Based on discussions and feedback from IFT utility topic, I am sharing a proposal for IFT short term reward program which not only should be easy to implement but also potentially scalable for a long term yield share solution.
- The main idea is to take advantage of the innovative, unique and safe IFT design where each IFT owner already has their own vault to store INT and only they can access it. So we don’t have to store everybody’s IFT in another vault created for the purpose of staking. Storing everyone’s IFT in staking vaults could put the whole protocol at additional high risk where an exploit could drain the LP.
- As each IFT also has mint and burn functionality, it also gives the opportunity to evaluate the loyality aspect based on last mint date and reward proportionally.
- Lastly like rest of our protocol design where we emphasize passive holding concept of tickets and airdropping prizes to user and very minimal centralization. I thought it is a good way for us to expand on that principle of passively hodling your IFT and receive rewards directly into your vault or wallet without needing to do anything. It would go very well with especially the Lottery IFT winners who may not be savvy enough to understand concepts of staking/locking etc. Airdrops are fun and simple!
For the above reasons we are going with rewarding through Airdrop method where INT emissions will be directly added to each eligible IFT vault, creating a compounding effect on returns. So each IFT over time would have more than 100K INT backing them. Any one redeeming their IFT to access rewards would lose the benefits of time based and collection based boosts and would have to start all over again if they want to earn with a new IFT.
The proposal offers two airdrops once the program goes live
- One-time back-fill Airdrop
- Weekly Rewards as Airdrop
PROPOSAL OVERVIEW
Duration: 24 weeks since launch
Budget: 9.72 million INT
Weekly emission cap: 500K INT
Target timeline: Early June
Implementation Budget: TBD (Based on the quote from Dev and QA)
Emission Schedule
The above is the proposed emission schedule where we ramp the INT emissions up to the max cap of 500K per week and after which we keep it constant all the way to 24 weeks. DAO can decide any time with vote to either increase or decrease this based on INT price and other factors.
Weekly airdrop will use the budget allocated for the week. Say this program is launched just after Week 10. So week 10 rewards(500K) will be used for the first weekly rewards and Week 1 to 9 rewards will be used as one-time airdrop. So the longer it takes for Reward program to launch the bigger the one time airdrop.
Week 1 is the week when we launched. The first Lucky IFTs minted would fall into Week 2. Only IFTs still active at the time reward program goes live will be eligible for airdrops. So basically everyone is already earning the yield on their IFT by simply holding their IFT, it will just be airdropped once we have the new contracts implemented.
ONE-TIME AIRDROP
One time back-fill Airdrop criterion is very simple.
- Each week has an emission bucket. That reward is shared by the folks who minted/won the IFT in that specifc week and still holding their IFT at the time of airdop.
- So for example if reward program goes live after week 10. Then a custom IFT minted on the day of launch who is still holding would get the highest airdrop with shares of emissions from Week 1 to week 9.
- Similarly a lucky IFT won on Week 5 will get shares of week 5 to week 9 emissions.
WEEKLY REWARDS/AIRDROP
Before I jump into this want to share that this mechanism may look a bit complex and long to describe but be patient and read it few times, it is not that hard to implement. I have tried various models and played with numbers and this is what I could come up with where advantages are baked in for various criterion based on loyalty and collections but at the same time their effect is capped on other criterion. This way we are not going too far rewarding one aspect of the protocol which is important now but could be a problem later.
For this reason weekly rewards have been split into buckets with fixed configurable ratio.
Base reward:
- 40% of Weekly Rewards would be shared among all IFT irrespective of what they are and how long they have been. This is good so we have dedicated rewards supporting base APR and not diluted by other boosts.
- Base Reward is simply based on how much proportional INT you have in your IFT. It is simple and straight forward.
- This reward supports compounding effect because rewards from last week are now in your vault which provides the compounding effect.
Time Boost:
- 35% of Weekly rewards are dedicated for time boost.
- Time boost is based on last mint date of the Active IFTs. It is a simple time-weighted average based on the days since your mint.
- The older your IFT is the larger the reward compared to others. For example somebody who minted/won an IFT 2 months ago will have twice their time boost reward compared to someone who minted 1 month ago.
- It is also linear that means the relative advantage over each other goes down as both IFT hodl for long time. Say in the above example both IFT hold for another year then the advantage of first IFT over second IFT is not as large as 2x it is only 1.07x
- All IFTs in terms of their INT is considered equal here, it doesnt matter whether you have 100K INT or 200K INT in your IFT. The boost is simply based on loyality and time you hodl your IFT.
- If you redeem your IFT you reset your time boost and lose the advantage and start with zero if you ever get another IFT.
Collection Boost:
- 20% of weekly rewards are dedicated for Collection Boost.
- Collection boost is only shared among DAO approved Collections Series.
- This way DAO can do promotional campaigns and have not only some art associated to it but also they get an exclusive bucket of rewards they share among collections.
- Collections also have this advantage where if say folks burn their IFT within the collection, rest of the folks in that collection get to enjoy a larger share of the rewards. For example: Lucky hands have a collection size of 2000. Say only 500 hundred are minted but 300 are burned away then the remaining 200 will get to share rewards of 2000 IFT.
- Right now Lucky Hands is the only official DAO sanctioned collection. Lucky IFT get the biggest advantage from this bucket as it takes a long time to get them to 2K supply and until then the folks who have won early and hold on to their IFT get to enjoy rewards from this bucket from the entire 2000 share.
- There is a suggestion to approve another DAO collection called Diamond hands from 2000 to 2199 to take advantage of this extra set of rewards and incentivize folks to lock their INT into IFT.
Contributor Boost:
- Lastly but an important category of boost is to have 5% of rewards dedicated for special IFT collection series called Contributor IFTs.
- As we are a DAO with no team, and no team allocation, we deseparately need a way to create a vibrant contributor friendly ecosystem to attract folks within the DAO and larger web3 space to actively paricipate, contribute and improve our protocol.
- This is one of the main reasons DAO has 50% INT in its treasury. We can obviously just see contributors as contractors and pay them in INT and IFT for the work they do, so they can move on from this to another project etc but I thought it would be better to also clue in contributors into the success of the protocol and their eventual growth and rev share of the project.
- Contributor IFTs are minted by DAO in few sets at a time where any payment we are giving to contributors with INT the contributors have a choice to receive them as IFT instead of free INT. If a contributor choses to hold their INT as IFT and not sell them they get to enjoy the sucess of their contributions to our ecosystem with boosted yield.
- This way contributors are not simply short term focussed but we have repeat contributors even after they finished their work they come back to either further contribute or have a stake in making sure their contributions have a long term success. This way we tie to the most important people into our ecosystem with the success of the protocol and we attract more and more talent into DAO and an attractive ecosystem.
- As the reward bucket is dedicated at 5% this also means the earlier you are as a contributor to this ecosystem the larger your share will be if there are only few contributors in the system. Another selling point to attract more talent at this critical juncture of our protocol. Of course as we grow and as we have more contributions the boosted rewards will be diluted but that is okay if we continue to grow the pie will also be larger.
- Some examples of contributions: Dev work, QA work, DAO coordination, Marketing, Affliates bringing volumes to Lottery and hitting targets on referrals can receive payment in contributor IFT etc. Many ways to attract all kinds of talent into DAO.
This is how we will do weekly airdrops. Note this model is scalable tomorrow we can also distribute Real yield ETH also in the same formula, Real yield(ETH) instead of being added to the vault can be directly airdropped to the wallet holding IFT. As more ETH is in treasury, we can reduce the amount of INT emissions and substitute with ETH.
MODELING
To understand this mechanism and its relative advantages for various different type of IFT I have created some sample model with some real data and projected data based on assumptions and config parameters.
Assumptions:
- Reward distribution is done after Week 10 since launch
- Config is as described above for Reward split and Emissions
- All IFT only have 100K INT in them
- 324 Lucky IFT out of 700 are burned
- 100 out of 200 Diamond Hand IFT are minted
- 50 Contributor IFT are minted but only 30 have been distributed/active to contributors as payments.
Analysis:
- Lucky Hand #0 first IFT winner would have 40% APR as weekly rewards and 7K INT airdropped on Week 10
- Lucky Hand in Week 5 which is still active will have 37% APR and 4.6K INT airdrop
- Diamond Hand #2007 minted on day 1 of launch and still holding will have 34% APR and 11K INT as airdrop for being the longest hodler
- Contributor IFT minted in Week 7 would have 67% APR and 2.8K INT airdrop. Note their APR is high because only 30 IFT are assumed to be in circulation. As we have more and more contributons their relative advantage and APR would go down compared to others but still they would always have a slightly higher APR because of additional 5% boost bucket exclusive to them.
- Generic IFT minted just now in Week 10 would without any boosts will be around 20% APR.
Note: This is just a model based on assumptions, the actual APR could vary drastically based on when the reward distribution starts and how many IFT are minted, burned, active etc and their distribution.
I am also attaching my google sheet, so you can copy it and play with it yourselves to get some numbers. So theoritically we project this to week 15 and max weekly emission is still 500K then obviously APR will go down across the board as more IFT will be in circulation because of more lucky IFT and folks minting custom IFT to take advantage of rewards. Here is the spreadsheet with calculations and config, make a copy and play with it if you like.
IFT Rewards and Airdrop - Google Sheets
Let me know if you have any questions in this regard. As I said it looks complex on first read but implementation of this should not be very difficult as we are not doing any staking, just simple calculations based on config and airdrop weekly rewards. I was able to do it on excel easily with data dump.
Want to acknowledge few people who actively contributed to this specific idea: AFA567, Saulius and Sal.
Also thanks to everyone who actively participated in governance brainstorming thread.
Lets go INT!