Prop 172: Adjust NLS Incentives Scale

Summary

The Treasury contract plays a crucial role in managing the calculation and distribution of NLS rewards as incentives to lenders within the protocol. Currently, the utilization of funds in the lending pools is relatively low. Specifically, 1.27 million USDC has been supplied in total, with only 480k USDC actively borrowed.

The aim of this proposal is to reduce the NLS incentives APR to 0%. This adjustment is designed to maintain overall rewards runway in the long term and provide flexibility to increase rewards when a higher number of borrowers is present and more liquidity is needed. In addition, should some liquidity be withdrawn, this would have a positive effect on the utilization of funds which would go up and with this, the real yield portion of rewards too.

By voting YES to this proposal, you agree to adjust the existing NLS rewards scale to align with the proposed structure above.