IIP-19: Bancor Follow-up Liquidity Deployment and $IDLE Gauges setup

Authors

Treasury League and Dev League

Summary

This IIP is composed of actions determined by multiple proposals:

Rationale

For a comprehensive analysis of each initiative, we suggest visiting the dedicated governance forum posts linked below:

Leagues budget M1-2022 extensionForum post

Starting from January 2022, Leagues paid out around 24,000 $IDLE to reward B2B partners and developers.
These rewards exceeded the budget expectation, hence their payment has partially affected available $IDLE liquidity in the Treasury League multisig previously set aside for Leagues contributors (i.e. “Rewards” in the M1-2022 Budget post).

Consequently, IIP-19 will:

Bancor Follow-up Liquidity Deployment (187k IDLE)Forum post

With an additional 187k IDLE deposit, Idle DAO can achieve $1m liquidity, thanks to the BNT matching.
SushiSwap and Uniswap still represent the main markets, but they require to deposit both IDLE and ETH. The deployment of $250k IDLE into Bancor would be automatically translated into $500k liquidity.
Bancor is still the most straightforward way to reach that milestone without the need to match the ETH side and with minimal capital deployment.

Main benefits of this proposal:

  • With approximately $1m in Bancor liquidity, Idle DAO would be able to halve the slippage on that market, attaining ~15% price impact on a $100k swap.
  • The aggregation of the liquidity in a single pair enables better market performances, generating benefits for community members that interact with DEX aggregators like Paraswap, 1Inch, Matcha.

Consequently, IIP-19 will:

Introducing $IDLE Gauges model for TranchesForum post

Idle DAO has already implemented two Curve-like modules: stkIDLE minting (locking system) and the fee-sharing mechanism.
This proposal is to introduce the Gauge Voting and Farming Boost modules, adding new Governance features to $IDLE on the Ethereum network.
The initiative will route 30% of the $IDLE currently allocated to the LM fund into the Gauge Voting for 6 months (178,200 $IDLE).
By integrating the Gauge Voting and Farming Boost modules, token holders that lock their $IDLE (minting stkIDLE) will be able to vote on PYT $IDLE allocation and also boost their individual rewards.

Main benefits of this proposal:

  • Less $IDLE circulating supply due to more locked tokens
  • Development of $IDLE booster vaults by other protocols
  • New $IDLE-based products
  • Protocols accumulating accrued $IDLE
  • Alignment between LPs and $IDLE token holders
  • DAO2DAO collaborations, with protocols fostering token holders to vote for their PYT.

Consequently, IIP-19 will:

  • upgrade IdleController to enable the IDLE transfer into the Gauges

Specifications

The code related to this IIP is here.

IIP-19 actions:

*In the actual on-chain proposal, there is an extra 493 IDLE request, which is not mentioned in previous discussions.

On-chain Voting Phase

:writing_hand: Cast your on-chain $IDLE vote here: IIP-19
:spiral_calendar: End date: 2022-03-19T02:40:00Z

:writing_hand: $IDLE stakers (stkIDLE holders) can vote here: stkIDLE snapshot poll
:spiral_calendar: End date: 2022-03-18T10:00:00Z

The threshold to make the off-chain poll valid (both metrics should be reached):

  • 30% of circulating stkIDLE voting the poll (min. 110,449 stkIDLE)
  • at least 70% on the same option.

The stkIDLE voting calculator will be used to calculate the final results.

6 Likes

Why not add $IDLE/ETH liquidity on Curve V2 directly too?

1 Like

Hi @unicorn, thanks for providing this feedback!

The proposed liquidity concentration is finalized with existing liquidity in Uni v3, and the 50k IDLE deployment does not require additional ETH funds.

Even if the listing of new pools is permissionless using the Curve factory, the DAO should deposit an equivalent amount of IDLE and ETH.
Uni v3 is used as a reference oracle by a multitude of DeFi protocols (including Fuse and Euler, where IDLE is listed), thus the primary goal of this proposal is to strengthen its resiliency.

4 Likes

Uni V3 for the Oracle
Curve v2 idle/eth for the rewards/bribes and IDLE’s Treasury diversification which is not being addressed by any means and is unsustainable tokenomics.

1 Like

IIP-19 succeeded :white_check_mark:

stkIDLE voters cast “yes” vote and reached the threshold, with the multisig reporting the result on-chain.
image

2 Likes

In your opinion, what would be the amount that should be allocated for bribes? What’s the best place to perform that activity, and what’s the expected outcome?

2 Likes

I am not a fan of buying other protocol tokens to use as bribes and I favour instead earning the same tokens if that’s the direction the DAO chooses.

Protocol wars will soon be a zero sum game as the Delta between bribing and the inflation of the underlying goes to zero. Also veponzu are great in bull markets but can’t help your native token in bear ones.

Idle is late to the bribe wars as they currently are being played and should instead continue to bring innovation to Governance and DeFi like we have been doing since the start.

DeFi needs better tokenomics and IDLE will do what idle has always done: lead.

The latest “Tranches battles” were a success by every metric even without idle rewards going into any pool. This is something that everyone is aware: there is room for improvement of IDLE’s tokenomics just by changing the current distribution of the ecosystem rewards. No need for more inflation. No need to reward stablecoin pools if their DAOs don’t see any value in incentivizing idle pools.

Grants matching are a good example for rethinking how pool rewards should be distributed.

Other existing tokenomics elements that should benefit from a little rethinking are performance fees, management fees and Protocol discounts for locked idle holders.

That being said, any changes of our tokenomics should be build on top of that: an improved battle model , not on buying 3rd party Governance tokens for bribes… Again, worst case scenario, if the idle DAO votes to chase VEponzu nonetheless, it’s better to earn them.

This is really not rocket science, the holy Trinity of DeFi is: base your native token by creating your own stablecoin, own both your liquidity pools (in ETH and your own stablecoin) , last but not least incentive ppl to lock their token (staking, voted escrow, bonds …) and protocol stablecoin while simultaneously allowing these locked “positions” to change hands.

1 Like