Introduction to ICHI <> IDLE Collaboration

đź—‚ Proposals đź’ˇ Ideas & Improvements
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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

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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.

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