Governance Proposal 27: Real Yield GNANA Staking Pools

Introduction & Context

By way of this Governance Proposal 27, ApeSwap core contributors propose to close the loop on the cessation of buyback and burns after the implementation of Governance Proposal 21. Governance Proposal 27 seeks to establish a mechanism to distribute the DEX Fee Revenue (as defined below) collected in the Community Fund (as defined below) that has been accruing since the implementation of Governance Proposal 21.

Over the past several weeks, ApeSwap DAO has been discussing the best path forward to implementing this proposed mechanism on its Commonwealth governance forum. This Governance Proposal 27 adopts some of the suggestions made on the governance platform.

The ApeSwap DAO approved changes to the allocation of DEX Fee Revenue (as defined below) with its passage of Governance Proposal 21 on August 19, 2022. Since that date, 50% of trading fee revenue from the ApeSwap decentralized exchange (the “DEX Fee Revenue”) has been earmarked “to give back to ApeSwap token holders in a mechanic that is voted on by the ApeSwap community” (such earmarked funds will be referred to as the “Community Fund”). The total amount held in the Community Fund accrued from 10/1/2022 to 4/30/2023 is denominated in a variety of tokens and is valued at approximately $179,640 USD as of May 11, 2023. The wallets that hold the Community Fund can be found here at the links below.

Below is a list of each type of chain in which a portion of the Community Fund is held, was held, or may be held in a wallet since the implementation of Governance Proposal 21 as well as the percentage of DEX Fee Revenue originating from that chain that is held in the Community Fund.

• BNB - 50% https://bscscan.com/address/0xb7DC80F7CBa6165D5350254a623eE2432B6f220A
• Polygon - 50% https://polygonscan.com/address/0x62c99d8bf46a2cB50920Ff288cB618A4E820a960
• Telos - 0%*
• Arbitrum - 0%
• Ethereum - 0%

We refer to each of the above as a “Revenue Wallet”.

*Note: ApeSwap DAO is currently not incentivizing Telos DEX trading fees.

Summary

This Governance Proposal 27 proposes that the ApeSwap DAO use the Community Fund for “Real Yield GNANA Staking Pools”.

Generally, “real yield” involves generating and distributing rewards that are directly tied to a protocol’s revenue. In this case, the revenue generated is the DEX Fee Revenue in the Community Fund. For a more in-depth primer, please review this Binance Academy article on real yield.

The Real Yield GNANA Staking Pools shall work as follows:

1. ApeSwap DAO allocates the DEX Fee Revenue in the Community Fund to the Real Yield GNANA Staking Pool(s);
2. GNANA holders stake their GNANA in the Real Yield GNANA Staking Pool(s); and
3. Such users are then rewarded with an output token (depending on the outcome of this Governance Proposal, such “output token” could be any of the tokens listed in this Proposal options below).

As can be seen in the Revenue Wallets listed above, the DEX Fee Revenue in the Community Fund has been settled into BANANA, native assets (such as BNB and MATIC), and stable coins.

Since GNANA is not cross-chain, these Real Yield GNANA Staking Pools will be available on BNB Chain. The Community Fund that is on other chains will need to be bridged to BNB Chain for use in GNANA real yield Staking Pools.

A number of different approaches have emerged following the discussion on Commonwealth regarding how to structure the rewards for these Real Yield GNANA Staking Pools. This Governance Proposal 27 allows voters, through ranked choice voting, to vote for their preferred rewards, or reject the creation of any Real Yield GNANA Staking Pools and leave the Community Fund unchanged for now.

If the community votes to set up Real Yield GNANA Staking Pools based on one of the rewards structures below, the rewards will be distributed over a six-month period upon the creation of one or more Real Yield GNANA Staking Pools. Subsequent DEX Fee Revenue that accumulates in the Community Fund from May 1, 2023, to August 31, 2023, will be used or distributed in a manner voted on in the future pursuant to a separate Governance Proposal.

Motivation

ApeSwap DAO cannot withhold 50% of the DEX Fee Revenue in the Community Fund indefinitely and the intent of Governance Proposal 21 was always to establish a mechanism to align the incentives DAO with the users of the ApeSwap DEX. ApeSwap’s core contributors have analyzed a number of available real yield mechanisms and propose Real Yield GNANA Staking Pools as an immediate, easy-to-use solution that will get rewards out of the Community Fund and make them available to the most committed ApeSwap users: those that stake GNANA.

Core contributors have suggested GNANA pools for three main reasons. First, GNANA, by design, rewards long term supporters of the DAO and BANANA token holders. Second, GNANA provides the greatest tokenomic value for the ApeSwap ecosystem via BANANA burns and reflect fees. Finally, the community has been widely vocal about increasing the utility of GNANA.

While it's impossible to know for sure, as the blockchain is anonymous, estimates suggest that the 30+ core contributors to ApeSwap own less than 10% of the circulating supply of 17.3M GNANA tokens.

Lastly, while xGNANA is still a key part of ApeSwap’s 2023 annual objectives, Community Fund needs to be dispersed to holders in the meantime.

Ranked Choice Voting Options

Each voter may rank the different options listed below in any order. If an option receives a majority (50% plus 1) of first choice (also known as “first preference”) votes, then that option is the winner. If no option receives a majority of first choice votes, then the option with the fewest first choice votes is eliminated. All of the second choice (also known as “second preference”) votes from voters whose first choice was eliminated are then redistributed to the remaining options. This process continues over multiple rounds until a option has the required majority.

Some options will appear as if they had not received any votes because they were eliminated in the ranked choice voting process (see this page of the Snapshot documentation for more information).

Option 1: All BNB: If this option is approved, then all of the DEX Fee Revenue accrued in the Community Fund since the passage of Governance Proposal 21 will be converted to BNB, and there will be one Real Yield GNANA Staking Pool created that rewards those who stake GNANA with BNB.

Option 2: All USDT: If this option is approved, then all of the DEX Fee Revenue accrued in the Community Fund since the passage of Governance Proposal 21 will be converted to USDT, and there will be one Real Yield GNANA Staking Pool created that rewards those who stake GNANA with USDT.

Option 3: All BTC: If this option is approved, then all of the DEX Fee Revenue accrued in the Community Fund since the passage of Governance Proposal 21 will be converted to BTC, and there will be one Real Yield GNANA Staking Pool created that rewards those who stake GNANA with BTC.

Option 4: Half USDT / Half BNB: If this option is approved, then half of the DEX Fee Revenue accrued in the Community Fund since the passage of Governance Proposal 21 will be converted to USDT, and half will be converted to BNB. There will be two Real Yield GNANA Staking Pools created: one that rewards those who stake GNANA with USDT, and one that rewards those who stake GNANA with BNB.

Option 5: Half USDT / Half BTC: If this option is approved, then half of the DEX Fee Revenue accrued in the Community Fund since the passage of Governance Proposal 21 will be converted to USDT, and half will be converted to BTC. There will be two Real Yield GNANA Staking Pools created: one that rewards those who stake GNANA with USDT, and one that rewards those who stake GNANA with BTC.

Option 6: Chain-Based Rewards (BNB / MATIC / BANANA): If this option is approved, then all of the DEX Fee Revenue accrued in the Community Fund since the passage of Governance Proposal 21 will be settled to the native token of the chain the trades were performed on: BNB for BNB Chain, and MATIC for Polygon. All other DEX trading fees (i.e., those from Telos, Ethereum, and Arbitrum trades) will be converted to BANANA. There will be three Real Yield GNANA Staking Pools created: one that rewards those who stake GNANA with BNB, one that rewards those who stake GNANA with MATIC, and one that rewards those who stake GNANA with BANANA.

Option 7: Exact Rewards (from trading pairs above $10k USD), Buy Back and Reward BANANA (below $10k USD): If this option is approved, then all of the DEX Fee Revenue accrued in the Community Fund since the passage of Governance Proposal 21 will be settled to the exact pair that the trades were performed on (if those trading fees exceed a total of $10k USD), and the rest will be used to buy back BANANA for use as rewards. For example, trading fees paid on all BANANA for BNB swaps are paid in BANANA. These fees would be converted to BNB and used as the reward for a Real Yield GNANA Staking Pool. There will be as many Real Yield GNANA Staking Pools created as needed: a group of pools that reward those who stake GNANA with the exact reward token from each trading pair, and one pool that rewards those who stake GNANA with BANANA.

Option 8: Buy Back and Reward BANANA: If this option is approved, then all of the DEX Fee Revenue accrued in the Community Fund since the passage of Governance Proposal 21 will be used to buy back BANANA for use as rewards in a single new Real Yield GNANA Staking Pool.

Option 9: Do Not Create Any Real Yield GNANA Staking Pools: If this option is approved, then no Real Yield GNANA Staking Pools will be created and the Community Fund will remain unchanged until and unless a future governance proposal is approved to make changes.

Next Steps

The final result of the ranked choices will appear on Snapshot (the voting platform to be used). Following the approval of one of the options above, ApeSwap will create the applicable Real Yield GNANA Staking Pool(s). If Option 9 is approved, then no Real Yield GNANA Staking Pools will be created and the Community Fund will remain unchanged until and unless a future governance proposal is approved to make changes.

Disclaimer

ApeSwap products and services are no longer available to “U.S. Persons”. ApeSwap DAO has advised users that are U.S. Persons to divest their tokens on ApeSwap and to cease using or accessing the products and services of DAO. As a result, no U.S. Person may vote on this Governance Proposal 27. A “U.S. Person” is a person (as defined in the U.S. Code of Regulations at 22 C.F.R. § 120.14 (2023)) who is a lawful permanent resident as defined by 8 U.S.C. § 1101(a)(20) (2023), or who is a protected individual as defined by 8 U.S.C. § 1324b(a)(3) (2023). It also means any corporation, business association, partnership, society, trust, or any other entity, organization or group that is incorporated to do business in the United States. It also includes any governmental (federal, state or local) entity. It does not include any foreign person as defined in 22 C.F.R. § 120.16 (2023).