VIP 9 - Introduction and Funding of the Varen Vaultless LP Program

Abstract/Executive Summary

  • Herein we propose to implement and fund the Varen Vaultless LP model for the purpose of rewarding VRN-ETH liquidity providers for the next 90 day reward epoch.

Motivation

  • The Varen Vaultless LP model is designed to improve the useability and safety of providing VRN-ETH liquidity in the Varen ecosystem. By allowing users to maintain their SLP tokens in their own wallets this change will eliminate gas costs required for staking/unstaking as well as reducing contract risk by avoiding the need for a vault altogether. The multiplier feature will work to improve rewards for long term LPs in order to stabilize liquidity fluctuations over time. Additionally, the VRN-ETH SLP token voting will allow LPs to participate in Varen governance.

Specification

  • 1. Implementation of the Vaultless LP model:

    • Users will no longer need to stake their SLP tokens into a Vault, they will be able to keep their SLP tokens in their individual wallets reducing the gas cost of staking/unstaking and limiting contract risk by eliminating the vault entirely.

    • SLP balances, and thus rewards, will be tracked and determined by frequent, randomized snapshots being taken to keep tabs on the holders of the SLP tokens. Rewards will then be calculated based on these snapshots.

    • Rewards can be claimed via a Varen UI similar to the current model at the user’s convenience.

    • NOTE: Rewards must be claimed within one year of being earned, unclaimed rewards beyond that will be returned to the rewards pool.


  • 2. Rewards Multiplier:

    • Reward levels will increase based on the length of time a user holds SLP tokens, assuming the amount doesn’t decrease.

      • 1x Initial Reward Level (All LPs start at this level when epoch begins)

      • 1.5x Reward Level after 4 weeks

      • 2x Reward Level after 8 weeks

      • 3x Reward Level after 16 weeks


  • 3. Emission Levels and Funding:

    • The base level of emissions will be set at 10 VRN/day (assuming all SLP holders are at 1x rewards level.)

    • The max level of emissions will be set at 30 VRN/day (assuming all SLP holders are at 2.5x rewards level.)

    • This proposal seeks to authorize the allocation of 2700 VRN to fund the LP Reward program for 90 days.

    • Since many SLP holders will not be at the max level, we expect there to be VRN left over after the 90 days. Any unused VRN will be rolled into the next 90 day epoch to support continued LP rewards.

    • NOTE: The above values are based on approximate conversion from blocks to days. Actual values should be 90 days * ~6500 blocks/day = 585,000 blocks. Therefore, 10/day = 0.00154/block and 30/day = 0.00462/block.


  • 4. SLP Voting:

    • An additional benefit to allowing users to keep their SLP tokens in their own wallets is that VRN-ETH SLP holders will now be eligible to vote and participate in Varen Governance. This will no longer force holders to choose between providing liquidity and participating in the governance of the project.

    • VRN-ETH SLP voting will be weighted so that the SLP voters vote based on the underlying VRN in their LP position to maintain maximum fairness in the voting process.


Voting options

  • For

    • Execute proposal; authorize the implementation of the Varen Vaultless LP Program and earmark 2,700 VRN for this purpose.
  • Against

    • Do not execute the proposal. No actions will be taken.
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