Key words:
Treasury allocation, reward long term holders
Summary:
Use the 0.05% swap fee collected by the treasury to generate a yield for veAPW holders…
Context:
Since the launch of the protocol, APW holders can lock their tokens for up to two years to increase their voting power, but $veAPW holders aren’t incentivized to lock, so a lot of Apwine are held in liquidity pools or on Tokemak.
As APIP 1 is currently in vote, this is only a discussion subject. If APIP 1 is voted, this proposal will become the APGP 1.
Rationale:
The goal of this proposal is to activate a yield for veAPW holders that can be claimed every week for example. Considering that the DAO incomes might be low for now, it can be interesting to consider bridging the fees on Polygon every week, to make it accessible for every user.
If the DAO decides to distribute these funds, we can consider several approaches:
Distribute every token as collected (Geist model)
Sell all collected fees for stables and make it claimable (Curve model)
Buy back and distribute APW to veAPW holders
Let the choice to either receive stable or APW
Benefits of the stables option:
Generate a yield in stable, independent of the APW price
Can be distributed directly in a strategy (for example PTaUSDT/USDT LPs)
Less token to claim (less gas fees)
Benefits of the buy back option:
Buying pressure on APW
Incentivize users to increase their voting power
Less token to claim (less gas fees)
Benefits of the several tokens options:
Can be converted to PTs
Yield diversification for the users
If this proposal passes, i’ll create another one about accumulating the rewards for a period on mainnet before bridging it to Polygon and reduce users gas fees.
Means:
100% of the collected fees distributed to veAPW holders
Technical implementation:
New router deployment
Voting options:
Buy back and send APW to veAPW holders
Sell all fees for stables and send to veAPW holders
Distribute every rewards in several tokens as received
Don’t distribute the fees to veAPW holders (other distirbution)
Don’t spend the collected fees
How should be used the 0.05% swap fee if APIP 1 is accepted ?
Buy back and send APW to veAPW holders
Sell all fees for stables and send to veAPW holders
Distribute every rewards in several tokens as received
Don’t distribute the fees to veAPW holders (other distirbution)
I support selling all fees for stables and giving to locked veAPW holders. Because it will create a Sybil resistant(nobody can predict when these users will buy unlike an apw buyback and share which could be front-ran) buyback due to veAPW holders being more likely to use the earned funds to buy more apw. This counts as free cash flow for many potential owners of veAPW and could thus increase its value.
I am wondering if we could add an option to distribute all collected fees in eth to the proposal:
unless a general market movement, it is not that much correlated to APW’s price.
moreover, I think it is the asset that most of apwine’s users would agree has value, after APW itself.
It could also be distributed in PTstkETH/stkETH LPs.
But I would argue that the best option, if it is feasible, would be to send the rewards directly in ETH (the coin). However, I do not know if it would be compatible with the claim feature.
Distribution of rewards in eth would be seen as a risk on for many users who are in veAPW. If a person wanted that sort of risk they would just do apw/eth lp pool instead. Distributing rewards as stables would give people the choice as to what token they would want instead of it being thrust upon them.
The fact that a majority of apwine users see ETH as more risky than stablecoins is not obvious to me, that is why I think it should be added to the poll so that it is decided dirtectly by veAPW token holders themselves.
How is eth not riskier than stablecoins? Thats not a matter of opinion but fact, shown in the naming of the tokens. They are stable because they do not submit to the same market volatility that eth is under.
APW is the governance token for a fixed income platform, I would venture to assume that a majority of its holders are fixed income users as well. The purpose of fixed income is to reduce volatility not create it and so paying out in stables is done to shift that narrative onto the governance token as well. Make veAPW a fixed income instrument in that sense, by paying out a low volatility token to its holders who can choose to either keep their volatility low or increase it by buying eth/btc/apw, etc…
I think @Viras probably means that most veAPW users see ETH as having a more attractive R/R. Not sure if that’s absolutely the case (personally I do, but can’t speak for all users).
But I agree with @CoolGuy , distributing in stables is already established as the norm (largely established by curve). At least for the early stages of fee distribution it would be beneficial to stick with this norm as it’s far more likely the market will recognise the value proposition of APW vs something more unique like PTstkETH/stkETH LPs.
Also I don’t know off the top of my head, but I would assume a position like PTstkETH/stkETH would be more gas intensive to distribute and claim?
Of Course stablecoins are less volatile and I get that it is appealing to many.
On the risk part, I was reffering to the fact that stablecoins peg (and even transferability for some of them) depends on other protocols/companys. Actually that is true for any token on the blockchain. ETH does not have this issue.
Moreover, not every Ethereum user uses stablecoin, while everyone on Ethereum uses ETH, hence why I think that adding a ETH option for veAPW holders to vote on on snapshot would be a great idea.
I can’t change the poll on the forum, but I can add the option to the snapshot vote since there is some interest for ETH
I think it could be great to diversify the earnings for veAPW holders, however not sure if it will be interesting to do it at first, considering that the fees amount might be low at the beginning.
I think a reward in ETH for veAPW holders is great because a lot of people want to accumulate ETH and judging by the success of $LOOKS staking I think it would be a great option
I prefere the APW option, but I admit that I hadn’t thought about this front-run risk (and I supposed there are no solutions to bypass it?).
So yes, maybe because of that stable is the best option (even if I’m still convicced that APW distribution to veAPW holders make the most sens).
APW distribution risks users dumping their earned apw,thus being negative for price action. Whereas giving stables would allow users to market purchase apw with their earnings and thus be positive for price action.
Also its true that the front-run risk would exist for eth and apw distributions, but be much less likely for stablecoin distributions.
Apwine is a platform that represents stable apy rates,ergo giving eth runs opposite to this thinking since eth is not stable in the slightest.
Giving stables allows users to buy the eth on their own and opens it up to more users since the users attracted to apwine’s stable apy offerings are more likely to be into collecting stables as well.
Many eth users use eth as gas but that doesn’t mean they want their rewards solely given in eth as well?
Also, the distribution of eth runs opposite to the ethos of the apwine platform,which is providing users stable apy rates. Eth being the unstable asset that it is, would not support the general user ethos of the apwine platform and thus would not be attractive as a reward.
Also, stablecoin rewards are dependable in their value and thus their rewarded apy would remain stable and predictable. While eth rewards could mean an apy that shifts up or down at any moment due to its price action. We want a reward that creates buy pressure and promotes stability, defi is more than just ethereum but it includes polygon, gnosis, and more.
Thanks for posting this proposal Dydymoon. I really appreciate breaking the previous proposals apart. We are pretty agnostic on the specifics of revenue paid to veAPW holders. So whatever the community and other token holders decide is great.
Preferably, we would like the treasury to accumulate the revenue until the DAO has a decent sized war chest. One that could sustain it for years to come in case of bear market.
However, if this is not doable, we would like to propose an amendment: split the revenue from the .05% fee. Half should go to veAPW holders and the other half should be sent to the DAO treasury. This should continue until such time as the DAO builds up a suitably large war chest/treasury. The target treasury amount should be set through governance. Once a suitable treasury is accumulated, all revenue should go to token holders.
We think it extremely important that DAOs build a treasury diversified in stables and other blue chip assets. If we rely on native tokens as the treasury asset, then the ability of APWine to deploy funds (through selling unissued tokens) is several limited in unfavourable market conditions. Locking tokens for 2-years is a hard sell if the protocol goes bankrupt before they unlock.
I would be a bit hesitant to support a permanent fee split 50/50 between veAPW and treasury, but a short term one at inception that funds DAO treasury up to certain value is great idea.
I suppose first though we’d need to get a rough idea what size war chest would be suitable to switch fees back to 100% distribution to veAPW, and at current / forecast protocol usage how long it would take to accumulate that treasury value.
For example a $1m/$2m/$5m war chest is reasonable. But if we crunch the numbers and found it would take 10 years to accumulate before switching to 100% veAPW fee distribution, then that might change the consensus!
@DelphiAaron would Delphi have a rough suggestion for what you think would be a suitable value war chest? And have you a rough forecast for revenues if performance fee and/or swap fee are both active at current protocol usage?
We agree that a permanent fee split is probably not preferable. But a short term one, or one that we start/stop so the DAO has sufficient funds would help with the longevity of APWine.
We like the idea of the team presenting the community with some rough costs or a budget so we could better figure out what a sufficient war chest would be and assess how long it would take to build. That is an awesome idea. Shooting for a 2-3 year runway in operating costs would probably be a good starting spot for a treasury, but we are open to ideas and comments from the community too!
@Dydymoon what do you mean by :
“Distribute every rewards in several tokens as received” ?
In my opinion, this is really the best option if that’s what I think
everyone is free to sell in a stable if they want to
it allows you to diversify in a simple way