Proposal to experiment with a liquidity mining program to incentivize vault TVL growth.
You can vote on the Snapshot proposal here.
At time of writing, the APY of the ETH Covered Call, WBTC Covered Call, and ETH Put Selling vaults are 14%, 16%, and 64% respectively. The yield comes entirely from the premiums of the deep out of the money options sold.
I propose a one-month liquidity mining program where vault depositors can also earn RBN tokens. This program will go live June 15 2021 12:00pm UTC and run until July 15 2021 12:00pm UTC. It targets the following three vaults on Ribbon:
The goal is to allocate 10,000,000 RBN (1% of total supply) for rewards, split pro-rata based on TVL across the vaults. For reference, Uniswap’s liquidity mining program allocated 2% of total supply to LP’s across four pools over 2 months. The concrete allocations are still TBD since the TVL’s will be snapshotted right before the start of the program, but for guidance an even split (~3.3m RBN) translates to ~765,000 RBN per vault per week.
In order to receive these rewards the depositor must stake their proof-of-deposit tokens (rETH-THETA, rBTC-THETA, rUSDC-ETH-P-THETA) into the relevant vault’s staking contract. Unlike most liquidity mining programs where rewards are released pro-rata per block, we will release rewards pro-rata once per week on Friday. Since the options are sold every Friday, we want all stakers to receive RBN rewards only if they have exposure to that week’s option.
In order to receive rewards, one must remain staked at the end of the program. You are free to join whenever you want and will receive rewards at the end proportional to how many weeks your funds were used as collateral for the options sold. You may unstake whenever you want, but you will not receive any rewards for the staked rewards. Please refer to FAQ for details.
This liquidity mining program aims to achieve three goals:
- Grow vault “adjusted” TVL - how much ETH / WBTC / USDC is locked in our vaults (not in “usd terms”)
- Expand the voting power to those who missed out on the airdrop
- Distribute the governance token to those who have the most skin in the game: vault depositors themselves
To measure success of this experiment, we will measure three main metrics over the next month and thereafter:
- User growth
- TVL growth
- TVL stickiness (how much capital leaves the vaults after the experiment ends)
To execute this proposal, the Ribbon Deployer will execute the following transactions for each vault:
Deploy Staking Contract:
- Deploy the
Ribbon Staking Rewards Contractwith the following relevant parameters:
RBN Transfer to Contract:
transferRBN (amount based on vault’s contribution to overall TVL) from treasury to the deployed staking contract
So how does the liquidity mining work if the token transfers are locked?
We are granting the liquidity mining contracts transfer rights, so it can transfer to your wallet but you cannot transfer the RBN afterwards.
Do I need to stake on day 1 of the program to earn rewards for the first week?
No, as long as you are staked by June 18th, you will be eligible for the first week worth of rewards. You have a 2-day buffer to stake your tokens from when the contract goes live until the first week’s rewards start to get counted.
Can I unstake my proof-of-deposit tokens from the staking contract whenever I want?
Yes, you can unstake whenever you want. However, you will be forfeiting all your RBN rewards.
So I need to stake for the entire month to earn those rewards?
No. Once you stake you will need to remain staked at the end of the program to get rewards for that deposit amount. However, you can stake whenever you want and receive rewards accordingly. For example, say I deposit 10 rETH-THETA tokens on the second Saturday. I will be receiving rewards for the upcoming third Friday and fourth Friday as my funds are used for 2 weeks of options sold. On the other hand, if I deposit 10 rETH-THETA tokens on the third Monday, I will be receiving rewards only for the upcoming fourth Friday as my funds are only used for that weeks options contracts. However, in both cases I will have to be staked from that point until the end of the liquidity mining program to get those rewards.
In order to receive rewards, one must remain staked at the end of the program. You are free to join whenever you want and will receive rewards at the end proportional to how many weeks your funds were used as collateral for the options sold. You may unstake whenever you want, but you will not receive any rewards for the staked rewards. Please refer to FAQ above for details.
IMPORTANT: YOUR RBN REWARDS WILL BE FORFEITED IF YOU WITHDRAW STAKING TOKENS BEFORE THE END OF THE PROGRAM.
Program ends Monday, July 19th (any timezone).
A handy diagram
You can vote on the Snapshot proposal here.