Please provide your thoughts on two specific questions:
- How should the premium calculation be performed?
- BONUS: Should liquidity earning tokens (LP tokens) created by Blockzero Labs earn an additional premium?
1. Premium Calculation
How should the premium calculation be performed?
- Static Rate - All accepted/whitelisted pairs will earn a base rate of 10%. “Lower risk” LP tokens can be voted on by the community and these could be offered higher premium rates - for example if the community believes we want more WETH/USDT liquidity tokens, we can set the premium for this anywhere between 10% and 25%
- Shared Basket - Set aside a constant number of AQUA tokens per day/month and distribute these based on the % of fees generated by the staked LP tokens - for example, there are 100,000 AQUA tokens available for the day. There are two stakers, one of which has earned 70% of the total fees and the other who has earned the remainder 30%. The first staker will receive 70,000 tokens into their running total and the second will receive 30,000. This will continue every day until the stakers decide to withdraw at which point the running total of AQUA tokens would be paid.
- Dynamic Rate - Have something similar to the FPY within the Flash protocol where the rewards/premium is calculated based on the usage of the protocol. As the protocol is used more, the premiums lower, and as the protocol is used less, the premiums increase - for example when the AquaFi protocol is not being used, the premium is set to 25% and when it is being used extensively, the premium is set to 10%. This might be quite challenging since we need to think of what type of metrics we can use on-chain to suggest when the protocol is being utilized. Some ideas here are maybe keeping track of all the AQUA paid over the last X days and when the average is lower than this, the premium increases? (probably a bad example but hopefully it illustrates the point)
- Hybrid - Require the staker to stake some amount of AQUA in order to unlock higher tiers of premium/APY - for example, the staker could stake their LP tokens for a given amount of time and receive the base rate of 10% upon withdrawal. However, if the staker wanted to “unlock” higher levels of premium (say up to 25% for example) they would have to lock some amount of AQUA tokens. We could have some sort of sliding scale and be percentage-based to encourage the holding of AQUA tokens - the larger holders earning bigger % returns would be incentivized to continue purchasing AQUA tokens - example:
- 0.01% = 25%…
- 0.001% = 20%…
- 0.0001%+ = 15%…
- 0.00001% = 10%
- else 5%
- something else…
2. Incentivise Blockzerolabs Projects (BONUS Question)
Should liquidity earning tokens (LP tokens) created by Blockzero Labs earn an additional premium? (e.g., LP tokens from the Flash protocol earn an additional x%). How much additional premium would you suggest?
Removed the question regarding unstake early since the protocol will allow users to withdraw at any time and the premium will be calculated upon withdrawal.