IIP 2 Implement a smart treasury for the IDLE protocol
Consensus Check Vote
Snapshot link active until 2021-01-30T00:00:00Z
Implement a smart treasury for the idle protocol. A smart treasury, based on the article by Placeholder VC could be implemented to redirect a portion of the fees into a buy-back machine, while also providing more on-chain liquidity.
Since the launch of the $IDLE governance token, there has been an ongoing discussion in the forum of how to increase the on-chain liquidity of the token, and of how to give the tokens economic value in the long-term to its holders. Uniswap-like liquidity mining programs help boost on-chain liquidity in the short term, but once the program is finished most of the liquidity evaporates. Buy-back and burn models help increase the token value but also shrinks the supply of the token, which is counter-intuitive when the primary role of the token is voting rights.
A smart treasury helps in solving both of these issues for $IDLE by increasing the on-chain liquidity of IDLE, and by providing a sound value proposition. Fees which are generated from the protocol can be redirected into the balancer pool, acting as a ‘buy-back machine’. This pool will be available for investors to swap against, increasing on-chain liquidity. The fees which are generated from swaps will be added into the pool, which serves as an additional income stream for the IDLE protocol. In addition to this, making the protocol eligible for $BAL tokens which can be held, or re-invested back into the smart treasury. The smart treasury will be controlled by the IDLE governance which can adjust parameters such as pool weights, token additions/removals, swap fees, and to pause/unpause swaps.
130,000 $IDLE will be used from the ecosystem fund along-side funds from the FeeTreasury to bootstrap the smart treasury. The smart treasury will start with two tokens, IDLE-WETH. The WETH will be bought by swapping all the fee tokens (USDC, DAI …) from the FeeTreasury to WETH using uniswap. The value of IDLE and WETH will determine the initial pool weights, which will be gradually updated to a weight of 90 / 10 IDLE / WETH over a period of a month.
In addition to this a new contract will be deployed called
FeeCollectorwhich will help convert the idle protocol fees into WETH and deposit a portion into the smart treasury, acting as the buy-back. This contract will also distribute fees to the feeTreasury, and the idle rebalancer. In the future more addresses can be added as beneficiaries to idle fee’s, such as the treasury commitee multisig.
The technical implementation can be found in this github repo GitHub - AsafSilman/idle-smart-treasury
- Smart Pool Parameters
- Weights: 90 / 10
- Tokens: Idle / WETH
- Swapping fee 0.5%
- Fee Collector Parameters
- 80% of the fees will be directed to the smart treasury
- 15% will be directed back to the feeTreasury
- 5% will be directed to the idle rebalancer
- Smart Pool Parameters
Implementing a smart treasury benefits everyone in the idle community, $IDLE holders will have long-term incentives to remain holders through the tokenomics of the smart treasury, $IDLE investors/traders will have access to greater liquidity for IDLE on-chain. The IDLE protocol also benefits as it will gain an additional revenue stream which can be utilised for funding further growth for the protocol and community.
The smart treasury idea was discussed from the early stages of IDLE governance release, the following posts trace the journey of how we got to this IIP
The code has now been reviewed by members of the community with the commit at 9cef492 being the most up-to date version of the code. With reviewers
contributing issues to the github. Please share an eth address for your tip once the treasury committee is ready.
- PlaceholderVC article: Stop Burning Tokens – Buyback and Make Instead — Placeholder
- Pickle Finance Smart Treasury: Into the Brine Vol. 4 — Yearn Collab and Smart Treasury | by Pickle Finance | Dec, 2020 | Medium
This is the outline each step which needs is required to implement this IIP, and where governance will need to be involved.
- Pass consensus check for IIP - Forum post here: [Consensus Check] — Add a Smart Treasury to idle
- Delegate IDLE to my deployed address
0x143daa7080f05557C510Be288D6491BC1bAc9958(This is my own deployer address )
- Deploy contracts on-chain.
- Create on-chain vote #1 for this IIP
- This vote will send all fees from the FeeTreausry to the bootstrap contract to create the smart treasury.
- This will also transfer 130,000 $IDLE to the bootstrap contract
- The multisig address will initialise the smart treasury and transfer ownership to the IDLE timelock. The multisig will also configure the FeeCollector to use the bootstrapped smart treasury
- Create on-chain vote #2 for this IIP
- This vote will update the feeAddress for each idle token (USDCBestYield, DAIRiskAdjusted, etc) to point to the feeCollector
- Fund 1,000 $IDLE for the grant to build the smart treasury