(The title it’s just a nod to Tuna’s post )
I’m gonna start with a quote of @Andre’s post from a while back
“Our DAO Is Our Greatest Strength”
Seriously, I don’t think we have seen an project with such well thought and inspiring ideals, people don’t just want to use the protocol they want to become part of it! We believe in the success of the protocol there is no other way to put it.
V4 has been an amazing step ahead, its cutting edge tech will no doubt help us growth much further. However, do we have this much confidence in the POOL token? Personally I do not, because I know the market can be irrational and that the amazing progress we are making can easily be overshadowed by a declining token price, in both the eyes of investors and new depositors.
So, with that said what do I propose?:
- Tie token value to TVL
We want token growth to align more directly with protocol growth, I propose we distribute a portion of the yield generated by deposits to POOL holders. Could be 1%, 0,1%, the higher the % is, the stronger the tie will be.
Since stablecoins are a scarce resource, the holders would have to be paid on whatever token the interest generated, as an example:
Total yield generated: 200000 USDC, 4000 MATIC, 2000 AVAX
Funds to be distributed (1%): 2000 USDC, 40 MATIC, 20 AVAX
The distribution would be done by a staking mechanism which should be kept as simple as possible (User deposits POOL, earns a % of distributed funds).
One thing I want to note is that this would end the DAO dilemma of contributors being paid in protocol tokens, and then having to sell them in order to realize it’s value, with this they could now both hold it and still earn some form of realized value.
Note that this could enable a very interesting loop of users earning tokens and then depositing them back into the pool where the interest was generated in the first place (we can even offer an option to automate that) and also it’s a way to appeal current depositors, with point two:
- Reintroduce POOL drip
Tokens have to be distributed somehow, the thing is, how do we make sure they go only to the people who actually believe in the protocol? One way is thru Coordinape, which I find amazing, and I believe other way is through a locking mechanism:
Distribute POOL to depositors (based on TWAB for example), but here is the thing, we won’t actually give them the POOL (hold your horses) instead we give them the option to buy X amount of POOL, at a discount price, if they agree to lock it for a certain time:
- User is rewarded with the option to buy 50 POOL at 25% less than the current market price.
- User buys it, but he does not receive the POOL yet, tokens are locked in a smart contract and will be transferred after 6 months (for example)
If after 6 months POOL price:
Stayed the same / went up / did not drop over 25%: Then user would be at a substantial win
Had a drop of over 25%: User would be at a loss (altho less of a loss than if the user would had bought at original price and holded it for the same period)
This would effectively ensure that only users who believe in the protocol growth (remember, price is now tied to TVL) are being benefited with privileged access to POOL. It would also solve the dusting problem of users receiving too small amounts of POOL to even bother withdrawing (which results in effectively burning those tokens) since now they can just not buy them, and we could also make the options to buy expire after 240 days.
Now some points I would like to address:
Why not set an special pool to distribute in point 1?
I’m 100% onboard of making holding POOL a fun experience, however imo investments preferably have the following characteristics:
- Be as predictable as possible (reducing risk of not making a profit)
- As much as possible, performance has to be based on fundamentals (and not by chance)
PT pools don’t have these, they are based on probability (you could make a sizable deposit and still not earn anything) and your yield does not necessarily depend of the protocol growth and it’s fundamentals, in the end it’s by chance, not guaranteed, now these are great properties for a savings account but not for an investment necessarily. This is why put my vote on keeping the mechanism as simple and predictable as possible, and to make myself clear, I like the idea of a special pool, we can offer it as a higher risk/higher reward option, but that would be as an extra, not being the base layer.
Why not also utilize the treasury to fund point 1?
Similar to my previous answer, I aim to keep the mechanism as predictable as possible, utilizing the treasury may mean a higher return, but it can also provide uncertainty, subsides can be upped or reduced without a clear trend, treasury can also dry up, it’s very hard to predict these in the long term (especially because ideally we would also use the treasury for other purposes) so it’s better to leave it out of the equation and focus on building a robust base layer.
Alright, I wanted to make this post for quite some days after reading a lot of feedback on the discord, thank you for reading my first post
- I agree, let’s make it happen
- I agree with the main ideas, not really with the execution (feel free to explain)
- I don’t agree