Anthias Labs has reviewed this proposal and discussed with @river0x. We agree that not all liquidity is the same. We would like greater granularity around which assets to incentivize the supply of. The end game here is to increase borrows and thus increase protocol revenue, so we place an emphasis on this goal as opposed to just attracting liquidity via points for the sake of TVL, which does not increase protocol revenue.
Typically, a few assets compose the majority of borrower interest. These assets are ETH, USDC, and USDT. Because of this, we think 60% of supply-focused XP should be deployed across these three assets. The remaining 40% can be distributed among other assets. XP distribution should work in a bid system whereby vault governors utilize the forum to emphasize why their vaults should receive greater incentives than others, which the DAO can then vote on. This will likely involve a significant focus on the interestFee parameter: vault governors can lower fees and attract more XP from the DAO.
Lastly, we disagree that no XP should be allocated to borrowers for Season 1, as the goal of XP should be to garner revenue in the form of borrows. We believe 20% of XP should be allocated to borrowers in Season 1, with a similar bid system implemented. This 20% can be taken from the vault creator XP side, as the two (vault creation and borrowing) are intertwined.
Anthias Labs or another DAO contributor could handle the implementation of the XP bid system if the Foundation would rather not handle this.