Our research to understand what the rewards we distribute go to led to this Dune dashboard: https://dune.xyz/tuta/Where-did-the-rewards-go
The goal of the page is to determine how much we are paying each protocol agent, and if we are over-paying specific pools.
One thing to keep in mind is that the roles of HAs and SLPs in the protocol are very different, and HAs arguably play a much more important one than SLPs. As such, paying HAs more than we pay SLPs should be natural.
→ The most interesting table is probably the comparison between HAs and SLPs. It shows that we are currently paying HAs 4% for a 80% hedge ratio, and SLPs 4.5% to be over-collateralized by 50%.
Why do we pay HAs?
→ The protocol needs to attract HA to hedge the protocol reserves against price change. This is the main mechanism that helps back the stablecoins issued by the protocol.
To calculate the cost of attracting HA capital to cover the protocol funds, we can divide the amount paid by the protocol in ANGLE tokens, by the total quantity of capital covered by HA (hedge ratio x user funds in the protocol), the capital incentivized in the table.
$$ \texttt{payout yield = amount paid in ANGLE / capital incentivized } $$
We see that we are currently overpaying FRAX Perps by a factor of 2.
ANGLE distribution Efficiency - Perps
Why do we pay SLPs?
→ The protocol needs to offer enough yield to SLPs to attract them to over-collateralize the protocol.
To calculate the cost of attracting SLP capital, we can simply divide what the protocol pays them in ANGLE by the capital they deposit into the protocol.