Name of the Proposal: Fund the Drift Incentive Fund
Note: This is the Second Draft of the proposal to Fund the Drift Incentive Fund and is set to be voted on commencing 10 June 2025.
Acknowledgements: Thank you to something, namanc and Himura for contributing to the discussion.
The first post can be found here : Fund the Drift Incentive Fund
Abstract
This proposal requests the allocation of 20 million DRIFT to fund the Drift Incentive Fund which will be used to fund incentives for various growth initiatives for the remainder of the 2025 calendar year. The Drift Incentive Fund will be managed and delegated by the Drift Foundation and Drift Security Council. The incentives initiatives will be used to support the continued growth of the Drift ecosystem.
Mandate
Incentives will be strategically distributed by the Drift Foundation aligning with its mandate. The Drift Foundation is a non-profit entity responsible for the long-term growth and sustainability of the DRIFT ecosystem. Its key responsibilities include governance support, ecosystem expansion, and maintaining the DAO’s security and stability.
Part of the DAOs mandate is to fulfil its responsibilities in a capital efficient manner, ultimately all issuance is a cost and it is crucial that for the foundation to be net positive to the ecosystem so it is important that it acknowledges that and prioritises capital efficiency in operations.
Context & Reasoning
Since the DRIFT DAO’s launch corresponding with the DRIFT token, Drift’s TVL has over doubled from $400M to $1B, and cumulative perpetual volume has surpassed ~$80B. Along with KPI growth the Drift ecosystem has scaled, there are now more than 40 teams building on Drift’s primitives. Example ecosystem products include vaults, stable-coins, wallets, defi-native credit cards and gambling apps. Drift’s Vault offering has expanded significantly, now with 18 managers running over 58 vaults and managing over ~$250M in TVL.
The Drift Foundation has been largely inactive aside from funding select minor ecosystem growth initiatives via governance. These include programs such as the G.A.S. Ecosystem Support Program, the AI Agent Request for Grant Program, the Drift Working Group and FUEL program . The success of these initial initiatives suggests that further activation of the Drift Foundation through the Drift Incentive Fund would help accelerate the Drift ecosystems growth.
Drift’s most recent incentive initiatives were centered around the FUEL program. This program allocated a maximum 78.2 million DRIFT to be distributed as growth incentives. Allocation of the DRIFT is based on a tiered distribution schedule with tiers being unlocked by volume goals for the duration of the program, due to non-favorable market conditions volume has been lower than expected and the FUEL program will only distribute the first tier of 28.2 million out of the total 78.2 million DRIFT. This proposal proposes utilising 20 million from the unused 50 million DRIFT from the FUEL program to fund the initial Drift Incentives Fund.
The proposed 20MM DRIFT allocation represents 2% of the total DRIFT supply and ~5% of the DAO’s treasury. As Solana DeFi competition intensifies, strategically activating the Drift Foundation through targeted incentives is essential to sustaining and expanding the Drift ecosystem.
Proposal
The Drift DAO will allocate 20MM DRIFT to the Drift Security Council. The Drift Security Council will have full discretion to deploy or allocate these funds aligning with its core mandate: protocol growth, ecosystem growth, and DAO sustainability and security. Any unused DRIFT will be returned to the DAO at year-end.
At the end of 2025, the Drift Foundation will create a report evaluating fund utilization and progress toward its objectives. This report will serve to inform the DAO on the effectiveness of Foundation initiatives and guide future funding decisions for 2025.
Use of funds
The Drift Foundation will have full discretion to deploy these funds aligning with its core mandate. Below is an outline of potential initiatives that fall within the scope of incentives. It is important to reiterate that part of the goals of the foundation is to achieve this mandate within a capital efficient manner.
The newly funded Drift Incentives Fund will be used to fund the next generation of incentive programs to grow the Drift ecosystem. The security council will be ultimately responsible for allocating to initiatives it deems aligned with the core goals of the Drift DAO.
Incentives will likely take the form of direct distribution of DRIFT tokens instead of a long term sudo-points program. Direct distribution has the distinct advantage over points of providing calculatable incentives. As DeFi continues to grow in sophistication, direct allocations are likely a more effective use of strategic incentives.
- General incentives: These are longer term incentive initiatives targeting Drift product categories to align with the high level goals of Drift and its competitive position. An example here could be liquidity incentives for perp makers allocated per market.
- Strategic incentives: These are short term, focused incentives for new products, listings or markets to help bootstrap liquidity and increase competitive viability of new offerings. An example here could be incentives to encourage deposits in a newly listed borrow lend asset.
- Partnership matches: Matching incentives with partners for initiatives helps encourage partnerships by offering a capital efficient use of incentives for both parties.
- Ecosystem incentives: A novel idea is instead of grants, providing direct incentives to projects building on top of Drift liquidity to help them bootstrap growth. Having a diverse ecosystem of projects building on Drift helps increase the robustness of the underlying program.
- Other: Given the novelty of DeFi there is a lot of room to experiment with incentive design, this category is a catch all for those experiments. All experiments will align with the mandate and have a focus on capital efficiency. An example here could be rewards for DRIFT stakers, this would likely have to go through governance to ensure ecosystem alignment.
Outcomes
The primary goal is to accelerate Drift and Drift ecosystem growth in a capital-efficient manner. The main risk is inefficient capital deployment, which could contradict the Foundation’s mandate and weaken the DAO’s position.
Cost Summary
The proposal requests 20MM DRIFT from the DAO’s treasury. Any unspent tokens will be returned to the DAO at year end. If the program proves successful, the Drift Foundation may initiate DAO proceedings to fund the Drift Incentive Fund for 2026.
