Introduction to ICHI <> IDLE Collaboration

TLDR

  • ICHI builds and incentivizes stablecoins for other projects, like $oneIDLE - always redeemable 1:1 to USDC, and backed by USDC + your project token ($IDLE).

  • Benefits for IDLE span from new yield opportunity for stablecoin deposits, a stable medium of exchange that can be used in IDLE protocol services and gives value back to $IDLE (requires $IDLE to mint new $oneIDLE), and more…

  • ICHI qualifies to meet IDLE’s Integrations Standard Requirements

  • Looking to get IDLE’s community feedback and ideas on $oneIDLE use-cases and potential collaborations.

Summary

ICHI will launch $oneIDLE - a stablecoin redeemable 1:1 for USDC, and backed by USDC + $IDLE. $oneIDLE can be used across idle.finance as a stable medium of exchange governed by the stablecoin holders. Anyone can mint $oneIDLE by supplying USDC and $IDLE to the mint contract. This creates a reserve of USDC to ensure redemption at $1 and a community treasury of $IDLE

How will it work ?

IDLE provides strategies for stablecoin depositors to gain the best yields + earn $IDLE rewards. However, these depositors will usually want to simply farm $IDLE rewards with very little risk. They will then sell the $IDLE token for additional stablecoins.

Idle.Finance can turn this parasitic relationship between stablecoin suppliers and $IDLE holders into a beneficial one with the $oneIDLE stablecoin. When someone deposits $oneIDLE instead of another stablecoin into a strategy, users will benefit from the same or better rewards as other stablecoins, new rewards in the form of $ICHI and as oneIDLE holders they get a vote in the governance over the treasury backing it.

This creates a more powerful community by aligning the incentives between stablecoin suppliers and $IDLE holders. Essentially ICHI helps to offset protocol farming rewards effect (inflation) with organic demand for the native token

Today there are over $200M of stablecoins (DAI,USDC,USDT mainly) deposited in IDLE pools, providing their owners an average APY of 9.5% + almost $60K worth of $IDLE rewards are being distributed daily to these pools. What if IDLE could move some of this value to generate stable coin yield that is currently x5 (see oneTokens balancer pool) more, and generate demand to the $IDLE token at the same time ?

Collaboration ideas:

  1. ICHI to build $oneIDLE stablecoin for the IDLE community. I would love to get this community feedback and ideas of what use cases could be implemented. From our experience talking to many project, there are multiple use cases for that:

  2. Treasury diversification - IDLE can hold part of it’s treasury in a stable medium of exchange, while using $IDLE token.

  3. Pay contributors in stablecoins - giving them a way to hedge token volatility + generate demand for $IDLE token (unlike using other stablecoins that require to give up on your token to acquire it)

  4. Pay LP fees in a stable medium of exchange - the community can incentivize this by offering lower platform fees for those choosing to get rewards in oneIDLE vs. other coins

  5. ICHI uses the collateral that backs it’s stablecoins and deploys it to work.

Example - oneBTC pool is a stablecoin backed by USDC and wBTC - with $1.5M one BTC minted - they hold $1.42M USDC and ~7 BTC. oneBTC holders, who govern this pool of token, can decide to take $0.5m of the USDC collateral and have it “work” using IDLE.FINANCE yield strategies.

  1. IDLE deploys USDC that users deposit to optimize the yield they get on their stablecoin. IDLE.FINANCE can take these deposits, MINT new oneTOKENS (based on various strategies), and use them in farming opportunities on ICHI.

About ICHI

ICHI is a family of stablecoins (coins valued at 1 USD) designed to drive scarcity of member coins (ie, $oneIDLE = $1). ICHI exists to provide price stability and community treasury to projects like IDLE.finance, only the IDLE community governs its stablecoin treasury. ICHI is LIVE and works with coins and projects like BTC, ETH, LINK, and WING to enable them to grow their token economies.

How is the ICHI design better than other stablecoin designs?

The peg is guaranteed; redeeming $oneIDLE will always get the equivalent in USDC. However, unlike USDC, ICHI is 100% on-chain and non-custodial.

When minting a oneIDLE - you deposit exactly $1 - no need for over-collateralization, or getting into a debt position as the case is with other stablecoin projects.

Who is behind ICHI?

ICHI was created with a top team of devs from Microsoft, Amazon, RedHat, and IBM. ICHI had a 100% fair launch and has been community-owned from the first block. There was no pre-sale, no initial team cut, etc.

ICHI already collaborates with top DeFi dex like Bancor (ICHI token whitelisted) Sushi and 1inch (rewards program in place), and Balancer.

Towards launch of V2 in a few weeks, ICHI completed an audit process with Quantstamp & Solidified, and is in discussions with top DeFi projects to add them on the list of new oneTokens release roadmap.

Read more:

Website and docs - https://www.ichi.org/

Would love to get the community thoughts, questions and ideas on this proposal

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@Kobayashi Welcome to the Idle community and thanks for putting the ball rolling.
Great Introduction!

Would you be willing to do a AMA together with Idle’s Treasury League?

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Hey @Kobayashi welcome to the forum :slightly_smiling_face:

Sounds like a great initiative, we want to see what our community thinks about it, so we decided to collect here in this post all the questions and considerations that the Idle community wants to give.

:arrow_down: I the meantime I’m sharing here some questions already written in the telegram chat


  • Idle community: How it force to stable the $oneIdle?
  • ICHI: The idea is that at any given moment, you can trade your $oneIDLE to USDC at a 1:1 ratio.

  • Idle community: How long has ichi been live?
  • ICHI: has been live since November 2020.
    Docs.ichi.farm is the best place to go regarding information & documentation. 3 completed audits for V1, now in the process of completing 2 more with Quantstamp & Solidified for v2 coming soon.

  • Idle community: We may consider minting $IDLEDOLLAR or something like that to expand the usage of token.
  • ICHI: This is what ICHI does for you ! think about it as Stablecoins as a service - ICHI does all the heavy lifting, liquidity incentives programs, contract audits dev work so IDLE doesn’t need to deal with that - IDLE community just need to find the best use case to use it on their product, and benefit from it.

Idle community:

  1. Instead/besides of USDC, in the future could ICHI support idle’s interest bearing token IdleUSDC?

  2. Could $ICHI be added as an asset on Idle protocol in the future?

  3. In practical terms, what parameters configure oneIDLE?

  4. In practical terms how are the oneIDLE parameters (question 3) controlled (governance) by LP’s? Snapvotes? Forum/Discord/Telegram?

  5. What happens to excess liquidity when not all oneIDLE is minted?

  6. For someone deposit $oneIDLE on Idle protocol, what coding needs to be done from both ICHI and Idle side? Is it simple? Any security risks? Will it require audits?

  7. In the initial ICHI proposal its mentioned a possible 5x Yield increase. How did ICHI came up with this number?

  8. I have posted publicly (Roadmap Re-prioritization + New Initiatives - #4 by unicorn) that Idle DAO should start a discussion about how to best setup an “Hedge Fund” / “Portfolio Management” strategy for management of the Smart Treasury. My question (to the Treasury League) is if oneIDLE would be favoured instead of DAI/USDC/USDT if part of the Idle Treasury is swapped to stablecoins.

  9. Effort/Time: Following all the ideas posted initially on the Governance Forum + all questions from Idle community. Is it possible to have the dev team(s) (Idle/ICHI) create a table with what features DO NOT require any new code/audit and which ones would require new coding/audits (either by ICHI or IDLE).

  10. From ICHI’s side, how long does it take until everything is ready to be live in production?

  11. What minting ratio would you recommend for oneIDLE? I see that oneBTC is 94.90%, oneETH 84.10% and 93.40%… how/who came up with the ratio?

ICHI

  1. Yes. ICHI supports choosing stablecoin collateral to use.

  2. Yes

  3. The key parameters are the stablecoin collateral and the member token (in this case $IDLE). 1. oneIDLE would have a minting ratio which is the ratio of collateral to member token required to mint. This of course also requires oracles for managing member token and collateral price which drives minting.

  4. We’ve been using snapshot and then associated Multisig accounts to carry out the community votes.

  5. oneIDLE is only minted when a user triggers the mint event and provides the necessary collateral and member token. So the mint event is what takes the collateral and member coin and creates the oneToken.

  6. Very little! We have an audited factory model to create all necessary contracts in a secure, standardized and audited way.

  7. This would be based on associated ICHI and IDLE rewards which could be applied to use of oneIDLE.

  8. Absolutely, you could use oneIDLE across your system whether in treasury management or anywhere else. It aligns governance incentives really well I think to use it specifically for the mentioned strategy.

  9. Pretty much no new coding will be required! Happy to walk through the technical details but it is really that easy!

  10. Should be ready in a few weeks!

  11. Minting ratio always start with 100% - which mean the first $oneIDLE minted are backed 100% by USDC. gradually as the collateral buildsup, the ratio goes down in steps of 1.5%. this is part of how we make sure that there’s enough collateral to back the onetokens.

    What usually projects will do is they lend an initial deposit to the treasury of the onetoken, so minting ratio can start with a lower minting ratio i.e -( 80/20 )- this way from the first $oneIDLE minted, you will have an additional demand pressure on IDLE as it is required to mint new $oneIDLE.

    How much $IDLE ? This should be based on how much IDLE want to support the bootstrapping phase. and remember that the oneIDLE holders are the decision makers and controllers of that treasury


  • Idle Community: on your initial post you wrote:

⠀⠀⠀ Could this be deployed on idle?

  • ICHI: Yes, it’s up to the oneIDLE holders to decide how to manage the treasury (ICHI provides guidance on how to make sure the onetoken remains safe)

    There are 3 buckets a new oneToken community need to consider when evaluating the budget needed:

  1. Initial token to treasury (this is the incentive to reduce initial minting ratio)

  2. incentive to bootstrap the newly onetoken liquidity - i.e- farming rewards to encourage LP of $oneIDLE-$IDLE - here ICHI can match what IDLE community allocate so incentives are strong to drive enough of initial liquidity

  3. dev grants - ICHI usually receive a dev grant to support the execution of the new one token and the entire launch process (dev costs, gas costs for deployments of new contracts and all the ongoing work the ICHI team will do to help the new oneToken succeed !


  • Idle Community: I would like to ask you guys what would be a good estimate of the size of the initial loan & what rewards would ICHI be able to offer?

  • ICHI: Basically what we propose is some simple guidelines that help maintain a healthy treasury reserve ratio + driving IDLE demand from day1.

    We recommend minting ratio to change according to treasury reserve ratio:

    200% = 90% minting ratio
    300% = 80% minting ratio
    450% = 70% minting ratio

    Example - when it is set at 80% it means every new oneIDLE is minted with $0.8 USDC + $0.2 of $IDLE) —-> as long as treasury reserve is >%300
    if it goes up to 450% —-> minting ratio can go down to 70%

    How does IDLE get to those minting ratio? IDLE project / community can make a loan to the treasury of the oneTokens, and this will boost minting ratio , so from the first $oneIDLE minting , you need to use both USDC + IDLE.

    Here’s an example table of the concept that might help get the idea:

    How much of initial deposit ? think about it like another wallet to hold the IDLE $IDLE treasury - you can decide how much to hold there - the more you do —-> the more minting ratio is lowered —> the more IDLE demand is created upon minting new oneIDLE tokens

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Thank you all for this discussion! Thrilled to see a brand new use case for the $IDLE gov token :raised_hands:

On behalf of the Treasury League, I’d like to post some questions & considerations that would help the community understand better how ICHI works:

@Kobayashi According to your statement, Idle LPs would benefit more from minting $oneIDLE than act as they are doing.
E.g. the $oneIDLE is backed by 80% USDC and 20% IDLE. The USDC component might be deployed into Idle protocol, benefitting from 10% APY (therefore 8% is generated on deposits) + approx 60% from ICHI farming.

  1. How long does the farming program last? Is there a planned reward reduction? As far as I see, the halving can be voted anytime by the community. Is the farming reward the only incentive to mint $oneIDLE?

  2. I see that there is a 2% management + 20% performance fee. Are these fees applied to stablecoin farming? Or is the redemption fee the only charged amount?

  1. Do you have a system of liquidators/keepers? Let’s suppose a 30-40% dip of the token backing the stablecoin, which safe mechanism is triggered?

According to your FAQs, “Each stablecoin represents a vote that decides what actions to take with the cryptocurrency paid to mint stablecoins. Proposals may include selling coins to buy more USDC and deposit it to the collateral, investing the coins in DeFi…

  1. So $oneIDLE token holders would vote on how to allocate the “collateral reserves” backing the $oneIDLE pool. In that case, how is it possible to redeem back the USDC if, for example, the funds are deployed into a staking contract? The withdrawal might be very expensive if swap/unwrap is required for each operation.

  2. According to the sentences reported from Telegram, there is not a minimum initial deposit (in $USDC and/or $IDLE) to bootstrap the $oneIDLE pool, is it correct? Are there other deployment costs?

Looking forward to hearing more from you!

3 Likes

Great questions!

Before replying on the specific question - IDLE community need to look at this initiative at a strategic level, and understand the long term value it generates. The road to full maturation of the $oneIDLE is gradual via several stages (see Table 1), and the beauty is that the ICHI community is there to help $oneIDLE to succeed for the long run. This DAO partnership goes beyond just simple money legos: ICHI earns as your treasury grows in size!

Table 1: Stages of Launching a oneToken

Let me answer each of your questions:

Farming

  1. How long does the farming program last?

Halvings indefinitely extend ICHI’s farming program by cutting the base ICHI emission rate in half. Like with Bitcoin halvings, this ensures the supply lasts enough time to build the ecosystem around it. However, partner contracts are unaffected by halvings.

  1. Is there a planned reward reduction?

ICHI provides a guaranteed minimum of ICHI per block for a certain number of blocks to each new oneToken. This is a minimum! Every ICHI partner has received more than the minimum because ICHI rewards are adjusted based on the proportional share of circulating oneTokens and partners always have additional use cases for their oneToken.

  1. As far as I see, the halving can be voted anytime by the community. Is the farming reward the only incentive to mint $oneIDLE?

The farming reward is an initial reason to mint a $oneIDLE. You can think of this as a savings account for $oneIDLE since the pool has no impermanent loss. However, there is no long-term purpose of incentivizing the saving of an otherwise useless asset! Therefore, ICHI requires at least one additional use case to provide ICHI rewards to $oneIDL. I have provided some examples in the original post. Furthermore, the savings rate on $oneIDLE will increase when IDLE drives more growth in non-saving utility than other oneToken projects.

  1. I see that there is a 2% management + 20% performance fee. Are these fees applied to stablecoin farming? Or is the redemption fee the only charged amount?

Minting and redemption fees are not profit and do not go to ICHI. On a large scale, they could even go to zero. For now, they stay in $oneIDLE collateral to help grow over-collateralization and increase security.

The 2 + 20 model increases the value of the $ICHI rewards paid to $oneIDLE savers and the $oneIDLE treasury by providing governance rewards to $ICHI stakers. Currently, ~20% of circulating ICHI is staked in xICHI.

  1. Do you have a system of liquidators/keepers? Let’s suppose a 30-40% dip of the token backing the stablecoin, which safe mechanism is triggered?

There is no such thing as liquidation with ICHI as there is no debt. The system could even be operated in a fractional way like FRAX or USDT. However, $oneIDLE must maintain 98+% collateralization by fiat-backed stablecoins OR a 150+% treasury reserve ratio to be eligible for ICHI rewards

  1. So $oneIDLE token holders would vote on how to allocate the “collateral reserves” backing the $oneIDLE pool. In that case, how is it possible to redeem back the USDC if, for example, the funds are deployed into a staking contract? The withdrawal might be very expensive if swap/unwrap is required for each operation.

Treasury actions like this do not occur with every mint/redeem. They are infrequent and done with large sums. This is similar to the way Yearn/others pool funds to share gas costs. They can be executed via multisig or by poking strategy contracts.

  1. According to the sentences reported from Telegram, there is not a minimum initial deposit (in $USDC and/or $IDLE) to bootstrap the $oneIDLE pool, is it correct?

There is no minimum requirement. The most conservative approach is to just let organic growth, time, and investment returns change the minting ratio and increase the size of the treasury. The most aggressive approach is to simply migrate the entire IDLE treasury to the oneToken contract + multisig and manage it from there for all purposes. You could simply think of this as holding the treasury funds in a different wallet or as a loan to the $oneIDLE. These tokens remain in the control of the IDLE community. They are just held in a different multisig wallet.

Conservative approach Pros:

  • Cheap
  • Easy

Conservative approach Cons:

  • Mint with a low percentage of $IDLE
  • oneIDLE treasury doesn’t grow much if IDLE does well
  • Take a long time to drive $IDLE scarcity
  • Can’t afford to pay for adoption incentives for a long time

Aggressive approach Pros:

  • Mint with a high percentage of $IDLE
  • $IDLE purchase pressure increases the value of a large $oneIDLE treasury
  • Can afford to pay for adoption incentives out of $oneIDLE treasury

Aggressive approach Cons:

  • More $IDLE may need to be sold for USDC with a fast decline in the price of $IDLE

Ultimately, IDLE must decide where to start between these two extremes.

  1. Are there other deployment costs?

A fair exchange of value is necessary to

  1. Align the incentives of each DAO,
  2. Pass DAO proposals within both communities.

However, this can take many forms: splitting development expense, dual liquidity farming programs, splitting marketing expense, or a combination of these things. That said, every project to date has decided to provide a combination of a) sharing the upfront expense, and b) providing ongoing economic leverage to the oneToken adoption. For example, strudel.finance and wing.finance paid upfront grants and established rewards programs for their oneTokens. Both Solana and Moonbean have also provided grants.

5 Likes

Thanks for the detailed information.

After reviewing all the details, Its my opinion that this is indeed a win win money lego.
Ichi provides another use case for $IDLE and could be a nice easy 1st babystep to diversify its own Treasury (a must!). Inline with what other protocols are doing.
And the coolest thing here is that the rest of the community can participate,something that usually is reserved only to seed and VC investors. Thats pretty cool if you ask me. :heart:

image

One point that I would like to learn more details is regarding Governance control of the oneIDLE Treasury, and I will use MakerDAO as an example.

I think its important, regardless if the initial bootstrapping is done 100% by the Idle Treasury or in partnership with the rest of the community, that Idle Treasury League keeps 100% control of the oneIDLE treasury initially and until a stage where its safe to pass control of the oneIDLE Governance to a more decentralized format.
MakerDAO did it like that and I think its a safer approach than allowing decentralized Governance of oneIDLE from day 1.

Exciting times!

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The Treasury League is excited to follow up and support this community initiative. The Treasury League helped Ichi initially to formulate its proposal via Governance Forum, the initiative then picked up some initial interest from the Idle ecosystem that after reviewing the initial proposal raised many good questions.

This week there was a conference call between the Treasury League and the Ichi team that helped to answer more questions and share some light on both the benefits and challenges of setting up a oneIDLE stablecoin.

That being said, this post will summarize and inform the Idle community how the Treasury League can imagine this initiative being executed in a beneficial way to both Idle and Ichi. Money Legos, sirs :sunglasses:

After sharing our opinion about Ichi’s proposal and what our own research has shown us, it’s the Treasury League’s vision that the rest of the community should follow up the discussion and reach a consensus. In the end, the Idle ecosystem can say that its Governance worked!

ICHI confirmed that the Dev effort from our side would be minimal for use cases that do not require oneIDLE asset/strategy integration with our protocol. This might be a reasonable starting point and later, as oneIDLE grows, more complex use cases for OneIdle can be developed over time. A possible start for oneIDLE utility would be to use it as an option to pay grants and compensations. This adds desired utility to oneIDLE with no development resources from our side at the beginning.

The Treasury League could also manage the oneIDLE Treasury multisig wallet. Managing another multisig wallet comes with additional financial and human resources costs that the Treasury League would be willing to support if they are reasonable. The treasury League already asked for some more info about multisig management in Ichi.

Ichi’s “stablecoin factory” model requires an initial bootstrap of oneIDLE treasury. To be eligible for Ichi rewards this value has to be a minimum 100k USD. At this moment, the Treasury League has decided not to put any financial resources in bootstrapping a oneIDLE Treasury because we feel that we are working on other higher priorities on the roadmap with current sustainable capacities.

This means that to continue to pursue this initiative the entire Idle ecosystem needs to signal their interest and willingness to use the oneIDLE treasury by self organizing to bootstrap it.

It’s now up to the community to come up with more utility cases for a oneIDLE stablecoin (both now and in the future) that would be enough to make the case for the 100k bootstrap investment in the oneIDLE stablecoin Treasury.

One idea already discussed by the Treasury League was to bootstrap the Treasury with idleTokens instead of USDC. The initial reaction from the Ichi team was positive but more research would need to be done.

We’re keen to hear from Idle community what are the use cases and usage that they see for this initiative, and then follow up with this discussion with all actors and try to find consensus in the following week🗣

12 Likes

Has everyone seen the ICHI v2 article on cointelegraph!?!?! So cool.

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Don from the ICHI community here as well. Very excited about the collaboration with IDLE.

One additional utility case for oneIDLE which will now be a part of launch is the easy Deposit of oneIDLE to our farming contracts in order to earn ICHI rewards. There could be potential joint rewards for these deposits to incentivize the initial minting.

In addition to that, you could start to spend or use oneIDLE anywhere stablecoins are used in DeFi today. These can be in liquidity pools in Uniswap V3 and many other AMMs. We’ve been building partnerships across the space with the likes of Sushi, Loopring, Balancer, etc. who are doing things like providing liquidity for different oneTokens.

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Hey,
I’m ICHI’s Community Manager. So excited to see the collaboration between communities.
I must say, it has been a pleasure communicating and speaking with members from your team and community.
Very happy about this initiative. Best wishes.

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After several iterations here in this forum, telegram chat and conversations with the IDLE treasury league team, here’s our proposal we would go and raise for vote with the ICHI community

Phase 1 - $oneIDLE bootstrap

  1. ICHI to create a $oneIDLE token.
  2. Idle core team / Treasury League will assume ownership over the control of the $oneIDLE treasury.
  3. Community will deposit minimum of $100K worth of $idleUSDC as initial treasury to allow a lower minting ratio of $oneIDLE
  4. Initial minting ratio will be set at 90% - every new $oneIDLE minted will require $900 worth of $USDC and $100 worth of $IDLE.
  5. ICHI Community will allocate liquidity rewards for $oneIDLE-$IDLE pair. IDLE.finance to match rewards.

Phase 2 - Use cases for $oneIDLE

After the initial launch, and a period of 4 week from the beginning of the liquidity rewards campaign, IDLE community will follow up to introduce use cases for $oneIDLE within the IDLE.finance. Examples to such efforts:

  • List $oneIDLE as a token for saving account, eligible for IDLE rewards - same or more than other stablecoins
  • Pay contributors in $oneIDLE, diversify treasury
  • Pay platform rewards in a stable medium of exchange $oneIDLE

IDLE community is invited to continue the conversation on the ichi community channel and follow the voting on the snapshot voting page

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