[Temperature Check] HIP 7 - AMM and Bonder Liquidity Incentives

This is a temperature check in line with current Hop governance process 2.

Background

As discussed in the Request For Comment, previous posts, community calls, and in Discord, Hop could benefit from additional liquidity in the bridge AMMs. Increased liquidity may attract larger transfers and allow arbitrageurs to maintain tighter spreads improving bridge rates for all users. Providing HOP incentives for Hop LPs has the potential to increase AMM liquidity significantly.

In addition, Bonder returns have been low or have required a high bonder fee percentage to maintain adequate returns. A multitude of recent bridge hacks have also raised the risk profile of bridges in general despite Hop’s strong track record of security. As a result, bonders will need additional incentives if Hop DAO wishes to keep bonder fees low and keep bonders interested until a decentralized bonder network is achieved.

Proposal

Provide 2,000,000 HOP per month to Hop LPs and 800,000 HOP per month to Hop bonders. The annualized issuance related to these rewards is 3.36% of the HOP supply.

LP Incentives

2,000,000 HOP per month

Network	Network %	Network HOP/month	Asset	Asset % of Network	HOP/month
Arbitrum	40%	800,000	ETH	52.00%	416,000
			USDC	34.50%	276,000
			DAI	7.00%	56,000
			USDT	6.50%	52,000
Optimism	34%	680,000	ETH	51.00%	346,800
			USDC	35.50%	241,400
			DAI	7.50%	51,000
			USDT	6.00%	40,800
Polygon	21.50%	430,000	ETH	42.50%	182,750
			USDC	41.00%	176,300
			DAI	7.00%	30,100
			USDT	9.50%	40,850
Gnosis	4.50%	90,000	ETH	40.00%	36,000
			USDC	31.00%	27,900
			DAI	19.00%	17,100
			USDT	10.00%	9,000

Bonder Incentives

800,000 HOP per month

Bonder	Est. Liquidity	Liquidity %	HOP Rewards/m
ETH	$12,000,000	57.14%	457,142.86
USDC	$6,000,000	28.57%	228,571.43
DAI	$1,500,000	7.14%	57,142.86
USDT	$1,500,000	7.14%	57,142.86

Retroactive Bonder Incentives

800,000 HOP per month starting 6/10/22 (TGE)

June (Prorated for 21 days)

Bonder	Current Liquidity	Liquidity %	HOP Rewards
ETH	$11,300,000	46.27%	259,112.59
USDC	$6,000,000	24.57%	137,581.91
USDT	$2,121,816	8.69%	48,653.92
DAI	$5,000,000	20.47%	114,651.59

July

Bonder	Est. Liquidity	Liquidity %	HOP Rewards
ETH	$11,500,000	49.04%	392,286.99
USDC	$6,000,000	25.58%	204,671.47
USDT	$1,952,218	8.32%	66,593.89
DAI	$4,000,000	17.06%	136,447.65

August

Bonder	Est. Liquidity	Liquidity %	HOP Rewards
ETH	$15,000,000	62.50%	500,000.00
USDC	$6,000,000	25.00%	200,000.00
USDT	$1,500,000	6.25%	50,000.00
DAI	$1,500,000	6.25%	50,000.00

September

Bonder	Est. Liquidity	Liquidity %	HOP Rewards
ETH	$11,700,000	56.52%	452,173.91
USDC	$6,000,000	28.99%	231,884.06
USDT	$1,500,000	7.25%	57,971.01
DAI	$1,500,000	7.25%	57,971.01

Github Link

start

September 20, 2022

4:24 PM

end

September 25, 2022

4:24 PM

Voting

off-chain

Voting type

single-choice

Voters

204

Votes

6,714,150

Final Votes

closed

For

4.6M HOP (delegated)

68.58%

Against

2.1M HOP (delegated)

31.42%

item label

Placeholder title of a dao proposal

DAO name

0x000000000000

Mon 00, 2024 00:00

About Voters Analytics

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Voting

100,000

Voting type

100,000

Starts in

100,000

Voters

1,000,000

Votes

1,000,000

Votes

Choice label

TICKER

100%

Choice label

TICKER

100%

Choice label

TICKER

100%