As outlined in @Starl3xx earlier forum post, ABC Labs has made the decision to phase out incentives directed toward the dgnETH/ETH+ liquidity pool, LP on Curve.
Unfortunately, due to dgnETH’s two-token design, it has always relied on incentives to encourage a portion of holders to supply dgnETH to the LP rather than staking dgnETH. As dgnETH forgoes any intrinsic yield this dynamic was essential to ensure that sdgnETH stakers earned yields above the blended basket yield. Without continued liquidity incentives, this core value proposition is now defunct.
This decision wasn’t made lightly but given dgnETH’s growth being almost entirely dependent on continued emissions, the significant operational overhead required to manually process the yield and distribute it to sdgnETH holders and the ongoing demand on the engineering team to develop collateral plugins which fit dgnETH’s yield seeking mandate the incentives directed to the dgnETH/ETH+ pool will gradually be removed. dgnETH will subsequently scale down operations and sunset once emissions have been gradually phased to zero on the 11th December 2025.
Emissions Reduction Timeline
As per @starl3xx forum post:
- 6 Nov: Vote submission for emissions adjustment
- 13 Nov: First 50% reduction
- 27 Nov: Additional 50% reduction (25% overall)
- 11 Dec: Final reduction to zero
This timeline has been designed to provide holders with sufficient notice and time to exit positions smoothly.
Outstanding Governance Proposals
The proposal to swap the ETH+/ETH Convex LP from the old CryptoSwap pool to the new StableSwap variant is now a liability to dgnETH holders and RSR stakers and as such I encourage dgnETH governors to vote ‘NO’ or ‘ABSTAIN’ on the proposal.
While voting this proposal through would indeed support the liquidity of ETHplus, any changes to the dgnETH collateral basket are an unnecessary risk, especially given entering and exiting LP positions have incurred RSR slashing in the past.
Finally, I want to take this opportunity to thank everyone who has supported dgnETH over the years: whether as a holder, staker, or active governance participant. I’ll continue to be available during this transition and beyond to support holders in exiting their positions.
Ham, Degen ETH DTF Champion
TG: @hamdefi