TL;DR
Currently, CARROT tokens require a 6-month conversion period to become PUFFER. This proposal asks the community to consider reducing that period to 1/2 months, increasing flexibility, usability for token holders, reducing the CARROT:PUFFER premium while maintaining the protocol’s long-term stability incentives and potentially increasing TVL with the same amount of incentives.
Background
At present, CARROT holders must wait 6 months to convert their tokens to PUFFER. This extended period was originally intended to encourage long-term commitment and reduce short-term speculation. However, on-chain data indicates that the lengthy lockup may limit active participation and practical use of the conversor within the ecosystem, as there has not been plenty of people converting CARROTS to PUFFER but mostly dump them in the market. This leads to an increase of the “premium” (which follows the following formula: PUFFER_price * 0.55 / CARROT_price) that currently sits at a 82.64% (0.02474 * 0.55 / 0.00745), meaning that we could potentially capture the double of TVL with the same amount of incentives if this premium is reduced to as close as possible to 0%.
Currently, theres already a 30 days vesting for CARROTs when claimed so by updating the time for the conversor to 1 month would imply an effective lock of 2 months. I’ll enable an option of updating this time to 2 months (which is an effective lock of 3 months) in case there are arguments sustaining this decision, but I believe that reducing it to 1 month would be much better for the protocol long term.
The Decision
Reducing the conversion period from 6 months to 1/2 month could:
Improve token liquidity and usability.
Encourage more engagement from the community in staking, governance, and platform activities.
Retain long-term incentives while making CARROT more accessible to holders who want a shorter commitment.
Increase the TVL of all gauges using the same amount of incentives.
The Vote:
For 1 month: Reduce the CARROT → PUFFER conversion period from 6 months to 1 month.
For 2 months: Reduce the CARROT → PUFFER conversion period from 6 months to 2 months.
Against: Keep the current 6-month conversion period.
agree 6 month conversion time has proved to be an overkill of its intended purpose, with the market pricing the puffer-carrot ratio higher and consistently trending towards its ATHs. This reveals an increased interest from participants to exit (dump) carrot for usdc, and a consequent decrease to participating in the conversion path. A 1 to 2 month conversion period has proved to capture higher TVL in the past. A great case study on how in certain cases velocity can be more valuable than scarcity(lockups)
I’m in favor of this proposal. Reducing the conversion period feels like a very reasonable adjustment given the current premium and “low” TVL. A 6-month lock is quite restrictive and seems to discourage actual use of the converter.
Moving to a 1-month lock strikes a good balance between maintaining long-term alignment and making the system more practical for users. It should help reduce the CARROT sell pressure and incentivize people to convert to PUFFER and lock and participate more in governance
Overall, this change looks like a net positive for usability, participation, and TVL. I’d support the 1-month option.
Yeah, 6 months was a reaaaally long time for me to convert the carrots and i was just dumping them on the market, 1 month looks like a more reasonable time for conversion
Appreciate the thorough analysis here. The 82.64% premium and the TVL efficiency argument are hard to ignore.
One thing worth surfacing for the community: the 6-month period was originally set to ease PUFFER selling pressure by limiting how quickly converted tokens enter circulation. Reducing it is a deliberate trade-off — better incentive efficiency in exchange for faster PUFFER circulation. Neither side of that trade-off is wrong. It is a genuine decision about protocol priorities.
The proposal would benefit from quantifying both sides. How much CARROT is currently being dumped vs converted, and how much additional PUFFER would enter circulation monthly under each option. That gives voters a complete picture.
Looking forward to the community discussion before this goes to Snapshot.
Let’s assume 10% CARROT would be converted to PUFFER under the condition of 6-month conversion period. The additional selling pressure is 3M x 10% x 0.55 = 165k PUFFER
Let’s assume 70% CARROT would be converted to PUFFER under the condition of 1to2-month conversion period. The additional selling pressure is 3M x 70% x 0.55 = 1.16M PUFFER
Monthly unlocking amount of PUFFER is not low, and the precent of circulation is still lower than 50%, meaning the token price is sensitive to selling pressure. The1.16M PUFFER released is like 5% additional selling pressure in additional to the unlock schedule.
From Coingecko the monthly unlocks are 19,375M monthly PUFFER (delta from 1st march to 1st april), I am not able to know which data is correct but gonna use this number.
You are wrong saying that “The1.16M PUFFER released is like 5% additional selling pressure in additional to the unlock schedule.” as the PUFFER got from the CARROT->PUFFER conversion is already counted in the “Ecosystem and Community or Airdrop” emission, so there’'s not an “increase in selling presure in addition to the unlock schedule”. What an increase of use of the conversor will do is:
-Redistribute a sell pressure on PUFFER that is going to come sooner or later as there’s currently 40.7062M (100% - 39.2938% already converted to PUFFER supply - 20M undistributed CARROTS) of unconverted CARROT (40.7062 * 0.55 = 22388410 PUFFER) waiting to be converted to PUFFER and be sold. If we keep having a long conversion time what the data currently shows is that the CARROT:PUFFER premium is going to get wider what will lead to arbitragers buying a huge quantity of carrots when the premium is super high (so that the market and opportunity risk is worth to do the conversion) and dump them 6 months after that.
A low conversion time leads to manageable sell pressure, low an consistent premium tied to a better liquid and reliable asset (PUFFER) which leads to higher confidence on people to provide liquidity to CARROT, as the market risk would be similar to the one of provide liquidity to the PUFFER pool but with historical higher APR (so it absorbs a higher part of the seller’s pressure), CARROT staked (as investors will be more eager to lock for longer times if the premium is consistent and liquidity is better). This CARROT locks would also reduce the PUFFER sell pressure and use of the conversor so I’d anticipate we wont reach much higher use than the one we historically had.
This also leads to the conversor being used just by arbitragers (as people that wants to farm and instantly dump rewards could assume a 10% premium discount vs locking 1-2 months their capital) and people (like me) that would want to use at least a portion of their CARROTs to adquire PUFFER to lock for 2 years and participate in governance to distribute more incentives to vlPUFFER/staked_CARROT
-Your assumption of just a 10% being converted to PUFFER is way below the real on-chain data so can’t be used as an argument. Currently 39.2938% of the total CARROT supply has been converted to PUFFER, which is 50.1836% of the circulating supply (39.2938M/78.3M) so if the time reduction increases this to 70% the difference in POTENTIAL sell pressure is not much as your assumption.
-As stated before, is a potentially low increase in PUFFER sell pressure not worth the TVL and emissions efficiency of almost a 100% increase of the pufETH that the gauges attract?
Agreed. While a longer conversion time might appear to reduce short-term sell pressure on PUFFER, it also creates a bigger issue if the rewards become too difficult for users to manage from a risk perspective. When that happens, more people end up selling CARROT instead. So the real question is not just reducing PUFFER sell pressure, but making sure the reward system stays practical and sustainable for holders overall.
It’s great to see healthy debate, especially with data-backed, balanced views.
Happy to confirm that this proposal is progressing to internal review (either later this week or early next week). If successful, we will initiate a vote shortly after.