Thanks for posting this Polkachu! I wanted to pop in here with a little more color about the proposal process and include the KPI Incentives and KPI Council Appeal Templates.
KPI Incentives Proposal Process:
Strategy Providers may submit a community spend proposal to add KPI incentives to any active Cellar (using the template below). All proposals will include linear and discrete incentives. Strategy Providers may submit KPI-incentive proposals at any time, but rewards will always be distributed at the end of the quarter.
If approved by governance, the amount of the highest possible payout will be transferred to the KPI Council multisig. These funds will be held in escrow until proven achievement of pre-defined KPIs at the end of each quarter.
A thorough analysis of the accomplishment of pre-defined KPIs must be posted by Strategy Providers in the forum within 24 hours of the last day of the quarter at 0:00 GMT. If the Strategy Provider does not post an analysis by this time (intentionally or unintentionally), the Cellar will not be considered for reward distribution in that quarter.
To determine APY at the end of the reward period, the Strategy Provider must measure token price at midnight UTC for each day in the most recent 3 months. Those token prices will be used to compute daily APY, which is then averaged using the geometric mean.
To determine TVL at the end of the reward period, the Strategy Provider must measure TVL at midnight UTC for each day in the most recent 3 months. Those TVLs are then averaged using the geometric mean.
To determine fees to the protocol (for linear incentives) the Strategy Provider must include the list of transactions which resulted in fees being sent to the protocol over the most recent 3 months. In addition, the Strategy Provider must sum the dollar value for assets sent to the protocol using price at the time the assets were sent.
The first time a Cellar receives KPI incentives, performance should be assessed to date, from the time of Cellar launch through the most recent quarter.
The KPIC will validate the submitted analytics, publish a brief forum post on their decisions, and distribute rewards accordingly. An analysis of the impact of rewards may be tracked and displayed publicly post-distribution.
If not all of the reserved incentives are distributed by the end of the reward period specified in the Strategy Provider’s KPI Incentives proposal, the KPIC will return any unearned incentives to the community pool.
KPI Incentives Proposal Template
SIPS Name: SIPS-XXX [KPI Incentives]
Status:
Author: Strategy Provider name
Strategy: Name of Celler
Posted: [to be posted within 24 hours of the end of the quarter at 00:00 GMT]
Description
Please include details about your strategy, performance to date, and why you want to add KPI incentives.
Linear Incentives
Each Cellar that receives KPI rewards will receive a linear incentive according to the below formula:
[Sum of fees accruing to Somm stakers from Cellar, generated over 6 months, minus the sum of liquidity mining rewards distributed to Cellar, generated over 6 months, divided by 2*]
*In the event that KPI incentives are renewed on the same Cellar, the incentive factor will double with each subsequent renewal.
Please specify the expected amount of linear incentives to be added to your Cellar based on the above formula.
Discrete Incentives Table
Please define any additional, discrete incentives using the template below, according to the following guidelines:
- The APY value should remove fees that go back to the Cellar creator but include fees that are sent to SOMM stakers
- It’s expected that as TVLs grow, APYs will decrease. It is recommended to request higher rewards at - lower APY returns caused by higher TVLs.
- APY should be calculated as the geometric mean over the past 3 months
- TVL should also be calculated as the geometric mean over the past 3 months
- Rewards are cumulative, so if a Strategy Provider achieves a geometric mean TVL of 20M over the quarter, they will receive the cumulative amount of KPI rewards for each category between 0 and 20M
Conclusion
In this post we outlined the process and template for Strategy Providers to apply to add KPI Incentives to their Cellars.
We would appreciate any feedback on how to ensure the proposal best reflects the interests of the Sommelier Protocol and Community.
KPI Council Appeal Template (Signaling Proposal)
SIPS Name: SIPS-XXX [KPIC Appeal]
Status:
Author: Strategy Provider name
Strategy: Name of Celler
Posted: [must be posted within 15 days of the end of the quarter]
KPI Incentive Proposal:
Please link to the proposal authorizing KPI incentives for your Cellar.
Analysis submitted to the KPIC:
Please link to the analysis you submitted to the KPIC prior to the deadline.
Reason given by KPIC for Rejecting Analysis:
Please link to the reasoning for rejecting your analysis published by the KPIC.
Appeal:
Please explain why you believe the Council has made an error and your Cellar should receive KPI incentives this quarter.
The results of this vote are to be honored by the KPI Council. If this proposal is approved by governance, the corresponding rewards shall be distributed by the Council to the Strategy Provider within 48 hours of the passing of this proposal. If this proposal is not approved, no rewards shall be distributed to the Strategy Provider for the quarter.