Hey Giveth Community!
As a part of the Angel Vault, Regen Pool, and oneGIV initiative, the GIVeconomy Working Group is working to create a borrowing/lending pool using the Fuse protocol on the Rari platform.
This proposal is an extension of past discussions, moving forward with a means to reward depositors into the Giveth-managed lending/borrowing pool, what we’re calling the Regen Pool.
Angel Vault:
Regen Pool:
Collateralize Regen Pool:
Collateralize oneGIV:
Background
As discussed in previous posts, in order to set up the angel vault, we first need to create the oneGIV token, which is backed/collateralized by 80% FEI and 20% GIV.
We plan to access this FEI by opening a borrowing/lending pool using the Fuse protocol by the Rari team and incentivizing our community to deposit FEI through GIV rewards.
These rewards, similar to other reward mechanisms in the GIVfarm, will be distributed through the GIVsteam, providing rewards over time, until the end of the GIVstream. The details of the reward mechanism are described in Target Parameters.
How will we incentivize FEI?
Depending on the price of GIV at the time of creation, we expect to borrow between $500K to $1M FEI to create oneGIV for our vault. This proposal is to gain soft consensus to allocate funding for rewards, currently targeted at 20% when there is $1M FEI in the pool, from the nrGIV DAO. Funds will need to come from nrGIV in order to initiate the rewards program with the GIVstream.
As of today, the market rate of GIV is $0.12, which means we would need to allocate roughly 1.8M GIV to collateralize and incentivize the Fuse pool.
Target Parameters
Griff has put together a spreadsheet where the working group has explored parameters for the rewards here:
Total Amount Requested: 1.79M GIV Requested
Collateralization Rate: 300%
Target in Deposits: $1M
Target (Total) APR: 20% (Broken Down Below)
FEI Deposit Rate: 2.05%
At the present time, our parameters are optimized for roughly 60% utilization, which means we expect to be borrowing $600K of FEI while maintaining $1M in FEI deposits. This results in a 40% buffer between the collateral provided and the collateral used.
The FEI deposit rate is essentially interest that FEI depositors earn for loaning their FEI, rewarded in FEI (added to our debt). This can be thought of as an additional APR that FEI depositors earn.
GIV Rewards: 18.5%
Similar to other GIVfarm programs, deposits into the FEI pool would be rewarded with streaming GIV rewards; some part is claimable immediately, and the remaining streamed over time. While the amount claimable vs. streaming depends on when we launch, we anticipate it will be about an 18%/82% split.
All together, to maintain a cumulative APR of approx. 20% when there is $1M of FEI deposited in the pool, we would need a total of 1,795,000 GIV from the nrGIV DAO to run this rewards program for 1 year (365 days) worth of rewards.
Why 20%?
UST was offering roughly 20% APRs for stable coin staking, but since UST took a dump, we don’t need to compete with APRs this high. We were originally considering offering 30% APRs (with some part streaming over time) to incentivize FEI deposits, but in lieu of recent circumstances, APRs of 20% - even with part streaming over time - for stable coin deposits is very competitive.
In Conclusion:
To borrow roughly $600k of FEI to kickstart oneGIV, we are proposing to incentivize FEI deposits in our Regen Pool. We want to maintain ~$1M of FEI in the Regen Pool to give us a buffer on paying back the loan. At $1M of deposits, to maintain ~20% APRs for 1 year we would require 1.79M GIV from the nrGIV DAO.
What do you think about the this plan and the parameters for incentivizing DEI depositors?
- Yes, looks good!
- No, I have a better idea.
- Abstain
0 voters