I’m glad I found Defrost/MELT three weeks ago. While PA has been positive since, I am sure you all agree with me that the protocol is still materially undervalued. I believe one reason why is because too many MELT rewards are directed to the H2O3CRV pool, particularly to those that aren’t boosting with sMELT.
I propose the MELT reward for non-boosting depositors should decrease to c. 10 - 20%, which is more inline with competitors. Currently the non-boosted reward is c. 90% at a low MELT price of $1.50. This would greatly reduce the dumping of MELT by non-MELT holding depositors who have little interest in price appreciation or the protocol growing.
The reduced rewards should then be directed to the MELT - AVAX LP farm, which is currently only paying an APR of 110%. Such a low APR does not adequately incentivise LP-ing and deep liquidity. The lack of pool 2 rewards has two primary impacts: 1. Low liquidity given LP incentives are low, leading to volatility (as we’ve seen) 2. Less incentive to hold and LP and a greater incentive to dump rewards from stable farming. sMELT boosting certainly mitigates 2, but not entirely.
Depending on how the MELT reward reallocation from non-boosted depositors to the MELT pool 2 impacts the pool 2 APR, it may also make sense to allocate some boosted H2O3CRV pool rewards to pool 2, but hopefully that won’t be necessary. In any event it would make sense to discuss this here or in the Discord.
Thanks for reading.