Here’s my idea for ALCX DAO and Staking. The overall goal is to share revenue, maintain treasury funds to pay for protocol fees, and to incentivize active participation. Here’s my outline to achieve this. Actual math to follow once I get some missing data.

[Revenue Sharing Model] Those who stake ALCX in the DAO will be entitled to revenue share. The eligible treasury assets (ETH, DAI) will be deposited to the DAI vault. A half-maximum loan would be taken (12.5% for ETH, 25% for DAI). The remaining loan value would be available for protocol expenses. The initial loan would then be distributed to stakers (as alAssets) to effectively “boost” staking yield over some period of determined time, which would taper off as TVL in the protocol increases. Each week (or day or month) the loan would be re-upped to the 12.5% and 25% loan values and distributed to stakers. The end result is maintaining treasury collateral for emergencies, providing better initial staking rewards while TVL is lower, and maintaining a revenue stream for protocol expenses.

[Uses for Shared Revenue] Users will accumulate alAsset yield (weekly?) that can be used in the following ways:

  1. Withdrawn
  2. Left to accumulate - **The idle alAssets being accumulated could potentially be used to provide alAsset liquidity, removing the need for users to provide it themselves, removing or reducing the need for LP incentives?!?*
  3. Used to auto-repay debt for the address
  4. Auto-converted to ALCX, which is auto-staked (adds buy pressure to ALCX and creates essentially an ALCX autocompound single stake option)

[DAO/Gamefi] What we know about GameFi (materia points and shards, etc) is unaffected. To encourage participation, we want voting to have a large weight on your share of rewards. However, then we have a dilemma between giving everyone a lot of time to participate in votes (so they don’t miss boosted rewards), and actually getting things done. A few ideas:

  1. Allow a certain percentage of missed votes per month, with a minimum of 1 allowed missed vote. Users would be rewarded with their materia points/shards for these votes.
  2. The amount of materia points rewarded for a vote is proportional to the amount of ALCX the proposer has (or, assuming there is a minimum amount of ALCX required to propose, this may not be necessary.)
  3. Vote delegation settings - a setting where if I do not vote before the vote expires, my vote is automatically set to align with the vote of a delegated address.

Some initial math indicates we may be able to pay for everything in the AIP-16 budget with this strategy, though I would propose we use some ALCX for the budget to maintain/increase treasury diversification.

    ov3rkoalafied I think this is a quite interesting idea, and think that integrating the DAO into the staking rewards could be very beneficial. on the concept of delegation; if your don't want to participate in the DAO then you can delegate your ALCX but you then in turn don't get any DAO NFTs or materia points. I think that that is quite important, minimum involvement = minimum rewards which I guess is the whole point of this?

    on your bit about 50% of max loan, the DAO could always self liquidate instead which I think is what Scoopy has mentioned. I think some sort of auto compounding feature would be very important, but I would expect a 3rd part to build it instead and then its integrated into the DAO instead of asking the devs to build it. I think that if we got a closer integration between the DAO and the treasury that might be a better plan, as the DAO could max borrow and give 1/2 to us and the other 1/2 to a SushiSwap pool with the DAOs ALCX on the other side, this would mean that over time we can build up more liquidity for the auto compounding feature. what do you think? I know Scoopy has thought about the DAO being able to provide its own liquidity so this could be a good first step?

        Biddls
        Yeah, min involvement should = minimum rewards. However, if we want to get proposals approved quickly we are always going to have people missing votes, and I don't want people to be too heavily punished for having a life as long as they are generally voting often.

        My idea didn't have a solution for the ALCX/ETH liquidity, so your idea helps solve that.. but the cost is that now for any protocol expenses we need to self-liquidate, which I don't like as it reduces total collateral collecting yield. Maybe there's a balance.

        And agreed the auto-compound can likely just be done by a 3rd party

            ov3rkoalafied Yes so what about on voting the punishment is delayed, so lets say its an emergency we need to do something quickly and we give it 1 day to vote on. as long as you vote in the week after you dont miss out on any rewards? we could mby add in some decay so you get more rewards the sooner after voting ends than at the end of the week? that could be an interesting idea.

            for the liquidity problem I don't think that the max borrowing will go on for ever we will create enough liquidity to have the auto compounding work easily and then stop and go back to 50% of max borrow. or we could not pay out any dividends borrow at 50% max until we have enough liquidity and then switch to paying people out? it wont be able to last for ever any way as there is only so much alcx that the dao can put into those pools.

              I brought this up on the AIP-19 proposal, but don't see it addressed here. How can we ensure that a loan can be taken? If a vault has 0 available alAssets to be borrowed, then this breaks down and we either have to forego providing revenue sharing to the ALCX stakers or build in a priority function so that the rev-sharing vaults are always able to borrow first following each harvest which I could see severely limiting the ability for individual users to borrow.

              Also, this ensures there is always the maximum amount of alAssets which could de-stabilize the peg if rev-sharing people trade their share for other, more useful assets (assuming alAssets still have no use-case besides LPing/farming).

                Here's how I think the numbers would work out, comparing if we just simply shared all new yield vs using my method. For 1 year it approximately doubles the yield for stakers. Don't focus too much on the #'s themselves (since I'm assuming all ALCX is staked and current TVL, all of which are highly conservative), more on the fact that we can boost the effective yield while also affording the monthly budget, potentially needing to sell a bit of ALCX the first little while: https://docs.google.com/spreadsheets/d/e/2PACX-1vQANE9zwkrrSvL6iNjSB3ZhE0lXj-5CAbbnLKroLdtZ5AtQ4JT8EkrQ_m1zSyi8GJkndrt1I98KnROH/pubhtml

                and for anyone freaking out cuz "omg yield so low", say TVL increases 10x and only half ALCX is staked (and I think almost everything the devs have hinted at indirectly or directly allows for massive TVL increases), that's an annual yield of $160/token. Even at 20 P/E or whatever the unit is, that's a $3200/token price. Also like 100 alcx right now is about 32k. In 6 months that's probably around 140 ALCX. 140x$160 = 22.4k per year in dividends. Ie, this feels like it has potential to be an incredible interest bearing asset. If you pie in the sky it and say we go 100x TVL from here, then a 10 alcx buy today for 3.2k could be giving you 22.4k/year someday in the future (soon TM)

                math not entirely accurate as you'd eliminate the "boost" to staking rewards, but at that point the TVL would outweigh it by so much it shouldn't change the #'s that much

                  Franky
                  Your questions both have the same solution, which is more use cases for alUSD and alETH (mostly in the form of being accepted collateral in various protocols). Which the devs have mentioned multiple times they are pursuing - but I agree that if there aren't many more use cases by the time the DAO is ready, then it would be harder to keep increasing the debt cap. The treasury funds are really not that large right now compared to the total debt caps, so I think we have a lot more time on this issue than you think. We could almost just auto-raise the debt cap each time the treasury draws a new loan, since it really wouldn't be that large of a raise.

                  For the max alAssets, same thing - it's max for the treasury, but again the treasury isn't THAT big, so it would be a marginal amount of additional alAssets. The treasury has less than 10m DAI, isn't the debt cap like 200m DAI or something? alETH may be harder at first since the merge will happen after the DAO most likely, so alETH may not be included at first in the treasury payout.

                      ov3rkoalafied yea I mean talking about liquidity for the DAO if we assume a once per week auto compounding then all we need is to have enough liquidity to be able to sell a weeks worth of dividends into the pool for ALCX?

                        ov3rkoalafied i think you messed up your math slightly
                        $160/token. Even at 20 P/E or whatever the unit is, that's a $3200/token price. Also like 100 alcx right now is about 32k. In 6 months that's probably around 140 ALCX. 140x$160 = 22.4k

                        if we assume that now everyone has 40% more ALCX (100 => 140) then the same amount of coins has to go between 40% more ALCX meaning that everyone gets $160/1.4 per ALCX in dividends. a 20PE assumes a dividend yield of 5%, this doesn't take into account price changes from selling alAsset for ALCX if we are doing the auto compounding because then if we are constantly buying up ALCX and staking it then we are getting less yield but increasing our capital gains instead.

                            Biddls ah you are correct, we have more alcx but so does everyone else, so that should be removed. I'm hella busy until next week, I'm going to try to do a revised post taking everything into account next week.

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