Summary
As part of the V3 launch, we propose to set the annual NOTE incentive rates to 2,000,000 NOTE on Notional’s Arbitrum deployment to incentivize LPs and bootstrap liquidity. We propose to set incentive rates according to the following schedule:
| Currency | Proposed Annual Incentive Rates (in NOTE) |
|---|---|
| ETH | 500,000 |
| USDC | 500,000 |
| wstETH | 200,000 |
| rETH | 200,000 |
| cbETH | 200,000 |
| DAI | 100,000 |
| FRAX | 100,000 |
| USDT | 100,000 |
| WBTC | 100,000 |
| Total | 2,000,000 |
Context and objective
Notional V3 will officially launch on Arbitrum on November 1st. As part of the launch, attracting liquidity will be critical in order to make it possible for users to borrow and lend on Notional. In order to attract liquidity we propose to allocate incentives to Notional V3’s Arbitrum deployment at an initial rate of 2,000,000 NOTE per year. Incentive rates could be updated in the future as the community gathers more data about market utilization or if the protocol receives an Arbitrum grant to incentivize liquidity.
A subsequent proposal to review the Mainnet incentive rates will be posted in the upcoming weeks to propose a reallocation of Mainnet incentives as V3 is launched and as new markets are listed on Mainnet.
Proposal
ETH and USDC
We propose to set the nETH and nUSDC incentive rates at 500,000 NOTE per year. ETH and USDC markets have historically been the largest Notional markets on Mainnet. Moreover attracting sufficient nETH liquidity will allow users to trade between ETH and liquid staking derivative tokens. Similarly, nUSDC liquidity will allow users to trade between USDC and other stablecoins such as DAI, FRAX, and USDT.
Stablecoins
We propose to set the nDAI, nFRAX, and nUSDT incentive rates at 100,000 NOTE per year.
Liquid Staking Derivatives
We propose to set the nwstETH, nrETH, and ncbETH incentive rates at 200,000 NOTE per year. We propose higher incentivization rates for liquid staking derivatives in order to capture a larger share of the developing LSD market on Arbitrum.
WBTC
We propose to set the nWBTC incentive rate at 100,000 NOTE per year.