[BIP-143] Save. Earn. Borrow w/BalancerP2P (includes: licensing fees, increased LP activity, new product, more engagement)

TL;DR

• Residual Token, Inc. proposes to build, launch and maintain BalancerP2PTM, a savings, lending and borrowing tool that will integrate into the existing BalancerTM ecosystem.
• Residual Token, Inc. will not charge Balancer development or maintenance fees, and Balancer will not incur any out-of-pocket licensing or whitelisting fees.
• Residual Token, Inc. requests that Balancer - at its own expense - adds hyperlinks to its website that point to BalancerP2P, and advertises BalancerP2P to its users.
• Liquidations, a common function required to keep a P2P platform healthy, are managed by outside bots with no economic benefit to Residual Token nor Balancer.

Summary

Residual Token, Inc. (dba unFederalReserve) proposes to offer Balancer a license to BalancerP2P, a front-end interface to the ReserveLending Core.

The ReserveLending Core (hereafter, the 'Core') is an overcollateralized Pool-to-Peer1 lending protocol that brings together savers, lenders and borrowers from a variety of cryptocurrency ecosystems, platforms and brands. This global connectivity is facilitated by the use of multiple front-ends that each provide access to the Core's single set of liquidity pools.

The Licensor, Residual Token, Inc. (hereafter, ‘Residual’), will build and maintain the BalancerP2P front-end, and will not charge the Licensee, Balancer, development or maintenance fees (development is estimated to cost around $50,000 of Residual’s own capital, and maintenance is approximately $3,000/mos). Balancer will not incur any out-of-pocket licensing or whitelisting fees for hosting BalancerP2P.

Balancer’s treasury will earn 10% of the reserves generated from borrowers connecting through BalancerP2P. In other words, it will earn a portion of the APY that BalancerP2P borrowers pay on loans, and in the case of loan defaults, it will earn a portion of the recovered collateral.

Additionally, revenues from existing Balancer trading tools are projected to increase due to higher trading volume. Residual projects a 30-40% increase in Balancer’s trading volume as users take advantage of interest paying deposit accounts and affordable loans available through BalancerP2P. Detailed projections are available in the Forecast section below.

Note, the extent of work requested to be undertaken by Balancer - at its own expense - will be:

• Adding hyperlinks to the Balancer website that point to BalancerP2P.
• Advertising BalancerP2P to both existing and future Balancer users.

At the user level, BalancerP2P will:

• Empower Metamask, Wallet Connect and Coinbase Wallet users to earn APY - without relinquishing custody of their cryptocurrency to a third-party - via BalancerP2P‘s Supply or Deposit function;
• Allow users to borrow a select set of cryptocurrency types on an overcollateralized basis at reasonable APYs; and
• Provide users the ability to leverage up, short sell certain assets, or increase purchasing power using safe, reliable and easy-to-use features.

Balancer’s users will also have the added bonus of combining the above benefits with the robust trading tools already offered by Balancer, thus spending more time in the Balancer ecosystem, and increasing overall engagement with the Balancer product suite.

The BalancerP2P user interface will be custom designed to fit Balancer's existing brand style. Below are sample images of Residual's own front-end, ReserveLendingTM. The BalancerP2P front-end will share a similar overall layout, along with custom Balancer theming across multiple webpages. (See also: https://app.unfederalreserve.com/markets)

Example I: User View of Current Deposits and Loans Outstanding

Example II: Market Overview

Example III: Liquidations

Example IV: Education Center

Also included with BalancerP2P will be a range of “how-to” videos, along with user access to experts in the DeFi community. These experts will provide knowledge to the Balancer community on strategies to employ depending on Balancer’s users’ wishes and market conditions.

For

Onboard Balancer as a Licensee to BalancerP2P, a front-end of the ReserveLending Core. Residual will build the customized front-end for Balancer at no cost to Balancer. BalancerP2P will provide Balancer users access to the ReserveLending Core in an experience simpatico with the Balancer platform today, and will earn Balancer 10% of reserves generated through BalancerP2P. Balancer - at its own expense - will add hyperlinks to its website that point to BalancerP2P, and will advertise BalancerP2P to its users.

Against

Do not onboard Balancer as a Licensee to BalancerP2P.

Context

In business since 2017, Residual Token, Inc. is a Fintech SaaS company specializing in banking, Web3 and DeFi software development. Licensing software is Residual's primary source of revenue, and a live utility token, eRSDL, is used as part of its Licensing-as-a-Service (LaaS) model, which is explained in detail here: https://unfed.info/LaaS

The ReserveLending Core is a retail DeFi protocol for overcollateralized Pool-to-Peer1 lending and borrowing that is owned by Residual. The Core is based on the Compound® Protocol, which is non-custodial, meaning that Residual does not have control over supplied assets, and users are not exposed to the typical risks inherent in centralized custodial lending. The Core is also permissionless, meaning that any address is free to access the Core's liquidity pools. A review of the Core’s activity can be found here: https://dune.com/ethpanda/unFederalReserve-TVL

Front-ends (interfaces) to the Core allow users to supply assets to earn APY, and optionally use their supplied assets as collateral to borrow on margin. Users across all Core front-ends share access to the same Core liquidity pools. This means that a user accessing the Core from one front-end can supply assets to a liquidity pool; while a user accessing the Core from another front-end can borrow those assets from the same liquidity pool (assuming the borrower has supplied enough collateral to satisfy this key condition to the loan).

Residual hosts a front-end to the Core, branded ReserveLending™. Residual also offers front-end licenses to third parties (Licensees). Front-ends are custom-themed for Licensees, allowing for seamless integration with existing branded ecosystems.

Residual will build and maintain a customized front-end for Licensees, and will not charge Licensees development or maintenance fees. Furthermore, Licensees will not incur any out-of-pocket licensing or whitelisting fees for hosting a front-end.

The extent of work required to be undertaken by a Licensee - at its own expense - will be:

• Adding hyperlinks to its website that point to the front-end.
• Advertising the front-end to both existing and future users.

Allocation of Reserves

The reserves accumulated by the Core are allocated to:

1. Rewards paid to Licensees
2. License fees collected by Residual Token, Inc. (aka unFederalReserve)

Rewards paid to Licensees

The total allocation of Licensee rewards is divided amongst Licensees in amounts reflecting the percentage of the total TVL that is borrowed from the Core through each Licensee's front-end. Residual tracks and reports on these amounts using URL-related analytics and activity mapping. In this case, Residual will track Core activity tied to the BalancerP2P front-end - using its URL - when estimating the licensing fee. Please refer to the Forecast section for detailed reward projections.

License fees collected by Residual Token, Inc. (aka unFederalReserve)

Given that Licensees do not pay any out-of-pocket licensing fees, Residual collects licensing fees from the Core reserves. In line with the Licensing-as-a-Service (LaaS) model, part of the licensing fees will be directed to reimburse Residual for its costs and profit expectations, and part will be used to conduct open market purchases of eRSDL tokens (eRSDL tokens are digital markers representing license state, and are burned as licenses are consumed).

Licensee benefits of hosting a Core front-end:

• Rewards. Licensees are rewarded part of the Core reserves. A Licensee’s rewards reflect the TVL that is borrowed from the Core through its front-end. The greater the amount borrowed, the greater the rewards.
• No out-of-pocket licensing or whitelisting fees.
• Residual will not charge development or maintenance fees.
• Expansion of product offerings to both existing and potential users.
• Removal of the need to build, test, maintain and audit a similar platform in-house.
• The Core has undergone extensive security tests and audits; most notably Trail of Bits successfully completed an audit just a few months ago.
• In-house Core access means that a Licensee’s users no longer have to visit potentially risky third-party lending services.

Disclaimer: this proposal text has been shortened based on the snapshot character limit of 14,400. Read the full specifications on the forums (see Discussions link further below).