducing the emissions on single assets and current BPT rewards to temporarily reduce the overall budget makes sense.
Not exactly, the proposed reduction for StkAAVE rewards is from 550 to 200 AAVE / day, so 63%.
The SM upgrade is not proposing to reduce the slashing on single assets at the moment, but instead to keep the parameter unchanged for now (30%) and add another asset.
It also proposes to increase the slashing up to 45% for volatile LPs and 60% for stable LPs, which means that 80-AAVE-20wstETH once migrated would be 45% slashing.
I’d support reducing the slashing on StkAAVE over time but might be better to implement this once its representing a much lower proportion of the overall cover.
Assuming the emissions cycles can be added later, and if emissions can be easily changed back when the SM strategy upgrade is ready for implementation, then emissions for StkAAVE could be decreased even more (up to 200 / day), saving 350 AAVE/day.
(2,5% APR if no TVL reduction, 3,6% APR with 70% of the current TVL, which means 16/80M$ of cover would be withdrawn)
The reduction on StkABPT can make sense too as it’s where the SM cover is more expensive because of the TVL spread, but it could also be proposed after the migration, as the DAO voting power should then be ready to use by the committee to vote on the gauge + the slashing would be increased to 45%. This can be a first step of the SM upgrade to test the strategy (before adding GHO pools once the peg is improved).
However, if the cycle periods are implemented now, or if the budget can’t be increased back with new assets, it’s best to update the reduction to 100 AAVE / day because the rewards spending estimated for max TVL (including GHO pools) on the new strategy is ~ 1000 AAVE/day atm, so it would not be a blocker in case the SM upgrade can be live earlier than expected.