Summary

Reduce KITE subsidies for borrowing against yield-bearing LP collateral, increase its contribution through stability fees, and remove the standalone msETH borrowing subsidy.

Specification

• Yearn msETH/WETH (YV-VELO-MSETH-WETH): borrowing rewards from 25 to 10 KITE/day; annualized stability fee from 2.5% to 5%.
• Beefy BOLD/LUSD (MOO-VELO-BOLD-LUSD): borrowing rewards from 25 to 10 KITE/day; annualized stability fee from 2.5% to 5%.
• msETH (MSETH): borrowing rewards from 25 to 0 KITE/day; stability fee unchanged at 2%.

The three campaign allocations decrease from 75 to 20 KITE/day. These are total campaign budgets, not per-borrower rewards.

Execution and reward implementation

The on-chain payload changes the two LP stability-fee factors and calls taxSingle after each change to settle the old accrual period and activate the new rate.

The KITE allocation changes are a governance instruction to the rewards operator, not automatic effects of those transactions. Apply them prospectively from the first full daily reward period following successful on-chain execution, update the published reward configuration, and preserve accrued entitlements. Confirm the production configuration and resulting distributions publicly. If operational activation cannot meet that boundary, disclose the delay rather than represent the reward changes as executed.

Voting

FOR: approve the fee changes and instruct the operator to implement the reward allocations. AGAINST: retain existing settings and allocations. ABSTAIN: no preference.

Resubmission

This proposal resubmits the policy in the previous proposal, which did not reach quorum: https://www.tally.xyz/gov/hai/proposal/112209802296514809578632165976718079048511476623145965490229919052695527699466. The economic targets are unchanged.