[EIP #3] - Reduction of vlEGP Rewards Buyback Threshold from 50% to 30% APR

Eigenpie 3. Eigenpie Improvement Proposals
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Abstract

This follow-up proposal builds on the existing monthly reward adjustment and buyback mechanism by lowering the APR threshold that triggers excess reward reallocation from 50% to 30%. Rewards in EIGEN and USDT will continue to be capped monthly, with any surplus above the new 30% APR target automatically redirected to the automated EGP buyback program. This change aims to maintain sustainable yields for vlEGP holders while substantially increasing buyback volumes to drive greater EGP value accrual and long-term price support.

Motivation

The Eigenpie community is focused on optimizing the vlEGP reward system to create a more efficient and resilient environment, especially by enhancing the impact of the buyback mechanism in varying market conditions.

This proposal advances that objective by:

  1. Lowering the Threshold: Reducing the APR cap from 50% to 30%, allowing excess rewards to be captured and reallocated earlier.

  2. Boosting Buyback Volume: Significantly increasing the amount of rewards funneled into EGP purchases, thereby accelerating the reduction in circulating supply.

  3. Preserving Transparency: Continuing the established process of routing bought-back tokens to the Treasury multisig for community-verifiable tracking.

These adjustments will create a more efficient vlEGP ecosystem by:

  • Driving higher buyback amounts to strengthen EGP scarcity and mitigate sell pressure more effectively.

  • Balancing attractive holder rewards with stronger token value capture, making locking EGP more rewarding over time.

  • Building a bolstered economic model that aligns incentives and enhances overall ecosystem resilience.

Specification

EIP #3 introduces a single targeted change to the existing mechanism:

Adjusted APR Buyback Threshold:

The threshold for capping vlEGP rewards and triggering excess reallocation will be reduced from 50% APR to 30% APR. All other aspects of the monthly evaluation, reward capping, surplus redirection to the buyback fund, and execution of periodic EGP purchases remain unchanged as established in prior governance decisions.

Implementation:

Upon approval, the protocol will update the APR target parameter to 30%, effective from the next monthly reward cycle onward. No additional modifications to reward distribution, buyback execution, or treasury handling are required.