Regen Pool - The Path to an Angel Vault... and maybe much more!

  1. What is the worst case scenario that can happen if we launch this? Short and Long term.
  2. How do we know our community members will have FEI and want to deposit FEI to this pool? Have we done any research on that to validate the idea?
  3. Other than reaching the goal of getting enough funds to launch the Angel Vault, is there any other, broader long-term benefit or opportunity with having our own Borrowing & Lending market?
  4. How can we transform all the benefits of launching this market to the average project owner or donor, and communicating that in simples way possible? What will make them happy?
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I noticed Rari offers a couple of plugins, maybe that could offer a solution to link the pool to our stream?

  1. Staking plugin: The staking plugin will utilize idle tokens by staking them for rewards through their native platforms
  2. Interest Rate Model Plugin: the lending interest rate for assets will match the staking rewards yield available on that asset.

there is an upgradability compatibility option which I noticed majority of users are keeping the settings to be upgradable but we can maybe set a strong restriction or time frame on it? (i.e. to review the defaults every 3 months and get a vote if it needs revising). But to disable this option might be dangerous.

If the main purpose is to fund the Angel Vault with the FEI then wouldn’t it make sense to wait to raise the sufficient min. required amount (8-10% of market cap) and then borrow the whole amount?

With the problem of depositors borrowing cheap FEI, would it be possible to treat this as a “crowdfunding” with a time limit? Meaning once enough FEI is deposited we will stop/limit the lending borrowing activity in the pool and only allow the current depositors to earn yield until we repay the loan.

Also wouldn’t the linear utilization rate make the interests go higher as more FEI is deposited into the pool? Can we set the configs in a way to incentivize the lenders to deposit more FEI and keep them there?

Otherwise, if we also take the “whitelist” approach we would still mitigate the risk of depositors acting against our strategy of fundraising for the Angel Vault.

multisig?
Rari guys mentioned Its definitely easier and cheaper to make the pool on a normal wallet and then transfer to a multisig. perhaps would make sense to assign a trusted part(ies) for this to save on gas.

DAI vs. FEI?

My original thought was to offer both Dai and Fei since it seems Dai is more in circulation and accessible. However, it seems that can cause some technical problems, converting challenges, etc.

Also from a quick feedback round in the community it appears members have no issue converting their Dai to Fei to deposit in the pool. We just need to make the process of converting easy and transparent to reduce the work/hassle for depositors.

And we will be the main borrower… so we are just paying the fee to ourself… We will borrow 800k-1m and the interest will be 3-6% so if the admin fee is 1% it would be around $600 a year from our loan. I think the marketing is worth the $600… tho we could jack the fees up to 10% and $6000 might be more worth it… Maybe we should move the giv.eth/donation.eth decision to the next step once we have more solid numbers.

  1. Worst case, is really bad… if we poorly manage this pool, we could default and sell a lot of GIV into the market. The Angel Vault would get liquidated… the GIV price wouldnt get destroyed as much as ICHI, but it would definitely take a hit… but this worst case, well we would have to really screw it up, this would be very very unlikely.

  2. I think if we design it so that we give stable coin returns of liquid 15% APR and with a GIV stream of around 80% APR, it won’t matter what stable coin it is… people will stick their coins there… We were doing research in the Defi4good chat and are still asking around. We can just use DAI as well and then as a DAO sell the DAI for FEI… but then our debt is in DAI which might take an extra tx to acquire when we want to pay it down.

  3. YES! I think we can market this as a Defi4good lending pool. There is a nice opportunity to use this as a lego to do other things… i wouldn’t deposit more GIV to borrow more money… as that is a slippery slope… but we can look at what shapeshift is doing with their fuse pool, where they are incentivizing staking their Angel Vault Deposit token and then when it is deposited, their users can actually earn a yield (which we could do on the GIVfarm) AND the can borrow against it and do something else, like borrow DAI and then buy ETH with it, effectively going long on ETH (something we CAN’T do on the GIVfarm). There are a lot of cool things we can do with this pool, but we should take it slow and just take baby steps to get us to having this angel vault.

  4. I think the big wins here are for our token holders, which end up including the projects and donors… most of our donations actually happen in GIV and all our Donors get GIVbacks, so donors and projects are GIV token holders… so when we add liquidity and strengthen the GIVeconomy, we help the donors and the projects.

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The problem is we wouldn’t be the only borrower, anyone can borrow it and if there is a lot of FEI and not a lot of borrowing, then the interest rate for borrowing will be very low, incentivizing people to borrow.

We don’t have that kind of fine grained control.

As more FEI is deposited the Reward APR goes down for the depositors, and the interest on borrowing also goes down. what we can do is say, we want to target borrowing 800k with a utilization rate of 64% so that means we need 1.25M Fei Deposited… so lets set the rewards to be 80% APR when 1.25M is deposited… (this means we would need to have 1M USD worth of GIV allocated (as a GIVstream) for 12 months (or 500k for 6 months))

If 2M of FEI is deposited then the APR would be 50%
if 1M is deposited then the APR would be 100%
if only 500k is deposited then the APR is 200%

This is because the rewards are a set amount of GIV in a GIVstream… the APR will also be a function of the GIV price, so if the price of GIV goes up, so does the APR and if it goes down so does the APR…

The real time limit is how long do we want to offer rewards to depositors in the pool which is a function of how fast we will pay back the loan and buy back the wall.

Yeah i think it is a lot easier for everyone (depositors and the DAO) if we are only focused on rewarding the deposits of one asset. Fei is the obvious choice since that is what we want in the end. I don’t think it will be hard for people to convert to FEI, I assume a lot of people would have to convert to what ever token we choose, and we get a lot of extra network effects with FEI via (likely via their comms team) that we don’t get with DAI.

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Added this graphic to the original post that describes the process:

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Oh and I would love to do a call focused on just answering these questions:

Things we should probably decide first relating to our overall strategy:

  • FEI Borrowing Strategy (do we wait to borrow FEI until we reach the goal)
  • FEI Amount to Borrow (how big should our Angel Vault to be)
  • GIV Overcollateralization (how much extra GIV do we want to put into the pool to keep it well-collateralized)
  • Source of GIV (Does it come from the Liquidity Multisig? nrGIV? GIVgarden?)
  • FEI Repayment Strategy (how do we plan to repay the loan)

Let’s pick a time:
https://doodle.com/meeting/participate/id/bmZ08zAd

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I still think the first step is setting the pool parameters from here, and going forward. before talking about whats going to happen going forward. I would work on changing those settings, when gas is low, and I can move funds in as needed to cover. if its decided to use the rari system. we can deposit the giv at any time, and wait for users to deposit whatever funds they want. (fei/dai/usdc) but tell them we would borrow based on a ‘chunk’ of tokens, not small amounts, so they have a better chance if they deposit based on that.

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interest rate model is something we need to set now, it was discussed to change from the one i picked, to a lower rate that shot up at 80% utilization of that coin.

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Not sure i understood. I wouldnt want to turn off the upgradeable option. I was saying if we are unsure of a setting, to not change it. as its a gas cost.

(reply to another post, but System doesnt allow 3 replies lol) —

Somethings i think your missing.
Multisig. i am already setting up the pool with a normal wallet.
Linear utilization: the more fei (or any) is deposited, that raises the Utilization CAP up (lowers the utilization %(thats how i understand that). we are talking about a supply caps, however

Both Dai and Fee (and usdc) are offered for depositors. they can choose any. (this relates to my post above a bit) Letting it be known we will borrow in chunks (to save gas) and not small amounts. so if they want their % (and we can add rewards to what we want more of) they would change to Fei and deposit mainly that.
Could change the LTV to 0% to stop the other coins however. Instead just putting the extra reward on top, seems like a great option however.

I think i covered everything? :slight_smile: thanks for hte conversations love it :0

I think we can change that whenever you want, i don’t think it will change, we want the one that gives us the lowest rates

ok awesome. ill start watching gas, and work on switching them over.
Thanks!

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If you want to see the full notes, we are working from this doc: Regen Pool Parameterization - Google Docs

Here is quick overview of the Friday’s call

Why are we doing all this?

If we go for this, we will open up 3 incredible products for our community:

  1. Regen Pool: A lending market that benefits projects on Giveth
  2. oneGIV: Our own stable coin
  3. Angel Vault: A structured Univ3 pool that can be farmed

Regen Pool Scope Conclusion:

Proposal: Don’t promote the Regen Pool UI, or even so much the details of what we are doing people will deposit FEI on our site and that’s what we promote.

Note: Depositors will get a small % of FEI + a GIVstream, we need to do a little technical feasibility here still

WIP Roadmap

GIV Collateral for Loan

We should base our estimates on having at least a 250% collateralization, even if the GIV token drops to 10 cents

FEI Amount to Borrow - Max and Min

No Max, No Min, we grab the FEI we need to hit 10% of our market cap and move on from there.

Source of GIV for Loan

As much GIV from GIVgarden as we can + some from liquidity multisig. nrGIV can do the reward stream so all DAOs have to vote.

  • Liquidity multisig would require snapshot vote
  • GIVgarden requires Conviction VotingV
  • nrGIV through its Aragon DAO

Where does the GIV go?

The address that receives the GIV can borrow the FEI, and might have many small actions to take on a daily basis

To have speedy actions, let’s use a 3 / 5 or 3 / 6 Gnosis Safe - want to have at least 3 signatures & nice to have in-the-know people. Will require nrGIV to be a member.

FEI Repayment Strategy

When we take this loan out, we are not “Spending” the money as much as we are Staking the money.

We will learn a lot more to make this decision later, but it would be irresponsible to take out the loan without thinking about how we pay it back.

Discussion:

  • We can take the money back and pay off the loan soon after the launch if we have successful farming.
  • The interest rate will be small, around 1.5-5% (in FEI). If we borrow 800k that is 40k a year MAX, which is about the cost of 1 team member. When thought of like that, in many ways it seems like a pretty awesome deal maybe we wait to pay it off for a year and use the stable coin farm to attract degens to turn them into regens.
  • We could make univ3 pools above the price so that as the price rises, we sell GIV for oneGIV & pay it back like that
  • Shapeshift arbitrages: mints oneFOX and trades for USDC when there’s more USDC in the pool - makes $ from rebalancing the pool

Param Hack Sesh!! 1-3 pm Tuesday MST / Costa Rica Time

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Also worth noting. There was a huge hack of a few Fuse Pools… we are watching to see if they have any more issues… but as of now, we are still planning on proceeding.

Good news! With the info we have today we are still looking good to pursue this path.

Param Party, It happened:

We held a Param Party this week to parameterize the Regen Pool and the Rewards, if you want to play with the params, play with this spreadsheet: Regen Pool Param Party! - Google Tabellen

And you can see how we used the sheet and an overview of the parameters that we chose here:

Param Party Results

  1. We are going to turn off all functionality of the Regen Pool for now, besides what we need to get the FEI for our Angel Vault. That means no one can deposit some random token and borrow against their collateral, people deposit FEI, we deposit GIV to borrow that FEI, no one else will be able to borrow the FEI besides us… simple.

  2. We will also not advertise the Fuse Pool UI, instead we will make a card in our GIVfarm for depositing FEI and we will set it so we are the only group that can deposit GIV.

  3. The amount that we will borrow we estimate will be about $1M FEI but the exact amount will be determined based on the market cap of GIV so we can make the Angel Vault 10% of our market cap.

Here were the other params we settled on:

Regen Pool Params

Param Our Choice
FEI LTV 0%
GIV LTV 75% (Liquidation 133.33%)
Initial GIV Collateralization 300%
Top up GIV Collateralization @ 250%
Front-End FEI Deposit Cap (per Address) 200k
Upgradeability Yes
Reserve Factor 10%
Interest model FEI/FEI
Assets FEI & GIV
Admin fee 10%
Whitelist None
Close Factor 33% (advised by Rari)
FEI Supply Cap 4M
GIV Supply Cap What we deposit

GIVstream Reward Params

We propose to target a total of 30% APR (2.5% in FEI and 27.5% GIVstream) at 1,500,000 FEI deposited, if we hit the 4M FEI Cap, the APR will be about 11%.

We propose to allocate 1,000,000 GIV from the Givstream to incentivize depositors for 6 months, but the exact rate of rewards will be determined by the price of GIV at deployment and adjusted regularly by the GIVeconomy Research Group, and the exact length of rewards will be determined by how long we want to continue the loan.

Regen Pool Management Multisig

We will make a new 3/5 gnosis safe for managing this process and the pool. I want to nominate the 5 nrGIV holders that are closest to this process:

Me (Griff)
Willy
GiantKin
Lauren
Mitch

One Decision Left

All the params above are of course still in advice process, and can be challenged in this thread, but there was one parameter that we didn’t

There is one Parameter we still need input on.

Do the Admin Fees go to donation.eth or giv.eth?

Admin fees from our loan will amount to $50-$500 paid in FEI per month… They would need to be withdrawn and are on mainnet… so honestly from our initial set up, the fees may not amount to much that is worth claiming because of gas on mainnet… that said there is an option to use the Regen Pool for other things in the future, so the initial setting will likely carry over, and the admin fees have the potentianl

As a Regen Pool, it would make sense for the funds to go to donation.eth, and eventually directly to verified projects there is a nice bit of marketing that we can enjoy from this choice. It would be the only Fuse Pool that supports Public Goods.

As a DAO we also could use this as a revenue stream, and since our purpose is very impactful, it’s not a stretch to say if the funds go to giv.eth then it is still a Regen Pool. giv.eth can also choose to donate those funds later, if appropriate.

Where should the Admin Fees go?

  • donation.eth Let’s Regen it!
  • giv.eth Let’s start a Revenue stream!
  • I have a third option (and will add it below)
  • Abstain

0 voters

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Wait, weren’t we still debating the LTV?

We debated it in the GIVeconomy Research Call and settled starting out at 300% Overcollateralized (and we reup at a 250% to 300%) and 75% LTV (which means we get liquidated at 133.33% Colateralization).

Had a great call with Grace and Dan about setting up our Angel Vault and oneGIV token…

Things we learned:

#1 If we want a 4 Mil oneGIV market cap, we will want to put $1.2M USD worth of GIV up as collateral and 250k worth to mint oneGIV, so for the Regen pool calculation, this will increase our market cap 1.45M USD

#2 That GIV will go into a 4/6 multisig that has 4 Giveth people and 2 Ichi people

#3 they would like to align with us on a loan… we loan them $500k USD worth of GIV and then they will do market making with it and they will pay us back either the same GIV tokens, or 600K usd worth of Angel Vault LP… this is something we will want to debate in a forum post

Here is the recording of the call:

Notebook - Fireflies.ai - Free Meeting Recorder

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