[GIP-51] Allocate GEAR to Balancer/Aura g-USD pool bribes

EDIT 2023.04.19 - Revised from 600k GEAR/epoch to 1m GEAR/epoch.


Allocate 1m GEAR ($14k at current prices) per 2-week epoch to bribe vlAura holders (via HiddenHand) to vote for the Balancer Boosted Gearbox USD Pool for the purpose of evaluating efficiency relative to directly rewarding GEAR to lenders on Gearbox, and to simultaneously raise awareness for Gearbox and the lending pools to the Aura and Balancer communities.

If desired by multisig, multisig to coordinate with Aura on sending multiple installments to reduce burden (ie, send 1 month of GEAR and Aura will custody the GEAR and bribe the appropriate amount each epoch). Alternatively, the multisig can conduct bi-weekly operations directly via HiddenHand.

Justifcation (Less Technical)

Balancer’s boosted pool system allows a portion of a liquidity pool to be deployed in yield bearing strategies, without sacrificing depth of the liquidity pool. This allows LPers to earn additional yield on their position while still allowing large swaps through the pool. An initial pool has been created for USDC, DAI, dUSDC, and dDAI. This means traders can swap USDC and DAI in the pool, while LPers earn yield from lending USDC and DAI to Gearbox on a portion of their liquidity position.

The pool earns yield in the form of swap fees, base yield (USDC, DAI), external rewards (GEAR), and internal rewards (AURA, BAL). A portion of the yield is passed on to the LPer, a portion goes to the DAO treasury/veBAL, and another portion is used to bribe voters to vote for the pool (essentially this means LPers get a little extra yield, but in the form of AURA/BAL instead of GEAR).

An initial group of vlAura holders voted for the Gearbox USD pool. This created initial rewards in BAL/AURA, which brought TVL, which brings APR that goes to LPers/bribes, etc. There is a potential flywheel here, where an ‘altruistic’ baseline of voters will create baseline incentives, which brings TVL, which brings APR, which brings more TVL, etc, etc. A key piece of this flywheel is the Aura bribe multiplier which is historically between 1 and 1.5 ($1 paid to aura voters will send between $1.5 and $2 of emissions to the pool).

However, the initial vote has ended - so a new altruistic voter would need to step in to continue to grow the pool. Or, perhaps a voter that is already spending GEAR for diesel pools - aka, Gearbox.

The primary question here is: If we spend GEAR to bribe vlAura voters to vote for this pool, do we actually get more dUSDC and dDAI liquidity than if we send GEAR to the lenders directly?. The answer is: MAYBE. Essentially there are a LOT of assumptions and variables, but in general most conditions lead to it being somewhere between slightly worse and a bit better (see below section for more information).

So - the goal of this proposal is to fill in the void in voting, in order to see if the pool grows as we expect it to over time. The purpose would be to re-evaluate in the future to determine if a more significant portion of lending pool liquidity mining would make sense to divert to this pool. Additionally, the presence of a stablecoin pool with reasonable yield can bring new eyes to Gearbox and the lending pools from the Aura/Bal communities (which should encapsulate a decent chunk of active DeFi yield farmers/lenders).

More Technical Context

A boosted pool begins with a linear pool. This is a pool that pairs a yield bearing asset with it’s underlying collateral. For example, yvWETH and WETH. The pool has a target weighting that can be compared to the actual pool balance onchain with expected price functions of the yield bearing asset. When a pool user helps restore the pool balance closer to the target, they receive a credit. When they push it further off balance, they pay a fee. The bigger a pool, the higher % of yield bearing asset it can hold as the target balance is a flat number (not a percentage).

The linear pool token can then be paired with another asset to create a boosted pool. For example, a yvWETH/WETH linear pool could be paired with GEAR to create a GEAR/(yvWETH/WETH) market where a specified percentage of WETH (based on the linear pool balance) is deployed in Yearn.

We would be looking at creating and utilizing base pairings with Gearbox’s diesel lending pools (dWETH, dUSDC, etc). This spreadsheet has been created to model two potential use cases:

  1. Comparing sending GEAR rewards to the gearbox DAI and USDC lending pools with instead bribing the Gearbox boosted pool
  2. Comparing liquidity mining GEAR/WETH on Curve v2 with a potential GEAR/(wETH/dWETH) pool on balancer

The spreadsheet takes inputs from the current GEARBOX pools and compares them to bribing vlAura voters. There are a few highly impactful variables here such as the vote multiplier, the assumed APR that LPers will demand (because the protocol does not set the APR - the LPers decide that, the protocol just dictates total rewards), and pool size. The purpose is to determine which approach represents a net savings in spendings on both liquidity mining programs. These variables are highly… .well… variable… and therefore it is difficult to draw a meaningful conclusion. The spreadsheet also details and incorporates the exact breakdown of fee share in boosted pools.

Note the GEAR/WETH comparison does not yet include the option to bribe the curve pool. However, because the altruistic anon votes for the curve pool seem to have dried up, this scenario should also be considered if considering changes to GEAR/WETH liquidity mining.

A note on bribes

It would be fair to ask “this bribe multiplier thing seems too good to be true, who tf loses in this case?”. Ultimately I think bribes/liquidity mining/etc are all a manifestation of P/E ratios. You can give $1 of profit to an LPer every year, or you can give that same LPer a token that entitles them to $1 of profit this year, and a bit less every year after that assuming the protocol doesn’t grow and they keep getting diluted by giving out new tokens. In the investing world, most investments are valued at some Price/Earnings ratio greater than 1. That means the token promising ~$1/year is almost always valued by the market as worth more than $1. As long as that is true, it will always be better to distribute tokens instead of direct revenue to incentivize protocol use. Granted, the game is different in DeFi as many tokens do not distribute revenue and instead only offer governance - but despite that, many tokens still trade at a P/E ratio far greater than 1 (if not a negative number because earnings are negative). TL;DR as long as the investing world is pricing in growth, bribes gud for bootstrapping/sourcing liquidity where imbalanced.


For reference: current GEAR/WETH LM program = $50k/month or $25k/ 2 weeks

Current GEAR Supply Lend Program: 275m tokens over 1 year = 23m/month or $343k/month, $170k/ 2 weeks


Voting is simple FOR, AGAINST, ABSTAIN.

1 Like

Balancer Gearbox boosted pools already have ~5M TVL in stable pools, so focus on attracting more liquidity from Balancer makes sense for me.

I’d also want to raise a question personally important to me and related to operational execution of LM (idk maybe it’s worth to move it to separate topic): now it’s done through retroactive weekly Merkle Distributor updates, but I’d prefer to have standard Liquidity Mining contract (MasterChief/SNX LM contract or analogues). This requires removing rewards from Ninja side as it’s impossible to distribute this part of rewards through LM contract while distribution through Merkle Distributor requires too many actions from financial multisig. @RisingV_ivangbi @ov3rkoalafied wdyt?
Generally speaking, there is organic usage of Credit Accounts so no need to extra-incentivizing it. So removing CA-side GEAR rewards simplifies operations execution and decreases inflation (now ~270k GEAR weekly distributed between Credit Account users)

I think ninja cutting must be a separate topic, and I’d also cut them with V3 or rather re-specialize them where we really want brrr. Doing it now, it would be a cut-yourself move as LM reduction was (to an extent).

As for the @ov3rkoalafied post, is amazing, supporto!

Fully agree, I think this is more about the effort and DAO-to-DAO visibility (for all Balancer LPs who might wanna explore Gearbox boosted pool). As such, a ton of efforts are on @mugglesect & the marketing initiative / VIBES. Would even say it’s top-2 focus for the coming weeks. As for the numbers, maybe start as Koala suggests, and then see to ramp them up if it all works well? Or go with 1M GEAR per 2-week period.

Yeah this was partially from the altruistic votes we got so better to continue now than wait and see it dry up. I think @jared_gb already got some folks asking about it.

I’ll edit the proposal to 1m gear. Negligible difference, easier number to remember and conduct analysis around.

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Agreed with Ivan this is a separate proposal but also agree the incentives on CA side likely aren’t necessary. I think V3 makes the most sense - you remove rewards but at the same time offer many more features including new assets/integrations. Take the candy away but replace with ice cream or w/e the saying is.

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Do we already know how we are gonna measure the outcome/KPIs? I assume by “TVL from boosted pools now vs 1/2/3 months from now?” And I guess “as a percentage of total $ in Balance available to boost?”

Oh and another note, is this like an initiative essentially? So be it for 3 months uno cycle?

Proposal implies indefinite so we can have a follow-up proposal to expand, shrink, or terminate, as needed.

Basically there are a bunch of assumptions in the spreadsheet that we can verify once we see a bigger market. I would say in 2-3 months it makes sense to go back to the spreadsheet, and once again evaluate efficiency of these bribes vs direct liquidity mining of the diesel pool. Once we see the discrepancy and if it is positive or negative, and if we believe the trend is good or not, we can re-evaluate. So the KPI is essentially - what is the liquidity mining cost per $1 of diesel token? Plus, are there any intangible/less tangible benefits (marketing) that are working in our favor? Whether or not the pool starts picking up trading volume will matter to a degree.

@ov3rkoalafied how this proposal should be implemented? what’s address to sent GEAR ?

Manual Process:

  1. go to Hidden Hand
  2. connect wallet → wallet connect
  3. in the bribe market, search for “g-” to find “ComposableStable bb-g-USDC/bb-g-DAI”
  4. On the right click “add bribe”, select “GEAR”, and deposit 2 weeks worth of rewards
    (Note, can’t deposit right now as most recent epoch just ended. Best to deposit closer to the start of the new epoch to attract more votes)

Alternatively, the Aura team offerred to custody funds and bribe on behalf of Gearbox - let me know if you would like me to reach out to them and ask for something like 6 weeks at a time, and an address.


Thank you for your detailed response.
I would like to clarify. Am I supposed to do this in Aura or Balancer?
This is what I get in Aura:

And this is in Balancer:

Boost me daddy <3 Balancer

Safest way to execute this proposal such that treasury does not need to approve a contract is to use an intermediary. I will use a fresh EOA, 0x424ca62c3e1603d0f6da2346609be2d589ce6da9, to execute the proposal. The multisig will send this EOA 1m GEAR every 2 weeks and gas top offs as necessary, or both in larger chunks if desired. 1m gear will be used to bribe the gUSD pool each 2 weeks.

There is some turbulence in the bribe markets and at times vlAURA bribes are far less efficient than veBAL bribes. Bribes will generally be sent to the vlAURA market on Hidden Hand unless there is a sustained efficiency boost to veBAL votes and the Aura/Bal teams advise that this effficiency will not close. The GEAR will only be sent to vlAURA or veBAL hidden hand, or Paladin Warden Quest (veBAL bribe market). There are other considerations - such as late bribes doing better with vlAURA than elsewhere, etc. Ultimately bribes are a living ecosystem so constraining to a single strategy could result in excess spenidng. The general goal is always to get close to the market rate of bribes, better rates when possible, and minimize overpaying. I edit this post here each epoch which market is bribed with justification if different than vlAURA.

The multisig and/or DAO may elect to send GEAR elsewhere or handle the bribes with an alternative approach if it is deemed that execution is not satisfactory.

April 29 2023 - 1m GEAR sent to vlAURA hidden hand market.
May 12 2023 - 1m GEAR sent to Aura. Have done much more research into the various balancer bribe options, and it is a headache. It can be more efficient, but it is also easy to mess up and get a terrible rate. So with high risk low reward, we are sticking with Aura for now.


May 29th - 500k GEAR sent to veBAL hidden hand market. Context: Secured an OTC deal with Bal Whale at $0.105/veBAL vote/week, which based on the average of the previous week and 20% cheaper than aura. Bribe market collapsed a bit, so compared to the price of Aura this epoch it ended up being approximately 0% savings over Aura. Additionally, there was a miscommunication with the deal that resulted in less votes than expected and underpaying the voter - this will be resolved in next week’s veBAL epoch. Overall, a lot has been learned about the nuances of the bribe market. Will rebalance the deal this upcoming week and either switch back to Aura next week or proceed to further develop the deal to benefit both parties in the future.

June 13 We rebalanced the payout last week, and this week are doing a 2 week deal for bribes at approx 12% below the expected Aura rate, which should result in 12% more emissions for the boosted pool than if bribing Aura.

June 27 - OTC deal at $0.08/veBAL vote/week, >20% below Aura price
July 11 - OTC deal at $0.088/veBAL vote/week, >20% below Aura price

8/22 - Have been doing the same OTC deal for the last few epochs, beating Aura bribes by about 20-30%. Aura made a change to emissions, so OTC deal was not completed in time - bribes were done thru vlAURA instead.

However, on 8/22 bb-g-USD pool was noted to have a potential exploit by Balancer. So while the dust settles, bribes will be paused for future epochs until more information emerges and a decision can be made on the path forward.