[RFC] Extend and Adjust Vault Rewards Emissions

General Discussion Request for Comment [RFCs]
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Overview

Vault rewards across Summer.fi are set to expire soon. As of now, we’re emitting ~377,000 SUMR/day to incentivize depositors across vaults. With SUMR transferability enabled earliest on July 1st, we’re entering a critical transition period. I propose extending rewards with adjustments, while working with the community on long-term token incentive alignment.

Context: Vault Reward Expiries Are Approaching

Summer.fi currently emits approx. 377,000 SUMR/day across fleets on Base, Ethereum, Arbitrum, and Sonic. A large portion of these vaults have rewards set to expire within the next 20–31 days.

Initially, the emissions were set up to ~215,000 SUMR/day - this value was approx. the amount to allocate 45% of all community rewards to Vaults for 2 years.

Based on current reward manager contracts:

Vault Chain Rewards End Days Remaining
USDC Base May 12 / May 13 ~20–21 days
EURC Base May 12 / May 13 ~20–21 days
*ETH [SIP1.4] Base May 12 / May 13 ~20–21 days
USDC Arbitrum May 12 ~20 days
USD₮0 Arbitrum May 12 ~20 days
ETH Ethereum May 12 ~20 days
USDC Ethereum May 12 ~20 days
**ETH(HR) [SIP1.3] Ethereum May 12 ~20 days
USDT Ethereum May 12 ~20 days
USDC.e Sonic May 23 ~31 days

*[SIP1.4] Onboard Lower Risk ETH Vault on Base
**[SIP1.3] Onboard Higher Risk ETH Vault on Mainnet

Proposal: Extend (90-day) & Adjust Vault Emissions

I propose a modular extension of vault rewards, aligned with broader SUMR token incentive planning. The key choices:

Option 1: Maintain Same Emissions (~377k SUMR/day)

  • Keeps yields high & stable across chains - good for user confidence and onboarding
  • Could lead to SUMR oversupply near transferability
  • Might miss the opportunity to shift toward more sustainable incentives

Option 2: Slight Taper (Reduce to ~215k SUMR/day)

  • Soft landing into transferability
  • Frees up ~162k SUMR/day to be allocated to the treassury
  • Could slightly reduce APYs across vaults

Option 3: Strong Taper (Reduce to ~120k SUMR/day)

  • Strong alignment with long-term value accrual
  • Potential to redirect some rewards to locked liquidity or further treassury growth
  • More likely to reduce TVL in competitive chains short-term

Based on current reward APY:

Vault Chain Option 1 (Current) Option 2 (-43%) Option 3 (-68%)
USDC Arbitrum 2,427,226 1,384,227 772,592
USD₮0 Arbitrum 2,427,226 1,384,227 772,592
EURC Base 1,429,366 815,156 454,971
USDC Base 2,427,226 1,384,227 772,592
*ETH [SIP1.4] Base 458,476 261,465 145,934
USDC Ethereum 4,854,452 2,768,454 1,545,184
ETH Ethereum 4,854,452 2,768,454 1,545,184
USDT Ethereum 4,854,452 2,768,454 1,545,184
**ETH(HR) [SIP1.3] Ethereum 809,075 461,409 257,531
USDC.E Sonic 1,240,582 707,494 394,880

*[SIP1.4] Onboard Lower Risk ETH Vault on Base
**[SIP1.3] Onboard Higher Risk ETH Vault on Mainnet

Hey @Recognized_Delegates let’s align on how we want the next 90 days of SUMR incentives to look — especially in light of transferability. Feedback will shape upcoming SIP proposal.

Stay cool,
— jensei

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Thank you for this work @jensei

To add a bit of background to the original numbers too, we initially targeted around 215,000 SUMR rewards per day, based on an assumption that 45% of all community rewards would go to Vault holders, which is around 157.5M in total. And to stretch this out to 2 years, 215k was the number per day.

Obviously, it’s perfectly fine to go above this number, especially in the early days - but something we should be conscious of, given we are currently at 377k at the moment - mainly through more vaults being onboarded in the first 90 days than, I at least, was probably expecting.

That said, more rewards can also be given to the vaults from elsewhere, the 45% is just an assumption.

That being said, I would also like to propose another way of potentially renewing the rewards, which is take the current TVLs of each Vault, and reset the rewards back to a target rate APY (assuming 250M FDV of SUMR).

The following is based on resetting all to 25% APY (except for the two new vaults where there is an assumption made on the Ethereum HR ETH vault being around 20M and Base ETH vault being around 6.5M

Vault Chain Current APY (based on 250M FDV) Current Rewards Current TVL ($) Rewards to reset all to 25%
USDC Arbitrum 38.62% 2,427,226 $6.37M 1,592,500
USD₮0 Arbitrum 41.64% 2,427,226 $5.90M 1,475,000
*ETH [SIP1.4] Base 1,630,000
EURC Base 113.52% 1,429,366 $2.16M 540,000
USDC Base 37.71% 2,427,226 $6.52M 1,630,000
**ETH(HR) [SIP1.3] Ethereum 5,000,000
ETH Ethereum 20.21% 4,854,452 $24.34M 6,085,000
USDC Ethereum 24.61% 4,854,452 $20M 5,000,000
USDT Ethereum 39.90% 4,854,452 $12.33M 3,082,500
USDC.E Sonic 68.88% 1,240,582 $3.57M 892,500
TOTAL 24,514,982 26,927,500
PER DAY 377,000 299,194

This resets the daily reward emissions to around 300,000 - still higher than the 215k a day, but a fair bit less than the 377k where it currently is. For those wondering why the total for the current is less, but per day is higher, its because it was not all set to 90 days for the first, and the two new vaults are not yet included (but I included them in the per day figure for clarity).

Would be keen to hear the communities thoughts on this.

C

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very much in favour of the adjust of rewards to favour vaults that have expressed high demand

as higher risk vaults come online, will they also be 25% ?

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@Recognized_Delegates - Wondering if you have any thoughts on @jensei and my own recommendation?

I think we probably need to confirm this soon to get it to vote in time, given spoke-chains require around 9 days from start of voting to confirmation.

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We would support the [Current] option, and the option put forward by @chrisb. The proposal from Chris is more aligned with the variance in usage of different tokens, although there is also a case to be made that it is a bit arbitrary to pick 25% based on the current TVL despite various vaults having shorter live times yet.

However I think it is either way insignificant, and the most important aspect is that the growth trajectory is not halted, so we support both of those options.

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I am a fan of Option 2:

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Also for the new proposed 25% APY - what made you guys settle on that number? This is a little more aggressive than the soft landing, but should continue to increase TVL. I am not opposed to this option either.

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I am support option 2 slight taper:

Option 2: Slight Taper (Reduce to ~215k SUMR/day)

  • Soft landing into transferability
  • Frees up ~162k SUMR/day to be allocated to the treassury
  • Could slightly reduce APYs across vaults
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:brain: SUMR Daily Rewards — A Mental Model

I’d like to share a simple model to reason about SUMR rewards — and especially SUMR APY — based on a few assumptions:

:1234: Assumptions

  1. Daily SUMR emissions are fixed :
    R=215,000 SUMR/day

  2. SUMR FDV is proportional to TVL :
    SUMR FDV ~ TVL

  3. Ignore temporary differences in vault SUMR APYs — assume all vaults earn rewards equally.

:chart_increasing: Implication: Constant USD APY

Under these assumptions, USD-denominated APY from SUMR rewards is constant , no matter the TVL.

Why?

  • The SUMR APY a user earns is inversely proportional to TVL
  • The price of SUMR is proportional to TVL

So, the USD-denominated SUMR APY is proportional to the product of those two effects:

USD SUMR APY ~ (TVL* 1/TVL)
USD SUMR APY is constant

That means:
Even if TVL grows, your USD APY from SUMR rewards stays flat , assuming equal distribution.

:thinking: Why Say This?

Because it might feel counterintuitive.

The natural thought is:

“Come on, those brave early adopters deposit based on 250M FDV while TVL is still so small…”

But remember:

The cake is smaller, but the party is equally smaller.

:compass: Should Rewards Be Fixed at 215k/day?

Not necessarily. Let’s weigh arguments for adjusting the daily emissions.

:white_check_mark: Arguments for higher emissions:

  • More rewards → more TVL → more attention → social snowball
  • Still early — early adopters deserve stronger SUMR APY (solely for being early - not for low SUMR value as discussed above)
  • SUMR is non-transferable , which raises perceived risk
  • Abrupt cuts to rewards may cause fear or frustration

:cross_mark: Arguments for lower emissions:

  • The assumption that FDV ~ TVL doesn’t hold perfectly — FDV grows slower at higher TVLs
  • Lower emissions now help create a soft landing into transferability

:balance_scale: Open Question: Does higher TVL help or hurt native yield?

Unclear:

  • Higher TVL may consume available opportunity yield , making SUMR APY less efficient
  • But it also reduces the cost of rebalancing , improving capital efficiency
  • saves SUMR to treasury

:light_bulb: Where I Stand

I’m in favor of keeping emissions slightly above 215k/day —

I’m for Option 4 , which is just in the middle between Option 2 and @chrisb approach .

I’m strongly against Option 1 and 3 .

Also: I share @FBrinkkemper concerns about newer vaults—their SUMR APY likely needs separate calibration.

Happy to hear feedback or counterpoints