[AIP-26] Optimize AURA/ETH and AuraBAL Stable Incentives to Maximize Protocol Benefit

Authors: 0xShunbun, Lamentations, 0xahtle, with support from the Aura Maxis


Aura DAO currently incentivizes both the auraBAL Stable and the AURA/ETH pools via voting incentives on Hidden Hand’s veBAL and vlAURA market. However, as these markets have compressed in efficiency, it has made less sense to always allocate to Hidden Hand to incentivize these pools. To ensure stable yields and to reduce net emissions, Aura DAO can add incentives to these pools through different methods to better optimize efficiency.


In AIP-2 and AIP-6, Aura DAO voted on proposals that allocated AURA to Hidden Hand as voting incentives to increase the liquidity of the 50/50 auraBAL/[8020 BAL/ETH BPT] and 50/50 AURA/ETH pools.

These proposals did well to bootstrap liquidity for both pools while efficiency in the vlAURA market was high, in excess of 1.5 to 2x. Yet over recent voting cycles, efficiency for incentives has begun to compress toward 1x, resulting in attempts to maintain efficiency by testing the waters in the veBAL market. While this has had some effect, voting incentive efficiency in the veBAL market is inconsistent and comes with the risk that veBAL holders not aligned with Aura DAO can obtain large amounts of AURA with little return to the DAO.

Emitting AURA from the treasury into voting incentives also has the effect of Aura DAO effectively ‘double-spending’ on emissions, assuming those tokens are not put out of circulation via locking. vlAURA voters that get AURA as voting incentives are more likely to lock their AURA than veBAL voters that get AURA as voting incentives.

With this in mind, we propose the following incentive model to maximize cost-effective incentives for these key pools:

  • If vlAURA efficiency was above $1.4 last cycle, add incentives to the vlAURA Hidden Hand market to the point where efficiency is expected to reach $1.4
  • If vlAURA efficiency is under $1.4, allocate voting incentives veBAL via priced voting incentive markets (e.g. Hidden Hand v2, or if unavailable, any provider supporting $/veBAL at the discretion of the multisig) at a price of the value BAL emissions for those same votes (implying a ~2x efficiency))
  • For AURA left over from these mechanics (either the vlAURA market compresses to a projected 1.4x or the veBAL market incentives are not allocated), allocate the remainder to direct emissions via a new “VirtualRewardPool,” which would allow AURA rewards to be directly distributed to LPs, such that the net AURA spend on these pools is the same every two weeks

Note: vlAURA efficiency is voting efficiency as defined by Llama Airforce.


Should this proposal pass, the following will be implemented:

For AURA/ETH incentives

  1. Allocate 40,000 AURA per vlAURA epoch for 25 cycles (totaling 1,000,000 AURA) from the treasury to the Aura incentive multisig mentioned in AIP-6 for the AURA/ETH pool. This will be sent to the incentive multisig in batches of 250,000 AURA to minimize operational risk, and to leave AURA for other initiatives. The incentive multisig will allocate AURA to voting incentive markets or as direct incentives based on the aforementioned conditions.

  2. Set up an ExtraRewardStash for the AURA/ETH pool with the following specification:

  "version": "1.0",
  "chainId": "1",
  "meta": {
    "name": "Transactions Batch",
    "description": "",
    "txBuilderVersion": "1.13.3",
    "createdFromSafeAddress": "0x5feA4413E3Cc5Cf3A29a49dB41ac0c24850417a0",
    "createdFromOwnerAddress": "",
  "transactions": [
      "to": "0xCe96e48A2893C599fe2601Cc1918882e1D001EaD",
      "value": "0",
      "data": null,
      "contractMethod": {
        "inputs": [
            "internalType": "uint256",
            "name": "_pid",
            "type": "uint256"
            "internalType": "address",
            "name": "_token",
            "type": "address"
        "name": "setStashExtraReward",
        "payable": false
      "contractInputsValues": {
        "_pid": "0",
        "_token": "0xC0c293ce456fF0ED870ADd98a0828Dd4d2903DBF"
  1. End AIP-6’s ongoing incentive program 2 vlAURA voting cycles early. 40,000 out of the 60,000 AURA left can be recycled to this new program, for a total of 26 cycles, while the remaining 20,000 can be returned to the treasury.

For auraBAL Stable incentives

  1. Continue the same rate of emissions to the auraBAL Stable pool as specified in AIP-3, though under the same conditions as the AURA/ETH pool


This RFC will be live for a few days, and if it sees no contention from the community, will be turned into an AIP for voting this upcoming voting cycle.

This vote will be a single-choice vote. You may vote “For” or “Against” this proposal, or choose to abstain from the vote.

By voting “For” this proposal, you are voting in favor of adjusting AURA/ETH and auraBAL Stable incentives as specified in the proposal.


This is a well-drafted, well-reasoned AIP, and will be of vital importance to the Aura ecosystem. I strongly support this proposal.

1 Like

It is important to be able to adapt when market conditions change! The considerations are reasonable, and the trigger for changing the voting incentives is on the spot. I support this proposal.



1 Like

I don’t understand the second part of the proposed plan at all. Can someone re-write it in plainer language or share an example that would illustrate it?

" If vlAURA efficiency is under $1.4, allocate voting incentives veBAL via priced voting incentive markets (e.g. Hidden Hand v2, or if unavailable, any provider supporting $/veBAL at the discretion of the multisig) at a price of the value BAL emissions for those same votes (implying a ~2x efficiency))"

Because the potential that AURA distributed to veBAL holders is sold vs. AURA distributed to veBAL holders, we can allocate AURA via voting incentive markets that allow the DAO to price votes at a value advantageous to the DAO. Whereas with non-priced voting incentive markets, votes are distributed to gauges indiscriminately such that in some cases there could be a loss of efficiency.

The pricing of the votes as stated in this proposal is that of the dollar value of BAL emissions of each veBAL vote, since each veBAL controls a specific amount of BAL emissions each cycle. Because Aura as a protocol distributes AURA too for BAL earned by LPs, we basically get a ~2x multiplier if we price votes at the dollar value of BAL emissions.


I assume for the second bullet on efficiency under $1.4, since Hidden Hand V2 doesn’t exist yet (right?), most of the initial “priced voting incentive markets” would be manually calculated/done by the multisig holders?

Ok so you’re saying that in the future on HH there will be a way to put a price limit on rewards such that Aura can more closely tie emissions to something that makes sense for them. And this will result in leftover Aura that can be distributed in some other way more beneficial to the Aura project. Do I understand that correctly?

1 Like

Vote Market by StakeDAO and Warden by Paladin both support the kind of bribe dynamics discussed here. I think the idea is that if HHv2 isn’t ready, the bribs could be placed on another market.

Both Vote Market and Warden support some sort of a cap on how much you pay per vote. My understanding is that Hidden Hands is close to releasing a new version that allows the same.

I think the future of vote markets involves a lot more automation for DAOs. Being able to set a quarterly plan for example, fund it, and then manage it via some parameters (with good metrics) instead of just throwing money into the ring each round and praying.

Exciting times!