Happy to see that there is technical implementation details shared for discussion!
Regarding the new measures, I have several concerns:
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The Foundation is already incentivising defi participation with the Aeneas rewards program, why do we need to allocate additional rewards from the governance program to incentivise defi? Why not just reduce the rewards amount of governance program and increase & extend the rewards of Aeneas?
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The proposal focused on LP tokens but as things stand, account local storage instead of LP tokens is being used for some defi use cases (for example Algofi v1 creates a proxy account for each user that opted into their smart contract and uses the proxy account’s local storage to track lending & borrowing balances). Focusing on LP tokens would miss out a portion of meaningful defi liquidity, esp considering that Algofi has a ~40% defi liquidity dominance on Algorand according to DefiLlama.
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DeFi activities include a variety of actions on top of basic liquidity provision, for example some users might deposit their LP tokens into farming pools on DEXs, and therefore the LP tokens will be in an escrow smart contract and their address will not hold the LP tokens. This does not mean that they contribute less to defi than users who didn’t participate in farming, but under the proposed mechanism, these meaningful liquidity and actions will be excluded from governance. How does the Foundation plan to address this? Or do users need to choose between farming and governance?