Summary
This proposal is meant to formalize the funding round and strategic agreement between Idle DAO and Rockaway X to solidify the relationship as liquidity providers and users of our product suite and pave the way for a new line of institutional-grade yield products.
Background
Idle DAO is on a mission to empower the DeFi credit market with robust yield automation and hedging instruments, facilitating its expansion and establishing a foundation for sustainable financial ecosystems.
At the heart of our product design, there is a much broader thesis on the shifting DeFi lending market. It is formed on the core belief that, over the coming years, the global debt activity will move on-chain, making every transaction and loan programmable and auditable – as the world’s debt moves on-chain, liquidity providers will have the essential need to manage their exposure to it.
As one of the most prominent venture capital firms backing leading Web3 funds and founders, Rockaway X is amped to back Idle DAO to achieve this mission. In tandem with RoX Credit Fund, they will provide a robust foundation to develop Idle DAO product suite and contribute to long-term value creation by providing network, liquidity and community support.
Rockaway X has strategically employed Yield Tranches over the last years to effectively balance their risk and reward profile in managing institutional credit lines at the fund level. Through practical experience, they have witnessed the advantages offered by both Senior and Junior Tranches in optimizing their financial strategies.
We both recognize the nuanced risks associated with both DeFi securitizations and RWA-based loans, including traditional and novel elements. To address these challenges, our industry must develop hedging solutions. Current on-chain debt offerings often lack diversity, limiting their appeal, and the use of illiquid collateral in off-chain transactions introduces additional risk, catering only to a specific group of investors.
Together, we believe that the use of securitization and tranching methods can be a catalyst to grow DeFi’s reach. The long-term plan is to create a marketplace to facilitate this, by bringing diversification to the world’s on-chain lending and borrowing activity and allowing liquidity providers to customize, leverage or hedge their yield portfolio
With the ultimate endorsement of Idle DAO and IDLE token holders, this proposal would set the stage for a wider ecosystem endeavor and give support to build a credit and yield derivatives marketplace where liquidity providers can create their very own yield portfolio.
Rationale
This agreement is part of Idle DAO strategic treasury diversification, as already voted and approved by IDLE token holders. The treasury diversification is intended to accelerate Idle DAO growth via more diversified liquidity management and an enhanced partner ecosystem.
This is planned to be the first instance of a series of strategic agreements with Rockaway X, which will actively participate in Idle DAO’s product suite. The reason for the strategic diversification is two-fold: enhancing the development of our yield product suite and its ecosystem and better aligning our partners long term.
Specification
This funding round provides the following:
- Rockaway X will allocate 1,000,000 USDC (or other stablecoins) to Idle DAO’s Fee Treasury.
- Idle DAO will allocate 1,733,333 IDLE from the Idle DAO’s Long Term Fund to Rockaway X Vesting Contract.
IDLE tokens taken from Long Term Fund will be subject to a 2-year vesting period, with 33% released after a 12-month cliff and the rest with a 12-month block-by-block linear vesting.
The initial focus of this funding round will be to expand Idle DAO Leagues with new team members to streamline product suite development, and improve market liquidity to foster a more robust ecosystem.
In addition to the funding round, Idle DAO will allocate up to 866,667 IDLE from the Long Term Fund that will be distributed to Rockaway X Credit Fund according to the weighted average of the liquidity deployed across Idle DAO product suite throughout 12 months. This allocation will follow the same aforementioned vesting schedule. Details about the product, liquidity deployment, and distribution methodology for this strategic allocation will be further described and approved in a separate governance post.
If the proposal is positively voted by the Idle DAO, the Treasury and Dev League will set up the required contracts, and the initial operations for the funding round transfer via the next IIP.
Next Steps
All Idle DAO stakeholders and the Ethereum community are invited to weigh in on the proposal. This proposal will be followed by a Temperature Check vote with the link published here, when ready.
Poll for $IDLE holders: 
Polls will close on 
