We are thrilled to announce a groundbreaking development that marks another milestone in the evolution of Prisma Finance. Following an on-chain vote, the community has spoken, and we're excited to unveil the implementation of a new proposal that will shape the future of Prisma.
Protocol Fees Redistribution to vePRISMA Holders
In response to the growing success and increasing TVL, reaching an all-time high of more than $400 million, Prisma has enacted a significant change in its structure and revenue sharing. Effective from the next epoch (Thursday 21st), protocol fees will be distributed to vePRISMA holders, aligning incentives and fostering greater community participation.
Motivation Behind the Decision
The decision to distribute protocol fees comes after a bit more than a month since the launch of Prisma's DAO and three months live on Ethereum. With an annualized fee estimate of $48 million, the true figure, excluding PRISMA penalty fees, is expected to be around $10 million. This includes $6 million in interest rate fees and $4 million in mint fees, translating to approximately $200,000 per week.
Prisma has emerged as the third-largest Collateralized Debt Position (CDP) protocol, trailing only MakerDAO and Liquity. The decision reflects the platform's commitment to sustainable growth and community involvement.
Key Features of the Protocol Fee Redistribution Proposal
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100k mkUSD weekly: Protocol fees from the FeeReceiver will be distributed weekly, up to 100k mkUSD.
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LST Fees Distribution: Any LST fees will be sold for mkUSD, contributing to the overall distribution.
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Liquidity Pool Enhancement: A portion of the fees, 25k mkUSD paired with $25k PRISMA, will be added to the mkUSD/PRISMA pool weekly, owned by the DAO in perpetuity.
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Remaining PRISMA: PRISMA remaining in the FeeReceiver will be retained for the time being, serving as a potential backstop or a future mechanism for incentivization, subject to DAO approval.
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Adjustable Cap: The weekly 100k mkUSD distribution cap is adjustable based on the protocol's growth and revenue performance. The DAO retains the flexibility to adapt to changing circumstances.
Benefits of the Protocol Fee Redistribution
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No Increase in PRISMA Emissions: The redistribution strategy avoids increasing emissions of PRISMA by excluding $PRSIMA penalty fees.
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VePRISMA Holder Incentivization: By distributing fees to vePRISMA holders, the protocol ensures that those who commit to locking PRISMA for a year are appropriately incentivized.
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Attractive Yield for Locked PRISMA: With PRISMA locked for a year yielding approximately 38% APR at current prices, vePRISMA holders can enjoy an attractive return on their commitment.
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Future Flexibility: The retained PRISMA in the FeeReceiver provides flexibility for future use.
We appreciate the active participation of our community members in shaping the future of Prisma, through proposals, discussion, and active communication.
As we continue to grow and evolve, the Prisma DAO remains committed to transparency, decentralization, and the empowerment of our community.
Thank you for being part of the Prisma journey, it’s only the beginning!