I will not be supporting this proposal.
If the DAO starts funneling SPS from the whitepaper to itself it will set a bad precedent. I would support the DAO providing all the liquidity as a service to the community and cutting off the SPS rewards to LPs completely. The DAO is to be of service to the community not the other way around.
I will vote no because it is not in the best interest of the community.
- I would support burning the SPS.
- I would support cutting the rewards off completely assuming the DAO could support the LP by itself.
- I would support lowering the rewards in direct proportion to the amount of liquidity the DAO is providing.
But in effect, this accomplishes essentially the same goal, except on a proportionate basis. If the DAO is 100% of liquidity, it has all the rewards (which essentially just means they are not paid, and thus reserved for the era after sps-whitepaper-distribution). If some Liquidity Providers want to participate still, they will still earn SPS, in proportion to their relative participation. That doesn't really seem like a bad precedent to set?
I would also add, that this proposal aligns well with traditional economic theory, in that it should encourage capital to gravitate away from the pools where it is least needed, where if the DAO's liquidity is already sufficient then any extra liquidity is inefficient and could be better deployed elsewhere.
However, I'll agree that we shouldn't just assume that no private Liquidity Providers are needed. I don't think this should be a one-stop solution - this is only "Part 1".
After all, we are still allocating proportionately based on pools that were set years ago, and I think it's worth re-examining the ratios.
I think that once we reduce the reliance on "LP social security", we will see a new equilibrium, and at that point, perhaps we use the resulting new equilibrium point to determine whether the SPS allocated to each LP pool should change. We can re-calibrate the LP pool allocations to direct private capital into those pools that are seeing higher volume and/or higher slippage, where they may need more liquidity. [Perhaps algorithmically based on slippage/trading volume, etc]. I don't know the right answer, but it seems like that type of recalibration is overdue, and it would need a think tank and a "Part 2" proposal.
Why are you so against the DAO being rewarded for its liquidity services? It takes the risk so it should be rewarded. Your example of distribution also counters your point. The distribution for the LP rewards does not have restrictions on who earns it. Yes the Dao got its initial funding of sps but if it's also the main source of LP then it should get its fair share of the rewards. The only reason to be against this proposal is because you have personal financial incentive to not want the DAO to recieve its share of rewards. If that is the case then you aren't really looking towards the future health of the DAO or really the game since the DAO is going to be who will be rewarding players after SPS distribution ends. I keep seeing players voting against proposals that are aimed towards increasing the health of the funding for the DAO and it almost always revolves around said players mainly looking at personal benefit for their reasoning. At some point people need to take a hard look at the future and ask themselves if they really want our ecosystem and game to last.