0xTedious November 22, 2022, 11:22pm #1
Suggestion: Do not offer personal loans nor individual stake of DAO-controlled treasury for the Delta token.
Main area of impact: Other.
Background and crude introductionary reflection:
This suggestion will also have background information and digressions, as I don’t know how much information the participants on this forum have, as there has been confusion in the telegram groups. So to be sure we communicate on the same terms, I like to present the viewpoint I have in terms of data.
Currently, there are 80,068 rLP’s in circulation, and the total supply of Delta token is 45,000,000.
When we look at gross farming numbers for the DFV, this was publicly known information when LSW was held (I think),
DFV GrossTotalFarmingPower868×203 44.9 KB
When StableYield was introduced, this changed the structure, or gross earning distribution, to:
DFV GrossTotalFarmingPower-SY852×226 53.6 KB
This brings the lowest possible % of DFV yield for the LSW investors(not totally true, will come back to this), those who invested capital in the Delta project, to 34,44%. This is the absolute lowest number, and it will, in reality, most likely be a lot higher, as we do not know how the development fund gets utilized, we do not know how the 18,247,500 Deltas in DFV will be used either, if those are out of yield-capturing circulation or what they will be. I am also unsure if the 5,000,000 Deltas in StableYield is coming out of those 18,247,500. I will research that further as it is months between when I first did this reasearch and now that I am writing these proposals.
The above calculations are done with all the Deltas at a multiplier of 1x. If the multiplier is at 10x, the percentage of the distribution that goes to Delta will be way higher, and the distribution that goes to rLP will be way lower.
There are several factors that are unknown to us outsiders that could severely influence the %; among these are:
How the 10,350,000 Delta tokens in Delta Team Fund wallet get utilized, if this gets distributed to future developers as part of payment, or if some of it is strategically used in DFV with a 10x multiplier, or in ways I havent imagined it being put to use?
Note, I am not reflecting around this in a negative way at all, as if CoreVerse becomes as successful as we all think it can be and hopes it becomes, then it will require excellent developers and a lot of them to grow and sustain to be the Ruler of DeFi. Then they need a slush fund to be able to attract and retain the best of the best. I just wish for a better understanding of it, as 10,350,000 Delta tokens staked in DFV even at 1x equals 51,750 rLP’s staked, which has an enormous capacity to capture yield generated in DFV.
I am not saying that this is black-and-white a bad thing. If we are a top 10 ecosystem, then nobody of us that has been with from the start will have a worry in the world, and then massive amounts of $ are needed. To show an example assface Hayden raised a series B funding at $165M for his Pretend-DEX-actualsemiCEX. There is no doubt that if CoreVerse gets to the point it has the capacity for, it will also have massive expenses down the road, and the developers need to plan for this ahead of its greatness.
If, for example, the developers need to have personal loans also on Delta to be able to get out liquid DAI in times using their team Delta as collateral, then that is a good argument for that.
How the strategic partnerships and growth 7,650,000 Delta tokens get utilized, as these equals 38,250 rLP’s yield capturing ability at 1x.
How the R&D fund’s 4,500,000 Delta tokens get utilized, as these equals the yield capturing ability of 22,500 rLP’s at 1x.
Since reward Delta has one year vesting time, the amount of Delta in withdrawal contracts at all times will also impact the actual % distribution.
Another factor that severely affects how much of the Delta tokens gets utilized for yield-capturing in DFV is how the use case for using Delta in writing the options and how long it gets locked up there. This could massively change how much Delta gets chosen to capture yield in the DFV.
As if I understand it correctly, Delta’s main utility is to be used on the options platform to write options, but if and when the platform becomes immensely successful, it will also be very profitable to stake Delta in DFV for rewards from the platform, and where there is money to be made, smart money comes.
I think we can then argue that the Delta token’s secondary utility is as a yield-capturing token in the DFV.
Whichever of the two use cases above is the most profitable will probably get the most usage. And there is an immensely difference in monetary results for the rLP owners on which of these use cases gets the most mileage.
Of course, there is also another use case if the price grows rapidly in periods, and that is buying and selling on the open market for a profit.
On the note of the last use case above, whenever there are forfeits in Delta, 16% of the forfeits are noted to become burned(1), I initially was under the impression that this meant that the circulating supply of Delta would be diminishing over time, and while that is partly true, it is just true in terms of tradeable Delta, as what happens when 16% of the forfeited Delta gets burned, it gets removed from circulating supply, but you as the «burner» receive, let’s call it a voucher, that you can redeem for that 16% «burned» Delta, but as permanently locked Delta, forever locked but still earning yield for you in the DFV. This means, from the rLP holders’ perspective that yield-capturing wise Delta always has a preferential size.
Deep Farming Vault
Luckily, those 16% burned Delta tokens are available to the «burners» as a form of vouchers, meaning it has to be redeemed before it starts capturing yield in the DFV. Otherwise we as an ecosystem could end up «loosing» out on a lot of value captured in accounts that will never ever be redeemed. Now I believe in many cases the 16% burned in practice will be both out of tradeable circulation and also out of yield-capturing circulation.
With 16% of Delta forfeits being permanently locked and taken out of tradeable circulation, they will never ever be used as collateral for personal loans, and they will never, as I understand the structure today, get the value created by the DAO-controlled treasury, as it is reduced to a yield capturing token only.
With all of the data above, the uncertainty of how much Delta will actually be utilized in the different scenarios, I feel it is uneccessary to offer personal loans on the Delta tokens, and also the part of treasury for Delta. I feel that should be reserved for rLP tokens not to diminish the possible outcome for rLP holders.