Hey @idal - Thanks for proposing this (and thanks to @Falcone for the proposal and continued effort to improve Idle). Here are my thoughts:
Early in the life of a company or network/protocol, there is a high opportunity cost of both time and capital. Decisions on where to allocate these resources must be made relative to other opportunities and in the context of driving long-term value.
For Idle, the highest priorities are increasing Users, TVL, and $IDLE value (specifically for the purpose of increasing yield). This creates an incentive loop - more users drive a higher TVL, more TVL ‘generally’ signals to the market the protocol is providing value and increases the token price, which increases yield, which incentivizes more users and capital, completing the incentive loop.
When I look at what Idle needs to do in the short term to reach these goals, I think there are higher-impact uses of time and capital, specifically:
- Finalizing the Smart Treasury implementation (capital and time) [side note: glad to see IIP-2 pass!]
- Adding non-stable assets to Idle (time)
- Incentivizing developers to build on Idle through grants and companies to integrate Idle through fee sharing (capital)
- Designing and implementing the Long-Term LPs program (time)
On this basis, I would advise we don’t pursue the card at this time.
Further, I tend to agree with some of the problems others have stated: legal structure, KYC, introduction of trust and brand risk, etc.
I would also bring up a few other points that led me to my conclusion:
- The absolute cost is fairy high for a protocol this early (~1000 users): $25k setup fee or staking (300k SXP = ~$400k USD), 2.5% processing fees (1% if staking, has to be paid in SXP), and card issuance fees. This only makes sense at scale and for certain business models
- This is only possible after $IDLE becomes collateral in Maker, which may take a long time given the early nature of the Idle Protocol (and volatility in $IDLE)
- Assuming $IDLE is added as collateral to Maker, this requires users of the card to create debt and puts them at risk of liquidation. Liquidation is not only a bad user experience, but can also cause downwards price pressure on $IDLE and impact yields (especially in cases of cascading liquidations)
I’d like to note that this doesn’t mean the recommendation wasn’t valuable, nor that this can’t be explored later as credit systems evolve and Idle builds a larger community and treasury (making new use cases viable), so thanks again for your involvement and proposing this @Falcone