Rewards Allocation Framework
for Protocol Participants

Summary

This governance proposal establishes the RAAC Rewards Allocation Framework (RAF) for the next quarterly cycle. It formalizes the distribution of newly emitted RAAC tokens across four stakeholder groups that have contributed to the growth and security of the protocol.

Motivation

As RAAC matures from early-stage bootstrapping into a sustainable DeFi protocol backed by real-world assets, it is critical that incentive design aligns with long-term protocol health. The current ad-hoc reward model has created misaligned incentives — liquidity miners with no long-term commitment extracting outsized rewards. This proposal rebalances incentives toward participants who create durable value.

Proposed Allocation

The total quarterly emission budget for this cycle is 2,400,000 RAAC. The following allocation is proposed:

Recipient Group	Allocation	RAAC Amount	Rationale
Liquidity Providers	40%	960,000	Core protocol utility — lending & borrowing depth
RAAC Stakers (veRAC)	30%	720,000	Long-term alignment and governance participation
Protocol Development	20%	480,000	Engineering, audits, infrastructure & integrations
DAO Treasury	10%	240,000	Reserve for future community-led initiatives

Implementation

If passed, the RAAC core team will deploy updated distributor contracts within 7 days of proposal finalization. The new allocation will take effect from the start of the next weekly epoch following deployment.

• Liquidity Provider rewards are distributed pro-rata based on average liquidity depth over the epoch.
• veRAC staker rewards accrue linearly based on lock duration and staked weight.
• Development allocation is held in a 2-of-3 multisig controlled by the core team.
• DAO Treasury funds are governed by subsequent community proposals.

Risks & Considerations

Reducing the LP allocation below 50% (from the current informal ~55%) may temporarily reduce TVL incentive pressure. The team models this as a net positive over 90 days as protocol revenue replaces mercenary incentives.

The veRAC staker multiplier rewards long lock-ups and inherently reduces circulating supply pressure — this is expected to support RAAC token stability during the transition period.