Prime Staking - IDLE staking v2

[Biaf]

Summary

A proposal to present the IDLE staking version 2 - offering unique fee discounts to stakers.

References

• Leagues M4-2023: Roadmap and M3-2023 Recap post by @Teo
• IDLE staking update post
• IDLE token improvement proposals post by @matus.eth

Background

This summer the DAO’s Leagues presented an analysis focused on updating the IDLE staking

@Biaf

At the time of writing, the number of staked IDLE is 1.6m (source) vs a circulating supply of 5.4m (source), i.e. ~30% of IDLE staked. The ratio of staked IDLE vs the total IDLE supply is ~12%, locked for an average of 1.8 years.

Leagues are aware that the utility of IDLE staking should be revamped. It’s then worth discussing some old and new ideas coming from the community to have a clear view of the available options to update the current model.

multiple ideas were shared and discussed

@Biaf

We would like to gather the sentiment of Idle DAO toward all the proposals listed:

1. Pause the staking reward program for stkIDLE holders
2. Introduce a performance fee discount for stkIDLE holders
3. Introduce early access to new pools for stkIDLE holders
4. Update Snapshot’s voting power for stkIDLE holders

The DAO voted to pause the staking reward program, i.e. proposal 1.

Rationale

During M3-2023, Leagues continued brainstorming about the second proposal both internally and with some stakeholders

2. Introduce a performance fee discount for stkIDLE holders

@Teo

Fee discount: that’s the option I like more as it’s well-connected to the usage of the product suite and adds utility to it. As @william suggested, we can add a plain fee rebate/discount on the performance fee, so could be a good fit both for large LPs with fee discounts […]

This post aims to formalize the structure of the program and then vote on it.

Fee Discount

Goals

This strategic initiative offers a dual advantage. Liquidity providers, integral to the protocol’s revenue stream, will have the opportunity to benefit from a fee discount. At the same time, IDLE token holders will benefit from an enhanced utility for their tokens within the Idle ecosystem, potentially catalyzing heightened demand and an augmented volume of locked IDLE tokens.

This convergence of efforts aligns the objectives of diverse stakeholders in the long term and has the potential to cultivate a more dynamic and robust governance framework.

Discount Tiers

In the IDLE staking update post, we outlined some possible discount tiers, these may be the final ones starting from the base performance fee of 15%

Tier	IDLE	Locking	Power	stkIDLE	Discount	Discounted fee
I	10,000	4 years	100.00%	10,000	5%	14.25%
II	25,000	4 years	100.00%	25,000	10%	13.50%
III	50,000	4 years	100.00%	50,000	20%	12.00%
IV	100,000	4 years	100.00%	100,000	30%	10.50%
V	150,000	4 years	100.00%	150,000	40%	9.00%
VI	250,000	4 years	100.00%	250,000	50%	7.50%

This table assumes that the IDLE tokens are staked for the longest length available, i.e. 4 years.

stkIDLE linearly decreases from the lockup date to the end date. The maximum locking period is 4 years.

Shorter staking periods will affect the discount applied. Following the amounts presented in the Tiers summary table above, a locking of 2 years will make T1 not applicable. Similarly, a locking of 1 year will make T1 and T2 not applicable and so on.

Beneficiaries

The discount will be applicable to the IDLE stakers at first.

We can then think of expanding the beneficiaries list and include other LP tokens starting from the 80-20 IDLE-USDC Balancer pool and then consider other pool such as an IDLE-WETH pool on Liquis.

Such LP tokens will need to match the dollar value of stkIDLE.

Methodology

Ideally, users should have the staked IDLE (or equivalent LP tokens) in the same wallet that they will use to deposit into Idle pools.

Leagues will manually distribute the discount in the form of the underlying tokens of the pool once a month using a dedicated dashboard for the actual matching of stkIDLE and deposits with the relative fee generated and the fee discounts. The process of discount distribution will be then automated letting users receive the discount directly in their wallet.

A minimum threshold of distribution equal to $100 will be applied to avoid demanding transaction management. Undistributed discounts will be accrued and shared once the minimum threshold is met.

This methodology allows depositors to increase their locking period over time to maintain the discount tiers of interest.

Pools

The program will be initially tested for 3 months on the Yield Tranches pools (besides the Fasanara YTs, part of the strategic agreement with the DAO) on Ethereum. When fine-tuned, it could be expanded to the Best Yield vaults and to other chains where the Idle product suite is deployed.

Example

For a matter of clearness, let’s see a practical example with the Clearpool Yield Tranches on top of the Portofino DAI borrowing pool that offers a risk-adjusted opportunity to enter the uncollateralized lending market. The Junior tranche offers an average gross APY of 16.66%, corresponding to a 14.16% net APY.

Yield focus

The table sums up the IDLE needed to access the discount tiers, the corresponding yields generated and the minimum deposit amounts to offset the initial IDLE expenditure in 1, 3 or 6 months using only the yields generated by each tier.

Tier	IDLE equivalent*	Boosted Yield	Deposit to offset cost in 1 month	Deposit to offset cost in 3 month	Deposit to offset cost in 6 month
I	1,590 DAI	14.29%	134,736 DAI	44,912 DAI	22,456 DAI
II	4,200 DAI	14.41%	355,907 DAI	118,636 DAI	59,318 DAI
III	8,700 DAI	14.66%	737,236 DAI	245,745 DAI	122,873 DAI
IV	20,500 DAI	14.91%	1,737,165 DAI	579,055 DAI	289,528 DAI
V	37,000 DAI	15.16%	3,135,372 DAI	1,045,124 DAI	522,562 DAI
VI	61,000 DAI	15.41%	5,169,126 DAI	1,723,042 DAI	861,521 DAI

Discount focus

Alternatively, the focus can shift to the discounts generated. The table sums up the IDLE needed to access the discount tiers, the corresponding yields generated and the minimum deposit amounts to offset the initial IDLE expenditure in 3, 6 months or 1 year using only the discounts applied to each tier.

Tier	IDLE equivalent*	Boosted Yield	Deposit to offset cost in 3 months	Deposit to offset cost in 6 months	Deposit to offset cost in 1 year
I	1,590 DAI	14.29%	5,090,036 DAI	2,545,018 DAI	1,272,509 DAI
II	4,200 DAI	14.41%	6,722,689 DAI	3,361,345 DAI	1,680,672 DAI
III	8,700 DAI	14.66%	6,962,785 DAI	3,481,393 DAI	1,740,696 DAI
IV	20,500 DAI	14.91%	10,937,708 DAI	5,468,854 DAI	2,734,427 DAI
V	37,000 DAI	15.16%	14,805,922 DAI	7,402,961 DAI	3,701,481 DAI
VI	61,000 DAI	15.41%	19,527,811 DAI	9,763,906 DAI	4,881,953 DAI

–
* The examples shown consider an IDLE price of $0.15.

Next steps

All Idle DAO is invited to weigh in on the proposal. This proposal will be followed by a Temperature Check vote with the published here, when ready.

[Biaf]

Temperature check voting

The voting phase to approve the new stkIDLE framework and the discount tiers starts now

• For - Agree with the new stkIDLE framework and its discount tiers
• Against - Disagree with the new stkIDLE framework and its discount tiers
• Discuss more - Discuss more the new stkIDLE framework and its discount tiers

Poll for $IDLE holders: HERE
Poll for $IDLE stakers (stkIDLE holders): HERE

Polls will close on 2023-10-26T15:00:00Z

The final $IDLE voting weights will be calculated using the approved calculator.

Looking to delegate your vote on Snapshot? Follow the official Snapshot guide.

Let your vote count!

[Biaf]

Temperature check results

Temperature Check passed

The discount tiers shared will be used for the testing phase of the new stkIDLE feature

@Biaf

The program will be initially tested for 3 months on the Yield Tranches pools (besides the Fasanara YTs, part of the strategic agreement with the DAO) on Ethereum. When fine-tuned, it could be expanded to the Best Yield vaults and to other chains where the Idle product suite is deployed.

[Biaf]

Program kick-off

The initial phase of the Prime Staking program has started

As mentioned

The discount fee will be on the Yield Tranches pools (besides the Fasanara YTs, part of the strategic agreement with the DAO) on Ethereum. It could later be expanded to the Best Yield vaults and other chains where the Idle product suite is deployed.

A maximum cap of $5,000,000 on the deposit per wallet has been set for this phase.

Official documentation: docs.idle.finance/governance/idle-staking/prime-staking