Hihi, I’m Valdorff and I currently serve as the treasurer of Rocket Pool’s (RP) Incentive Management Committee (IMC).
The protocol values funding liquidity
RPL has inflation, and some of that is directed to the protocol DAO. Fully half of that (~5400 RPL/28 days) goes to the IMC. The IMC is fairly new - operating since September. In that time we’ve spent about 6.9k/28 days, so we do dig slightly into reserves. Given our current ~43k RPL of IMC reserves, it would take more than 4 years to run dry. Things change, so it might be faster, but I just want to provide a rough ballpark of the finances. The treasury does have a further reserve balance that’s not currently targeted at liquidity, but could be if the DAO sees that as a need.
rETH creates organic liquidity
In terms of liquidity mining, rETH is a very lucky token because it comes with built-in yield. This motivates pairing against it by both the protocol with the paired token and by DEXes that charge a fee against that yield.
Using Balancer on mainnet as an example:
RP incentivizes the rETH/WETH and rETH/RPL pools. Those have a value of $74.8M today. There are additional pools using rETH on Balancer that we don’t incentivize. Those have a value of $36M today. Over time, I expect rETH to replace ETH in many liquidity pools and thus generate organic liquidity - it simply requires less LM to get the same liquidity (from a protocol PoV) because of the built-in yield.
I should also note that changes in funding liquidity are likely to be slow. We value our LPers and our partner protocols, and don’t want them to deal with high volatility from our end. We will change things as we think is best (eg, use different platforms, increase or decrease incentives, etc), but we will not do so abruptly. My expectation is that, liquidity will continue to improve over time, but, even if I’m way off, I don’t think there’s any reason to expect a sudden change that Euler would be unable to respond to.
[addition in response to @river0x] Re Chainlink: CL has acknowledged we’ve met requirements and they plan to move forward here. I don’t have even a rough timeline, unfortunately.