Co-authored with @Davide
Thanks to its design, Idle is able to provide interoperability among DeFi protocols while adding capital management and yield optimization functionalities – integration partners’ teams don’t need to stitch together disparate systems and protocols or spend months managing every single integration.
The ability to provide users with a simple way to know they are allocating their capital efficiently is extremely powerful. However, we would like to make this value proposition even stronger. To foster Idle protocol’s growth, and reduce the initial onboarding barriers for these partners, we would like to propose a referral program for B2B partners.
Idle is an open protocol that can integrate with either decentralized and centralized platforms. It allows third-parties to securely access the entire Ethereum lending ecosystem with a single, reliable integration.
Despite the fact there are some direct (attractive yields/rewards) and indirect (fewer maintenance costs and increased capital resiliency) benefits, we observed that adding an affiliate program would enhance new B2B integrations.
Prospective partners have different needs, but they all share a common goal: a sustainable protocol/product/business. Evaluating the benefits reported above might be complex, and this represents a barrier to incentivize Idle protocol integration across DeFi and crypto platforms.
Lead protocols like Aave and Synthetix launched referral/affiliate programs, using different approaches (e.g. B2C on-chain or B2B off-chain distributions). The goal of this proposal is to set up an initial B2B off-chain mechanism powered by the Pilot League to reward integrators. The aim is then to upgrade this program into an on-chain automated solution.
How it works
During phase 1, the Pilot League committee would collect a list of integration partners and track the Partner Deposited Assets (PDA) along the time. Candidates will fill out a form to be selected for the program or the committee can directly propose getting in touch with key integration partners.
Profit-sharing is triggered when a withdrawal event happens on partner funds, allowing the protocol to claim the accrued fees. This will limit the protocol’s risks of going out of funds or cash-flow inefficiencies. There will be a minimum threshold for payment execution.
The Pilot League shares the profits in $IDLE tokens, at the conversion rate available on the market. The program will run for 3 months to test the parameters and collect feedback, and it will be officialized into an automated on-chain program.
The referral levels are tailored to the current size of the DeFi and CeFi markets, as the program is designed for industry leaders.
* Program Budget: 50,000 $IDLE * Program Manager: Pilot League committee * Minimum threshold to execute the fee sharing: 500 $IDLE * Vesting period: linear unlock in 3 months
Referral levels adjusted to Partner Deposited Assets (PDA):
* Tier 1 – PDA < $ 100M: 20% of the fees * Tier 2 – $ 100M < PDA < $ 250M: 25% of the fees * Tier 3 – $ 250M < PDA < $ 500M: 30% of the fees * Tier 4 – $ 500M < PDA < $ 1,000M: 35% of the fees * Tier 5 – PDA > $ 1,000M: 50% of the fees
The clearest outcome would be the TVL increase, which gives more exposure to Idle and improves the performance fee streams. Synthetix allocated up to $500k/month incentive for this program, so setting the 3-month budget up to 50k $IDLE would be aligned with the industry standards.
The proposed budget, if entirely deployed, could potentially lead Idle between top15 DeFi protocols.
The $IDLE token gets a positive effect from this program: fees are periodically routed to the Smart Treasury, which increases pool liquidity. This would consequently boost revenue streams coming from Balancer (more pool fees and $BAL rewards). Side benefits would come from the direct and indirect visibility across the DeFi ecosystem, on social media, and in the B2B landscape.
As a reference, in the following 3-month scenario we suppose a $900M TVL increase represented by partners that contribute to protocol’s growth at different tiers.
3-Months $900M TVL Increase Scenario
|Program Tier||Number of partners||Av. TVL (M$)||Shared Fee||Exp. $IDLE to partners/month|
Total distributed $IDLE: 49’583
With the above scenario, the ratio between $IDLE tokens collected by the Smart Treasury and the $IDLE issued to integration partners would be +310% (the ratio varies from 160% up to 400%). If the program reaches the hard cap of 50k $IDLE shared to partners, the Smart Treasury would improve its liquidity by 184k $IDLE (and the committee can eventually propose re-finance the referral program budget if an on-chain solution isn’t in place yet).
Part of this liquidity can be routed back to the Referral Program, triggering a self-sustainable loop. The Ecosystem Fund can be used only for the initialization of phase 1 of this program, preserving the funds owned by the Governance for future community initiatives.
This proposal is open to comments from our community.
Depending on the vesting contract structure, this proposal might require some work to set up a tailored smart contracts (which would be likely similar to the Idle team vesting contracts, which have been already audited).
Once the discussion phase gets to an end, this initiative can be formalized on-chain by the Pilot League, which can work off-chain to reach potential partners.