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SIP-11 and the Evolution of the SIREN Rewards Program

Community-proposed SIP-11 is ready for deployment and will launch by the end of this week. Thank you everyone SIP-11 is a step towards an improved alignment between Liquidity Providers (LPs) and the SIREN protocol, options traders, and SI holders.

The current LP program was effective in the early days of SIREN when a primary goal was attracting liquidity to bootstrap the project. As SIREN enters a more mature phase of growth, spending SI rewards more thoughtfully will allow for support of the protocol on an ongoing basis. Deploying SI rewards tactically, i.e. providing more rewards to pools that have more open interest, is a natural way to streamline the LP program, allowing for a more sustainable, ongoing program that rewards successful options markets and distributes capital more efficiently based on market demand.

Practically, the implementation of SIP-11 will result in the overall reduction of the APY of SI rewards distributed every day, especially for pools serving options markets with very low usage. For example, the open interest in Puts is close to zero, given current market conditions, so the new paradigm will result in reduced rewards to the USDC pool. However, this reduction in daily rewards will allow for the extension of this program beyond its projected end, currently about five weeks away. Reward amounts will continue to calculate daily off of a pool snapshot taken at a random time. Please see SIP-11 for more information on the technical details.

A utilization-based rewards program will create an opportunity for a significant extension of the LP program for multiple months to come. The modified program will also align incentives between liquidity providers and the protocol to ensure a healthy ecosystem of participants that are being rewarded for contributing to the long-term success of SIREN.