The Future of Metis Emissions

Moses

Background:
In July of 2023, the Synapse DAO voted to remove emissions on the Metis stableswap and ETH pool as part of a larger initiative to reduce SYN emissions. This proposal decreased SYN emissions from 11,340 SYN/month to 0. Simultaneously, the Metis Foundation agreed to incentivize the Metis Pools with $15k worth of METIS for three months.

Performance:
In the last six months, ~$19m has been bridged to Metis, generating around ~$15k worth of fees. The swap pools have done ~$38m over the same time period and $3.5k worth of fees.

[https://explorer.synapseprotocol.com/chain/1088]

_13k unique addresses have interacted with the relevant pools/routes over this time period. Most swaps and bridging into the chain currently have positive slippage. TVL on metis is currently:
2.9m Stables
800k ETH

Discussion:
To continue providing liquidity on Metis, the Metis Foundation is looking for a long term partner to incentivize these pools. This proposal is a temperature check on spending SYN emissions on Metis to further the DAO’s relationship with Metis and the Metis Foundation. To date Metis has been an instrumental partner in chain expansion and helped expand Synapse’s reach through on-chain activity and marketing efforts.

The primary questions are :

Is the Synapse DAO willing to allocate SYN and provide 50/50 rewards with the Metis foundation on the relevant pools?
1. What is the ideal amount of TVL in the Metis pools, and how much is the DAO willing to spend to achieve that goal?

Any feedback on the above questions can inform clear next steps for Synapse pools on Metis.

0xbottomseller

Moses

(all rough numbers)

over 6 months, seeing

average daily bridging volume – 0.1M
average daily bridging fees earned – 83$
average monthly bridging fees earned – 2500$

average daily swap volume – 0.21M
average daily swap fees earned – 19.5$
average monthly swap fees earned – 583$

average total monthly fees earned – 3000 $

To me,

definitely does not make sense to incentivize the pool with 15k/ month rewards
makes sense to incentivize with no more than 3k/ month total rewards
makes sense to redirect some of our own POL if we can determine if it is the best use of it
makes sense for Synapse and Metis to determine an optimum amount of TVL and split that with POL from each side

to questions:
1) rewards 50/50 makes sense if spend is not more than what we make
2) using Canto as an example we seem to be managing a lot of swap and bridge volume with just 600K, sometime over a million in swaps and 500k in bridge - does 400k in TVL do the trick for Metis? Can Metis team provide half of that?

666

Project dead why are we still voting?

Moses

Just spoke with Metis and they are willing to commit to providing $7k/$10k worth of emissions on a monthly basis for the next 6 months. Given that the expected contribution from the Synapse DAO is equal to the average fees for the last 6 months, this seems like a great solution in the short run.

As part of this program, Metis is looking for low slippage on specific size swaps, and the ability to scale with increasing inflow to the chain from other L2s specifically. More reporting on these items will strengthen the relationship between the two protocols and can help the Synapse DAO to grow synergetically.

TLDR:

Better reporting provided by Synapse DAO contributors
10k worth of SYN emissions/ month
$7k worth of METIS granted to the Synapse DAO/months ( so the effective synapse dao contribution is $3k/mo)
6 month rewards period, with a re-evaluation of incentives at month 3
Moving back to a state where emissions are provided in SYN for long term simplicities

0xbottomseller

Moses

I find this odd and am unwilling to vote for it.

From what I see (still taking average total monthly fees earned – 3000 $)

This restarts SYN spend on Metis
for the 100% of SYN spent on Metis pool, Synapse DAO is refunded back 70% in $METIS, and earns 30% in ETH/Stables
net 0 profit, but we've diluted SYN and earned $METIS to the treasury

While Metis can be used for gas, procedure so far has been to bridge ETH earned to each chain to buy their respective gas tokens - so this feels like spending $SYN to buy $METIS for 6 months.

I'm more in favour of Metis team providing half the ETH and Stables to our pools, and we provide the other half using POL, for whatever is determined to be the Optimum TVL by both teams and eliminating all rewards. Are there any roadblocks to splitting TVL by the protocols themselves?

konyalu42

Moses The current situation is good, the liquidity in the pools is sufficient, I am AGAİNST syn emissions for metis

Moses

A few things to note:

The current pools have sufficient liquidity but arent incentivized, and because of this TVL has shrunk more than 20% already.

To respond to @bottomseller
Yes this restarts SYN spend on Metis but the spend is equal to the amount in fees of the trailing 3mo. Its also important to look at recent activity on Metis which has already generated 17k of fees in the last month alone. Spending emissions here is a bet on Metis and L2 activity in general.

Currently Synapse is the largest bridge into Metis, and the Metis foundation is looking to create a long lasting relationship with the DAO to focus onboarding efforts. The Metis that is sent to the DAO can be allocated however the DAO seems fit. This agreement was a gracious one from Metis -- all of their other liquidity incentives partnerships are 50/50 while this one is 70/30 in our favor.

There may be a larger conversation to be had around using POL as liquidity.