Proposed Update to VIP Scoring for Echelon
1. Motivation
- Reduce vesting dilution: Current scoring formula emits a fixed total score daily allocated according to the incentivized actions. However, as TVL grows, scores may become diluted, making it difficult for existing users to meet the minimum scoring threshold to vest their previous positions. The new scoring formula dynamically scales daily emissions with total protocol supplies and borrows in an effort to reduce dilution as protocol grows.
- Realign incentives: Increasing the USDC borrow allocation to support greater borrowing activity, and increasing milkINIT and sxINIT allocation to maintain incentivized supply APR as caps rise.
2. Current Criteria
Current scoring emits a fixed total score daily allocated to the various actions. The allocations are outlined as follows:
USDC supply: 30%
USDC borrow: 15%
INIT supply: 32.5%
INIT borrow: 20%
milkINIT supply: 1.25%
sxINIT supply: 1%
deINIT supply: 0.25%
3. Proposed Change
We will emit a variable total score daily by scaling the score according to the following formula:
score_scale_factor = multiplier * (total_supply_value + total_borrowing_value) * 1000000
The multiplier ensures that scores follow the same scaling after this change. The scaled total score will then be emitted daily according to the following allocation:
USDC supply: 30% (no change)
USDC borrow: 15% → 20%
INIT supply: 32.5% → 31.5%
INIT borrow: 20% → 15%
milkINIT supply: 1.25% → 2%
sxINIT supply: 1% → 1.25%
deINIT supply: 0.25% (no change)
4. Target Implementation
Stage 7