Update on Fee Distribution & Auto-Bribing Activation on Berachain clusters

Euler DAO Rewards
1

Regarding Proof-of-Liquidity specifics on Berachain and the potential lending venue on this chain, we are looking to implement a few changes to the fee collection and distribution in our clusters.

These changes aim to use fees as future incentives to develop BGT emissions for the supply of strategic assets in our clusters and to help us with our partners’ future integrations.

MEV Capital Red Cluster

As we’re activating the auto-bribing mechanism, the DAO’s share of fees will be reduced from 50% to 25%.

A 20% fee is applied on the borrowing side and will now be distributed as follows :

  • 50% (i.e. 10% of total borrowing fees) will be used to bribe the BERA lending market within the Red Cluster

  • 25% (i.e. 5% of total borrowing fees) will go to the DAO

  • 25% (i.e. 5% of total borrowing fees) will go to the Curator

Please note that this fee distribution may be adjusted in the future based on market dynamics

The RFRV is currently being prepared. We aim to activate the auto-bribes starting from Batch 9, or Batch 10 at the latest

MEV Capital Blue Cluster

As we’re activating the auto-bribing mechanism, the DAO’s share of fees will be reduced from 50% to 25%.

A 20% fee is applied on the borrowing side and will now be distributed as follows :

  • 50% (i.e. 10% of total borrowing fees) will be used to bribe the BERA lending market within the Red Cluster

  • 25% (i.e. 5% of total borrowing fees) will go to the DAO

  • 25% (i.e. 5% of total borrowing fees) will go to the Curator

Please note that this fee distribution may be adjusted in the future based on market dynamics.

This market includes a unique feature: BeraPaw, which also leverages lending fees to auto-bribe the market. This mechanism is designed to bootstrap the flywheel effect in the early stages

In a future scenario where lending-side bribes become self-sustaining, the borrowing-side bribe fees may be removed, and the total fee could be reduced to 15%, split between the DAO and the Curator.

The RFRVs have benn submitted last week. We aim to activate the auto-bribes starting from Batch 9.

2

Thank you @0xMagikarp for submitting this proposal.

At Objective Labs we recognize that Berachain’s unique economics may require a separate budget for validator bribes. Therefore we are generally supportive of the proposed mechanism. Berachain is not a significant source of revenue for the DAO therefore such experiments come with limited downside while potentially uncovering a new flywheel for incentivization.