AIP - 107: ANGLE token buyback

This is a vote to:

• redistribute to veANGLE holders the proceeds from the sale of the Protocol's veAERO and veVELO positions
• remove the lock on the veANGLE token so all people with veANGLE can unlock their veANGLE back into ANGLE
• remove the tokens on the old FeeDistributor contract
• enable the conversion of Prots into ANGLE tokens
• remove the Protocol's liquidity positions on Arrakis
• launch a buyback program funded with the treasury of the Protocol with the Protocol seeding a single sided UniV3 position on a USDA-ANGLE pool

Context

veAERO and veVELO token sales

Recently, following a governance vote in November, the Angle DAO has engaged into the sale of its veVELO and veAERO positions as well as of its SAFE airdrop.

The Protocol obtained:

• 10,300 USDA from the sale of 10k SAFE tokens
• 146,016 USDA from the sale of the Protocol veVELO position
• 713,466 USDA from the sale of the Protocol veAERO position

This is the result of investments conducted by the Protocol back in 2022 using the treasury it had accumulated back then.

Like it's been the case on past airdrops or exceptional profits done by the Protocol, out of the course of normal operations, we're proposing here to distribute the proceeds from this sale into veANGLE and sdANGLE based on their weighted average balance between the time of the LayerZero airdrop (where it was proposed that veANGLE and sdANGLE would be eligible to the gist of the distribution back on the 20th of June 2024) to the 31st of January 2025.

This is the method that had been voted by the DAO for the distribution of PYTH tokens to veANGLE holders.

Conversion of Prots into ANGLE

In November, the Protocol launched the Prots program to reward the base contributors of the Protocol. We propose to unlock a budget of 1.5M ANGLE for this program to be converted between Prots holders based on the number of Prots accumulated.

veANGLE unlock

After the Euler hack, the Protocol stopped rewarding automatically veANGLE holders based on the proceeds of the Protocol. Since then, veANGLE holders got eligible to multiple different airdrops (PYTH, ZRO, SAFE).

While the payoff of these different distributions got quite important for veANGLE, many users started complaining with reason about being locked into ANGLE with rules that differed from when they locked into the Protocol. What we're proposing here is to remove the lock on veANGLE, meaning leave anyone with veANGLE with the possibility to withdraw the same amount of ANGLE they had locked.

The veANGLE contract supports this feature and it's just a function to activate. If voted positively, the Angle app will feature a way for people to withdraw ANGLE from their veANGLE.

Doing this would make the veANGLE contract irrelevant and manipulable which means that prior to doing so, all onchain governance contracts using veANGLE as a source of truth should be deprecated. We thus propose to deprecate the onchain governance (remove the roles to the onchain governance contract across all chains) till a new onchain system leveraging the base functionalities of the ANGLE token is deployed.

This also implies changing the Protocol's Snapshot space so ANGLE holders can vote on this space, and making ANGLE token holders the effective decision makers in the Protocol. The protocol governance multisig will remain the admin of the protocol on all chains where it is deployed.

For reference, here is the pull request creating the onchain governance vote to halt the veANGLE system: https://github.com/AngleProtocol/angle-governance/pull/44

Remove funds from FeeDistributor contract

Back in January 2022, the Protocol had implemented a revenue sharing mechanism that was done through a contract called the FeeDistributor contract. This contract stopped distributing rewards in March 2023.

We’re proposing here to recover the unclaimed funds of this contract and convert these back into USDA to be deposited in the protocol treasury.

Remove the Protocol liquidity positions on Arrakis

In August 2023, the Protocol engaged in liquidity position using Arrakis Palm product (cf this proposal: https://snapshot.box/#/s:anglegovernance.eth/proposal/0xc2c585d57217fad2a3ff0806bb30d34ab6b27afafabcff4722cff5c585343033) This position was later adjusted to be redeployed on Polygon. We're proposing here to remove the liquidity associated with these positions, bridge the associated ANGLE tokens back to mainnet and sell the wETH used as a counterparty tokens back into USDA.

Launch a buyback program

With the veANGLE unlock, the sell pressure on the ANGLE may increase. If in the meantime, the liquidity positions are removed, there would be no liquidity for people looking to sell. The Angle Protocol has been heavily profitable since its launch, and accumulated a treasury of approximately $8.5M. We're suggesting here to launch a buyback program using the treasury of the Protocol, by seeding a single sided USDA-ANGLE liquidity pool.

The current ANGLE circulating supply is currently around 490M tokens. With a treasury of $8.5M (as estimated per the analytics), it makes a price per token of $0.01734 per ANGLE token.

To execute this buyback proposal, we first propose to reconcile the treasury numbers of the Protocol once the different steps (veANGLE profit distribution + removing Arrakis liquidity) of this plan have been achieved, to then compute more precisely the implied price for the token.

Implementation wise, we're suggesting that the Protocol buys back any ANGLE token trading below the defined price, seeds a UniV3 single sided liquidity position in a USDA-ANGLE 1% pool with a price equal to the fair ANGLE price (based on actual treasury number and circulating supply). The position could be seeded with 5M of USDA to start with (so that the Protocol doesn't need to allocate all of its treasury in the Uni pool - likely not all ANGLE token holders would seek to swap their assets). If the 5M USDA doesn't suffice and the position gets fully swapped, the Protocol could top-up the liquidity position after having removed the ANGLE token in its positions and moved it to the Governor multisig.

On the other side, the liquidity position could be rebalanced and the swapped ANGLE token can be removed whenever the position created has more than 5m ANGLE in it.

Unfortunately there is no burn functionality on the ANGLE token, rather the withdrawn ANGLE could be sent to a protocol multisig before eventually being sent to a dead address.

Voting Options

1. For, launch program
2. Against, do nothing