RP - 1 Renzo Amore Strengthening Community Engagement and Rewards

Proposals
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At Renzo, our community is the heartbeat of our ecosystem. Your dedication, participation, and passion drive us forward. To honor this incredible support, The Foundation is excited to propose the Amore initiative, a community-driven program designed to reward and empower you, our loyal members. Seasons 1 and 2 saw remarkable growth and engagement, and with Renzo Amore, the aim is to continue this momentum. Join Renzo as we strengthen the community, enhance rewards, and shape the future of DeFi together. Your voice matters, and your participation makes all the difference. Let’s dive into the details of how $REZ holders will benefit from this new initiative.

Empowering The Renzo Ecosystem

Seasons 1 and 2 saw remarkable participation and growth, leading to over 130 DeFi integrations across 8 chains and reaching $2B TVL. To build on this success, the Foundation proposes the Renzo Amore initiative, allocating 5% of total $REZ supply over 4 months to reward our loyal community members and incentivise ongoing engagement in Renzo and the DeFi ecosystem. This allocation will be distributed retroactively, with 4% going to ezPoints recipients and 1% for token emissions towards liquidity incentives. A snapshot vote will take place 5 days after posting.

Igniting Growth: The Motivation Behind Renzo Amore

Renzo launched its first points program in January 2024, followed by a second season in April 2024, both achieving impressive results and active community participation. Season 1 concluded on April 26th with 7% of the total token supply distributed, while Season 2 will wrap up in late July 2024, with 5% earmarked for the community + any unclaimed rewards from Season 2. To continue this momentum and support the emergence of new LRT markets and users, Renzo proposes allocating 5% (500M $REZ) to the Renzo Amore initiative.

Objectives

  • Reward loyal community members for continued participation
  • Reward active DeFi users of ezETH, pzETH, and any new LRTs that may launch
  • Attract new users to join the Renzo community
  • Incentivize deep DEX liquidity

Program Outline

  • Timeline: July 26th through the end of November 2024
  • $REZ Allocation:
    • 400M REZ tokens distributed retroactively to eligible wallets
    • 100M REZ tokens distributed to DEX LPs for adding liquidity to ezETH/ETH and pzETH/wstETH pools over the 16 weeks
    • REZ tokens that are not used for DEX liquidity emissions will go back to the DAO treasury at the end of Campaign
  • Sybil, any blatant sybil or manipulation attempts will result in instant dismissal
    • Renzo Labs will work with 3rd party service providers for indexing, sybil checks and distribution
  • The conditions Renzo Amore may change based on community feedback and discussions

Discussion Timeline
Per the proposal guidelines, this discussion will be available for 5 days concluding on July 30th, 2024

Voting

$REZ holders (including $REZ stakers) are encouraged to participate in this first proposal.

  • For: Allocate 500M $REZ to community incentives.
  • Against: Do not allocate any incentives
  • Abstain: Neither for or against

Voting via Snapshot will commence on July 30th, 2024 and end 5 days later.

Shaping the Future Together with Renzo Amore

At Renzo, our community’s dedication is what makes the ecosystem thrive. By allocating 5% of total $REZ supply over the next 4 months, the aim is to enhance community rewards, incentive ongoing engagement, and ensure the protocol’s continued growth and success.

Your voice matters. As the Renzo community grow, it is encouraged that all $REZ holders participate in the upcoming vote. Together, let’s continue to shape the future of Renzo, driving innovation and community strength.

Thank you for being a crucial part of our journey.

7 Likes
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This is in addition to the 5% initially set aside for the season 2 airdrop, correct?

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Congrats on the first proposal sers!

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Yes, Renzo Amore is a separate program than Season 2. Renzo Amore will begin after Season 2 concludes at the end of July.

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We’re excited to see this proposal come forward, formally kicking off the governance process for the Renzo Protocol.

Below are some thoughts & analysis we have on the following proposal:

Past Performance for Seasons 1 and 2

Season 1 of the ez Points Program showed remarkable growth for protocol TVL, going from essentially zero to +1m ETH in a span of roughly 5 months. However, it’s important to realize that this growth, much like the majority of the EigenLayer ecosystem, was fueled by a plethora of incentive programs across several different protocols.

Season 2 then resulted in a drawdown of about 493k ETH ( -47.99%) as some of the exogenous incentive programs began to dwindle, and withdrawals were enabled. While it is obviously still very early in the Renzo protocol’s overall journey, we think it is critical that these additional 500m REZ tokens that are earmarked for the Amore incentive program are used thoughtfully and align long term users with Renzo.

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Maximizing Impactful Utilization through Emissions

When looking at the utilization of Renzo’s LRT, ezETH, throughout season 1, the majority of the TVL was deposited to Pendle Finance, a fixed income trading protocol, due to high point multipliers. Following the expiry of the April 25th market, there was heavy outflow from Pendle to Farms like Zircuit, Swell L2 deposit contract, etc. This rotation of capital from Pendle to “Farms” was then slowly churned out of the protocol by who we perceive as opportunistic farmers.

Going forward, it still seems that Pendle has the highest point multipliers, but our question is simple: does Pendle truly satisfy the medium-long term needs of the Renzo protocol?

If yes, how so? To properly answer this question, it would be helpful for the foundation to lay out their vision. From our perspective, Pendle is beneficial as it “locks up” capital for a prolonged amount of time. While the core product of Pendle is beneficial to the ecosystem at large, it’s not exactly clear that there are enough sophisticated actors around today to properly price these markets. Additionally, it appears that this may not be a mutually beneficial relationship for Renzo <> Pendle, and that extends to all LRTs running similar programs. Are there any incentives coming from Pendle?

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The Importance of Lending Markets for Adoption

When looking around at leading LSTs like Lido’s wstETH/stETH, and leading LRTs like EtherFi’s weETH/eETH, the majority of the supply is shifting towards lending markets. For wstETH alone, 51.81% of the supply sits between Aave, Spark, Compound, and Morpho respectively. For EtherFi, 45.87% of the weETH supply sits between Aave and Spark alone.

Meanwhile, it appears that only 6.26% of the ezETH supply sits on lending markets, across ZeroLend, Morpho and Compound. From the Aave governance forum, it appears that the community has passed the initial temp check for onboarding ezETH back in April, and that the ARFC step should have been implemented by now, moving the process forward.

It should be no surprise that LSTs have found ample adoption in lending markets, given that they are yield bearing collateral. With a plethora of AVS coming online for both EigenLayer, and Symbiotic alike, the yield offered via LRTs will be superior to LSTs. While LRTs of course pose higher “risks” to LSTs, we predict the reward will tilt users towards adopting these assets in greater magnitude than LSTs in lending markets. Therefore, we think there should be an important push towards lending market adoption, and DEX liquidity (which 1% of the supply is already earmarked to). Liquidity begets liquidity, and we think these two areas should be the primary focus for incentivizing use of both ezETH & pzETH, and any new LRTs launched by Renzo, alike for this season.

When considering best practices for optimizing growth through token incentives, we can look at Gauntlet’s work that they’ve done with JitoSol, the largest LST on Solana. All relative links with regards to quantitative analysis on the topic can be found in this tweet. We highly recommend following the methodologies laid out in their work, or establishing other similarly effective frameworks for incentivizing growth for the Amore program.

Liquidity DEX Incentives

With regards to liquidity, we would continue to emphasize that that liquidity is a means to an end, not an end itself. Liquidity, though important, is primarily complementary in our view. Liquidity is there to facilitate the ease of swapping into and out of ezETH, pzETH, etc, but the end action of users should be front of mind as well.

As the adoption of Renzo’s LRT products develops, it may perhaps be in the protocol’s best interest to seed these various incentivized AMM pools, then emit REZ incentives to those pools, thus allowing the protocol to collect swap fees. While these swap fees may not be substantial at first, it still provides a bit of ROI to the REZ emissions. Given the infancy of pzETH and Symbiotic at large, it may make sense to especially consider this to build substantial, deep liquidity for the nascent LRT. If any of these ideas were to be explored further, other considerations such as DEX venue, liquidity seeding size, and impact on other current pools & LPs should be carefully considered.

Conclusion

Overall, we’re excited for this program to begin. We believe that thoughtfully considering the lessons learned from past incentive programs, and taking the current market landscape into account, can help REZ holders and the community at large grow effectively. We look forward to continued conversations from the entire community to maximize the effectiveness of the Amore incentive program.

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congrats on the first proposal.
The sibil part is one of the most important as we real users who support the ecosystem suffer from them

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I am very excited to see the start of governance and this new incentive program for the Renzo Protocol.

If Renzo plans on distributing 500M $REZ over the next four months, it should be executed as efficiently as possible. With this in mind, Renzo should utilize Royco for the distribution of retroactive rewards and future incentivization. I am the Royco Intern, and here’s a quick TLDR about Royco and how it can improve Renzo’s incentive campaign.

As @Kairos_Res pointed out, Renzo’s previous incentive campaign benefitted from the lockup mechanics of Pendle’s liquidity pools/farms, but it seems that there was an inherent lack of price discovery for these markets.

However, if Renzo implements its incentive campaign using Royco, it can benefit from both the ability to lock liquidity and the infrastructure for price discovery.

Royco operates as a two-sided marketplace, facilitating interactions between incentive and liquidity providers. Protocols can bid for liquidity and observe the market’s response to this price and adjust their campaign accordingly. Royco also allows for the incentivization of almost any onchain action, which means that Renzo can incentivize both lending and liquidity markets on DEXs, lending platforms, and more. With this in mind, @Kairos_Res ‘s main critiques about price discovery and liquidity lockups are fixed through Royco’s innovative infrastructure.

Renzo will also benefit from Royco’s network of thousands of LPs who will compete onchain with one another for the incentives. This allows Renzo to gain more liquidity for the amount of incentives spent.

All in all, a partnership with Royco would be mutually beneficial to both sides. If Renzo shares this belief, I am fortunate in my position to be able to connect the Renzo Protocol with the Royco developers. Royco is planning on going live in the next month, and I would be happy to personally walk Renzo through becoming a launch partner.

If the Renzo Protocol is interested in becoming a launch partner please contact me @RoycoIntern on Telegram