Seems like a no brainer for us to do this as IDLE holders
This ideas seems feasible, do you already have a split structure in mind? liquidity providers are probably interested in such incentives.
Maybe consider also other ways to use those funds. FeeTreasury collects the performance fee charged by the protocol. This stream can be allocated to IDLE holders, but also developers incentives or fee sharing programs for integrators would be interesting options.
As the pie is just one, it might be better to have an overview of the possibilities and then focus on the most interesting ones.
There was this analisys from the yearn forum which have some valid points on why fee should not be redistributed, it may be worth considering some of that ideas too
What about using part of the profits for insurance?
I mean, use the profits to build a treasury and part of the treasury can be used for insurance.
I like this idea a lot. It would be awesome to have an insurance pool, since the risk of not being insured is what keeps me from adding a lot more of my assets to Idle
What would be the pros/cons of setting up our own insurance pool VS using something like nexus mutual or cover protocol?
I would say that with Nexus or other providers you can magnify the protection you have at the cost of the premium you pay, which can be considered a ‘loss’. In contrast by using part of the fees or a portion of the ecosystem fund or some other mechanism you will have less protection (in terms of AUM covered) at least initially, but in case of no hack you are ‘gaining’ the premium you would have had to pay
I am right if I assume that setting up our own pool takes/freezes IDLE while providers would dump them?
You are saying that if an insurance fund is built which requires locking IDLE to provide insurance?
Yes, why not? Do the tokenomics of that make sense?
Yes potentially yes, the only thing is that they would need to wait a grace period before actually withdrawing funds (like Aave with their staking module) otherwise in case of an hack people would obviously rush to withdraw and no funds will be left for the actual insurance claims
For sure there are a lot of options for the insurance mechanism.
What do you guys think about having different tiers?
More staking, more benefits…?
After confirmation on the telegram group and following up to William and Noah feedback, it seems that right out of the bat we have 2 technically possible frameworks for a inhouse (tiered?) insurance:
- Staking IDLE (similar to what AAVE is doing)
- Liquidity Providing (provide IDLE as LP and in case of hack repay what’s possible with IDLE locked).
That being said, from the 2 options, which one brings potentially more price appreciation?
And, from the 2 options, is there any that provides more “leverage” to the profits made by the protocol?
Insurance is not the core value proposition of Idle protocol. Then I would rather use existing insurance products like Nexus or Cover (if we really want to insure all pools from the treasury). Let’s not lose the focus on what we are really building here.
From the other side, we could offer insurance to depositors as an add-on, as a separate product. But that’s another topic.
Regarding profit sharing, let’s wait till there is any serious amount there .
For now we should focus on ways to grow the treasury, like building apps on top of the protocol and better utility for idle deposit tokens.
Read through the Yearn post, actually, the post is not really anti-profit-sharing or fee sharing, it’s actually really just saying that in the short term the fee should be used towards developing the project further in order to increase future volume on the application, which would lead to higher fees, which when the project is in a more mature stage would be shared with the token holders. I totally agree, in this early stage, we probably should not be doing fee sharing just yet, and should rather be using the fees to further develop the product. I do think we should have fee sharing as a long term goal though, once Idle is much more mature, it will make sense to turn on the fee sharing.
I like the choice that made Aave: they created a Safety Module, Aave governance put they $AAVE in staking with a cooldown time of 10 days and get rewarded. In case of problems the protocol they can slashing untile 30% of staking tokens and if the Safety Module is not able to cover all of the deficit incurred, the Protocol Governance can trigger an ad-hoc Recovery Issuance event. In such a scenario, new AAVE is issued and sold in an open auction for market price (like what did and will do MakerDAO).
I don’t know if Idle is able to do something like this, but i think isn’t a bad idea.
Sorry, i don’t like and don’t trust too much (at the moment) the esternal insurances.
this can be part of the smart treasury
Yes, but I don’t know if it is technically possible or is necessary to create a new smart contract.
I would say that everything besides new issuance is possible because the total supply is fixed in the contract and no mint method is available