Summary

Amend Sushi LP rewards downwards to reduce unnecessary inflation to MAGIC circulating supply, recoup MAGIC that was previously allocated to Arbitrum Nova and Hop via TIP-27, and preserve incentives to be used in future new user growth and market discovery initiatives as Treasure moves towards the Treasure Chain.

Rationale

Healthy MAGIC Markets

In the past year MAGIC has enjoyed healthy volume and liquidity across a number of venues including major centralized exchanges such as Binance and Coinbase, as well as decentralized exchanges like Sushi. As of 7 December 2023, the Sushi LP pool holds approximately $11.2 mil MAGIC/ETH and has enough depth to support significant trading activities with acceptable slippage. A $100k buy or sale would move prices roughly only 1% to 1.5% at current liquidity depth. This allows us to lower LP incentives and conserve emissions for future use in line with TIP-20(b).

Conserving Emissions for Future Initiatives (eg. Treasure Chain)

With increased focus by the core contributing team on the Treasure Chain as one of the upcoming initiatives for the Treasure DAO ecosystem, it is imperative that liquidity and attention not be fragmented away from the current “homebase” of Treasure (Arbitrum One) and that we ease any potential migration to come. Moreover, emissions allocated to staking and liquidity incentives should be preserved in order to support future new user growth, developer adoption, and market discovery as the Treasure Chain moves from a discussion point to realization. To-date, there has been minimal MAGIC-related activity on Arbitrum Nova due to the absence of Treasure ecosystem games and projects building outside of Arbitrum One. As such, the majority of MAGIC allocated via TIP-27 (and later agreed to by the Hop community through HIP-29) to seed Hop Protocol’s infrastructure to turn on fast bridging support for MAGIC via bonding and the StableSwap AMM should be recouped by Treasure DAO. To-date, the bonder has earned a little more than 2,500 MAGIC for bonding transfers as revenue to the DAO.

Proposal

Amend Sushi LP rewards downwards:

• Arbitrum One
  • Jan to End March → 90k MAGIC for the period (30k / month)
  • March to End June → 60k MAGIC for the period (20k / month)
• Total over 6 months: 150k MAGIC
• Reward amounts are monthly totals. The changes will take effect in the week following ratification of this proposal.

Recoup all available MAGIC as part of the Hop Protocol

After consulting with Hop, ~80% of the remaining MAGIC that seeded the bridge can be recouped by Treasure DAO with negligible impact to the bridging experience. The following balances are proposed to be retained in the bonder and AMMs:

• Bonder: 200k MAGIC (originally 1M MAGIC)
• AMMs:
  • Arbitrum One: 50k MAGIC (originally 250k MAGIC)
  • Arbitrum Nova: 50k MAGIC (originally 250k MAGIC)

Voting Period

Voting commences now, ending Friday, January 5, 2023 at 12:00 UTC (unix timestamp: 1704412800 - copy and paste here to see local time).

Voting Eligibility

• Only holders of MAGIC staked in the Harvesters or the TreasureDAO Governance Staking contract, and MAGIC-ETH SLP on Arbitrum can vote.
• gMAGIC will be calculated on a 1:1 basis across all options
• gMAGIC changes via TIP-34 have not yet been implemented