[EIP #2] - Monthly Adjustment of vlEGP Reward Distribution to Maintain 50% APR and Fund Automated EGP Buybacks

Eigenpie 3. Eigenpie Improvement Proposals
1

Abstract

This proposal, driven by community demand, adjusts the reward distribution for vlEGP (locked EGP) to maintain a consistent 50% Annual Percentage Rate (APR) through monthly evaluations. Monthly rewards, distributed in EIGEN, ZRC, and USDT, will be capped at 50% APR. Any rewards exceeding this threshold will be reallocated to an automated EGP buyback program. This initiative aims to deliver predictable and sustainable rewards for vlEGP holders while supporting EGP long-term value by reducing circulating supply through periodic buybacks.

Motivation

The Eigenpie community has expressed a strong desire to support EGP’s price stability while maintaining attractive and sustainable rewards for vlEGP holders.

This proposal addresses these priorities by implementing:

  1. Monthly APR Adjustment: Ensuring a consistent 50% APR for vlEGP holders, preventing unsustainable over-incentivization.

  2. Excess rewards Reallocation: Redirecting surplus rewards into a buyback fund to purchase EGP tokens and reducing circulating supply.

  3. Transparent Buybacks: Scheduled EGP buybacks will be periodically transferred to the Eigenpie Treasury multisig. Users can verify these inflows by checking the Treasury’s wallet address.

This approach strengthens the Eigenpie ecosystem by:

  • Providing sustainable and predictable APRs for vlEGP holders.
  • Reducing circulating EGP supply to mitigate sell pressure and enhance long-term value.
  • Aligning with community demands for a balanced and resilient economic model.

Specification

This EIP #2 will implement the following changes:

  1. Monthly APR Adjustment for vlEGP:

    • The APR for vlEGP rewards will be monitored and adjusted monthly to maintain a consistent 50% APR, calculated based on the total value of EIGEN, ZRC, and USDT rewards relative to the value of locked EGP.
    • At the end of each monthly reward cycle, the Eigenpie protocol will cap rewards to achieve the 50% APR target.

  2. Reallocation of Excess Rewards:

    • Any rewards (in EIGEN, ZRC, or USDT) exceeding the 50% APR threshold will be redirected to a dedicated EGP buyback fund.
    • The buyback fund will be used to purchase EGP tokens on centralized exchanges where EGP is listed.

  3. EGP Buyback Program:

    • Buybacks will be executed periodically
    • Purchased EGP tokens will be transferred to treasury for future use (e.g., ecosystem development, additional incentives), subject to future governance decisions.