A proposal to present the IDLE staking version 2 - offering unique fee discounts to stakers.
- Leagues M4-2023: Roadmap and M3-2023 Recap post by @Teo
- IDLE staking update post
- IDLE token improvement proposals post by @matus.eth
This summer the DAO’s Leagues presented an analysis focused on updating the IDLE staking
multiple ideas were shared and discussed
The DAO voted to pause the staking reward program, i.e. proposal 1.
During M3-2023, Leagues continued brainstorming about the second proposal both internally and with some stakeholders
- Introduce a performance fee discount for stkIDLE holders
This post aims to formalize the structure of the program and then vote on it.
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.
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.
The discount will be applicable to the IDLE stakers at first.
Such LP tokens will need to match the dollar value of stkIDLE.
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.
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.
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.
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|
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.
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.