Author:
Hover Labs [email protected]
Created:
1/30/2022
Status:
DRAFT
Background
Existing Farms
The Kolibri protocol currently maintains 3 farms which emit kDAO. These farms incentivize activities that are advantageous to the protocol. Specifically:
1. kUSD Farm: Incentivizes holding kUSD. This is important because it provides a reason for users to hold kUSD to balance out sell side demand for kUSD before use cases develop.
2. QLkUSD Farm: Incentives participating in the Kolibri Liquidity Pool. The Liquidity Pool provides stability to the protocol by providing liquidity to liquidate ovens (Read More)
3. Quipuswap kUSD/XTZ LP Token Farm: Incentivizes providing liquidity for the kUSD/XTZ pair on Quipuswap. This allows price discovery and stability of kUSD. Quipuswap is the oldest and most liquid DEX in the Tezos ecosystem.
The Kolibri Savings Rate
The Kolibri Savings Rate was introduced in KIP-010 and was added to the Kolibri protocol in Kolibri Governance Proposal 10.
The Kolibri Savings Rate provides an incentive to hold kUSD and balances out sell side demand.
Farm Modifications
The kUSD farm and KSR serve almost the same purpose. Additionally, incentivizing users to use the KSR will provide larger awareness of the feature. This proposal suggests:
1. Sunsetting the kUSD Farm: With the KSR, there’s not a strong reason to incentivize users to simply deposit kUSD.
The kUSD farm was originally meant to run for 1,048,320 blocks (1 year @ 30 second blocks) and emit 75,000. This equates to about 6,250 kDAO per month. The farm started at block 1,558,812 (July 15, 2021) and has thus emitted about 6.5 months worth of kDAO. To provide ample time, we could revoke farm four months early (around March 15th, 2022), and recover 18,750 kDAO to the Kolibri Community Fund for future use. The 6 week grace period provides time for the community to debate this proposal, vote for it, and provide a several week grace period for users to move assets before the farm ends.
2. Creating a KSR Farm: This new farm would incentivize users to use the Kolibri Savings Rate pool.
A new farm could be spun up for the Kolibri Savings Rate. This farm could have same paramters as the kUSD farm. Namely:
- 75,000 kDAO allocated to the farm
- 1,048,320 blocks run time (1 year @ 30 second blocks)
This farm would be spun up immediately, to allow users to migrate.
Costs
The Kolibri Community Fund contains 350,000 kDAO. Kolibri Governance Proposal #17 allocates 741 kDAO for a hackathon prize. Optimistically assuming the proposal passes, there is 349,259 kDAO remaining in the community fund.
Sunsetting the kUSD farm early recovers 18,750 kDAO, and 75,000 kDAO will be allocated to the new farm. Effectively, the cost of the new farm is 56,250 kDAO.
After this proposal, assuming Kolibri Governance Proposal #17 passes, the community fund will have 293,009 kDAO remaining.
Implementation
Farming Contracts can be deployed outside of the DAO. These contrats will not have any kDAO in them and will therefore not emit until the DAO proposal passes.
A lambda can be submitted to the DAO that will:
- Call the
sendTokens(75,000, <new farm address>)entrypoint on the Community Fund Contract, to transfer 75,000 kDAO to the new farm contract. - Call the
revoke(18,750)entrypoint on the kUSD Rewards Reserve Contract which will move 18,750 kDAO from the reserve contract back the the Community Fund for future use.