Earlier today there was a discussion on the Discord around auto compounding rewards. Currently this is possible via Mushroom Finance, however their 30% fee makes expensive and prices out community members with smaller stakes.

I'd like to kick off the discussion by proposing that staked ALCX move toward a model similar to xSushi -- xALCX. In this model ALCX holders would stake ALCX for xALCX tokens. These tokens would be a derivative of the staked ALCX and represent the holder's claim to their principle plus their proportion of the compounded rewards. A second contract would then be responsible for harvesting and re-staking the rewards for the ALCX rewards pool daily. Similar to xSushi, the amount of ALCX that xALCX would represent would increase over time as the rewards are auto compounded.

Considerations:

  • There is an desire among some community members to compound rewards but high gas prices make this prohibitive. By distributing the gas fees across the entire pool we can solve for this issue.
  • The contract that executes the daily compounding should be compensated for the gas cost of execution. This may slightly reduce the APY for the ALCX pool but the daily compounding should make up for that.
  • Limiting the scope of this to just the ALCX pool for should allow the discussion to be more focused and the project to be completed more quickly (if this were adopted).
  • Would this be a project that the core team would take on or would there be a bid/grant process for community members to participate or own this work?

While I appreciate the benefits of auto-compounding I would want the devs to weigh in on the time/effort involved here. The way I see it V2 and the DAO are of more important than a feature like this. If it's easy and does not impact the timeline then I am all for it but I think we have higher priorities at the moment. The bid/grant idea isn't a bad one either but we should do the math on the proposed gas costs/impact on yields before a vote. Compounding is also a personal choice and some do/don't so I'm not sure how the community at large will view it. Thanks for posting, definitely worth considering.

Thanks very much for putting this together. I also appreciate the benefits here but there is something off-putting to me about a protocol auto-compounding its own rewards. It makes the whole thing a lot more mercenary-feeling and circular. Think it would be best to rely on third party protocols for this. Also agree that it would be best for the team to focus on the core product.

This was also recently brought up here https://forum.alchemix.fi/public/d/23-ideas-internal-restaking-and-internal-stablecoin-pools

We hear you and we're trying to find feasible ways to implement this, however currently this would need a way too large overhead that most likely won't lead to as much of a reduction in gas fees as people hope it would. But we're thinking about it.

This could btw also be a community made thing, very much in the same way as mushroom did their auto-compound pools for ALCX ;-)

    It's a nice to have for me too rather than a must have, so if it takes too much time it's OK to not do it and there still is mushroom as alternative
    +I think the tx is made very efficiently gas wise and compounding once a week is actually OK

    BenjyBr0 all systems are working fine on my end. Come to #support in discord for more immediate troubleshooting.

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