HIP-21: Stop Incentives to the zBNB - BNB pool on Wombat Exchange

Stop incentives to the zBNB - BNB pool on Wombat Exchange.

Type: Horizon Improvement Proposal

Date: September 9th, 2024

Status: Second Draft

Summary

This HIP proposes to stop incentives to the zBNB - BNB pool. By performing these actions, the weekly HZN emissions will be optimized. Specification - Stop incentives to the zBNB - BNB pools on Wombat Exchange - The zBNB - BNB pools will still be live on Wombat Exchange but without an incentive

Motivation

The zBNB - BNB pool was originally created with the mission to provide a secondary on/off ramp for traders and an arbitrage opportunity that can reinforce the peg of the zUSD token (HIP-1). Since its migration to Wombat Exchange (HIP-8) , the zBNB - BNB pool had minimal volume showing little interest from traders. In addition, due to the algorithm implemented to balance the single sided pools on Wombat Exchange, it is more difficult to arbitrage zUSD via the zBNB - BNB pool. Stopping incentives for the zBNB - BNB pool will allow the incentives that are currently used for the zBNB - BNB pool can be redirected towards a more efficient use.

Considerations

• Peg mechanisms: Although the zBNB - BNB pool on Wombat Exchange proved not to be an attractive arbitrage route, by stopping the incentive, there will be less opportunities to arbitrage zUSD. Incentives towards the zUSD - USDC pool will need to be monitored closely and adjusted accordingly should there be a fluctuation in the peg. Looking into the future, should a new incentive for zBNB - BNB pool be proposed, it will need to be re-evaluated and submitted to community discussion.

• HZN Allocation: Potential uses for HZN tokens include redirecting incentives to the zUSD-USDC pool to help balance the Coverage Ratio (COV), enhance the on/off-ramp experience, and support the growth of the futures exchange. Additionally, growth strategies such as marketing investments, promoting Futures, and providing liquidity are also under consideration.

Feedback & Questions

If you have any suggestions, concerns, or inquiries regarding this proposal, please don't hesitate to reach out. Your feedback is valuable in ensuring the success and continuous improvement of Horizon Futures.