fBEETS x Reliquary

The voting options for the below are: Vote Yes for Reliquary implementation. Vote No for Reliquary and continue to evaluate ve Locking and alternative solutions.

Intro

The locking of fBEETS has been a long-awaited event. DeFi is constantly evolving and we must ensure that the decisions we make as a protocol are not only current but oriented towards placing Beethoven X in the best place for a successful future. After in-depth consideration, analysis, and debate, this proposal puts forward a proposition to utilize the Reliquary model instead of the previously proposed vote escrowed (ve) tokenomics for fBEETS.

Motivation

In April of this year, the community voted in favor of a proposal to introduce a locking mechanism for fBEETS. Due to a cascade of events that affected the wider market and the release of V2, the launch of Locking was postponed.

So much has changed since then and the question now arises: given the current climate does it still make sense for us to go ahead with this initiative?

As a recap, here are the key points relating to locking

Pros:

• Users who lock are incentivized to participate in the democracy of the protocol
• Users can earn a boost in rewards and participate in governance
• Protocols give extra votes for longer time-locks
• Align the protocol and holders incentives, those who lock hope to see the protocol succeed.
• Incentivizes larger holders to lock up as they can gain more control of the protocol.
• Capital is “stuck”

Cons:

• Users who lock are forced to participate in the democracy of the protocol
• Whales and DAOs can max lock a small portion of their tokens and control a majority of a protocol
• Not an effective mechanism to align both protocol and user incentives
• Traders who want to sell won't lock
• Users want to hold liquid assets, locking removes any freedom a user has
• Users who lock first benefit most and can sell on unlocks
• Not an efficient mechanism to reduce price depreciation
• Inefficient use of capital
• ve protocols quickly turn into whales just owning them
• The largest LPs are also the largest token holders
• Impacts your ability to de-leverage
• Capital is “stuck”

As we peel back some of the layers on a system that has had such a profound effect on the industry as a whole, it becomes ever more clear that there are still major drawbacks that make the ve locking mechanism a questionable choice for future implementation.

Introducing the Reliquary

The reliquary is an evolution of the Masterchef contract that also offers an alternative solution to the shortcomings of the current vote escrowed model.

Through the use of financial NFTS, the reliquary offers users the freedom and flexibility to build sustainable positions over time that align users' incentives with the desired outcomes of the protocol in a more ethical manner. An unexplored evolution, the reliquary encourages the diversity of the community by redistributing dominance hierarchies, bringing power back into the hands of the people.

The Reliquary allows users to deposit LP positions within a Relic; unlike ve mechanisms a Relic can be exited at any time. There is no locking. Instead of users needing to lock a position to gain voting power and boosted emissions, the Reliquary incorporates a concept known as maturity.

Rather than “force” users into a locked position, maturation through Reliquary encourages users to align with the protocol whilst keeping the user's “freedom” intact. The Relic persuades users / DAOs to earn additional incentives/governance power by cultivating a position over a given time period. The longer a position is held the more potent it becomes.

How does it work?

Maturity will be broken down into various tiers or tranches with each tier progressively unlocking more rewards. Both emissions and voting power will scale up as users approach a higher level of maturity until the maximum level of maturity is obtained. Users will not obtain maximum emissions nor voting power at the creation of the Relic, they must obtain the different levels with time, trust and patience.

There are two key differences between this and the ve model. The first is that voting power is not dictated by how long you are willing to lock your tokens for, but instead how long you’ve been a participant in a protocol. Secondly, users are not forcibly locked and can exit their positions whenever they choose.

Depositing more to your position will impact the degree of maturity (impact is weighted by the amount invested compared to your entire position). However, unique to the Reliquary, user positions are stored as NFTs rather than attached to addresses. This unlocks a whole range of creative possibilities; users may hold multiple, transferable positions, merge positions together or even engage in trade on secondary marketplaces.

For a more detailed exploration of the intricacies of how the Reliquary works, take a dive deeper into the technical here:

https://medium.com/beethoven-x/reliquary-the-new-chef-in-town-249c3a8dbf1b

What are the advantages?

Let’s keep in mind why we are here, and that is to build a system that is future-oriented, efficient, and constantly evolving with the times. Reliquary is innovative and it could provide our platform with novel opportunities that have yet to be fully explored.

Here are some of the key advantages of its implementation:

• Reliquary shifts the focus of an incentive model from “forced” to encouraged.
• It solves the issue of illiquidity as positions can be exited when desired.
• It fosters a system for protocol alignment that is more reflective of the community we are trying to cultivate
• It brings the power back to people, those who believe in the project’s success will wait for maturity.
• It offers every user the ability to engage and participate in governance.
• It opens up the potential for a secondary marketplace where mature positions can be traded.
• It is innovative and seeks to evolve the current systems we have
• It has scope for future development; if successful all of our emissions could be channeled through this model.
• Potential to unlock a huge amount of inefficient capital currently sitting on farms

Risks

What are the risks of this proposal?

• Reliquary is a new piece of technology that hasn’t been battle-tested, it has several audits, but smart contract risk is always a consideration.
• The earlier users lock, the more power they obtain
• Change requires adoption and education. Convincing users to shift paradigms takes time and effort
• There is no guarantee this new model will be successful, there is always the risk of failure.

Impacts

Impact on the core team

If a proposal is passed, it would mean that Beethoven would no longer implement the current locking initiative. Instead, the development team would look to prepare our infrastructure for the adoption of the Reliquary. The team has already done extensive research into the underlying architecture and they are confident in its adoption. The specifics for its rollout still need to be determined and hinge on the collective decision from the community.

Impact on fBEETS tokenomics

As the Reliquary integrates a new contract, it provides an opportunity for the fBEETS pool to be remade. The composition of the pool can stay the same but there is also the potential for it to be changed depending on community consensus. Following the creation of the pool, it would be a simple migration for users and only require a few clicks to enter and deposit the BPTs into a Relic. The whole process would be seamless, built straight into the Beethoven X UI. The migration allows not only for the evolution of infrastructure but an evolution of fBEETS.

The Reliquary Masterchef will also see fBEETs farm emissions move from a per block to a per-second basis. Having emissions released on a per-second basis is a step forward in future planning as it allows for forecasting without the uncertainty of block speeds.

Impact on governance

The maturity curve dictates a Relics position, and Beethoven X has the freedom and flexibility to choose specific time frames and levels that most effectively encourage participation. Yield and voting power can even operate on separate curves.

The most significant difference here between Reliquary and the ve model is that your governance power naturally develops/ grows are your relic matures. Under the ve model your voting power is at its strongest and then enters a natural decay unless you are actively relocking

Like with ve model, Reliquary unlocks the possibility for an on-chain governance system. Instead of relying on random snapshots to reduce the chance of users gaming the governance system, every user must engage in a period of maturity to gain voting power, limiting the ability for users to buy a position to vote and sell straight after.

Specification

This initial proposal seeks to gain approval to adopt the Reliquary model for fBEETS.

The specifics surrounding fBEETS composition would require separate proposals to be voted on.

The length to full maturity as well as the maturity profile is still to be determined, the goal is to have full maturity achievable within 8-12 weeks.

The Reliquary is a new smart contract and would thus require time for technical implementation by the development team. The specific timeframe needed to integrate this contract and ensure the utmost safety and security has been stipulated in the execution section.

The migration of fBEETS into Reliquary is only a starting point. The implementation of fBEETS and Reliquary could open up a pathway where Beethoven X could integrate all pools with the contract, allowing users to deposit every BPT on the protocol within a Relic. This would require separate community consensus and proposals following a successful implementation of Reliquary and fBEETS.

Execution Plan

With the approval of this proposal, the team would begin the implementation of the Reliquary, transitioning away from the current fBEETS model. As mentioned above, the team will strive to implement a migration path with as little friction as possible, with the goal to have a “zap” migration.

The current timeline for the development process is approx 4 - 8 weeks from the date of the proposal passing. During this time period, we will release an article to outline the precise steps for the migration into Reliquary. In order to allow for a “fair” transition, there will be a period of approximately 1 (or 2) week(s) where fBEETS emissions will be disabled to allow everyone enough time to migrate to the new system. This procedure would be the same if implementing a ve locking model.

During this period of development, the community is welcome to put forward any proposals to change the composition of fBEETS. As this is an underlying change to the tokenomics of fBEETS, this would require community consensus and all proposals must follow the current procedure outlined by the governance framework.

If this proposal fails to pass, the team would then continue to evaluate the ve locking model and alternative solutions that are more aligned with the community, team goals and the overall health of the protocol.

The final decision on the direction we take will be decided by community consensus.

Vote Yes for Reliquary implementation. Vote No for Reliquary and continue to evaluate ve Locking and alternative solutions.