BIP 62: Creation and operation of Equalizer gauge and incentives.

Summary:

Use a portion of DAO Treasury FTM and BEETS to create an LP position on Equalizer DEX and bootstrap the liquidity incentives.

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Motivations:

Visibility and marketing for sFTMx. Partnership and Fantom ecosystem cooperation. Deepening liquidity for BEETS and sFTMx. Possibility to grow DAO treasury although this is ancillary.

BeethovenX has taken over the management of sFTMx and in the short time since then, we have seen rather impressive adoption and growth of the sFTMx Liquid Staking Token (LST). As the owners and managers of the LST protocol, the BeethovenX DAO will constantly strive to drive awareness, use, and adoption of the sFTMx token. This is not only for the sake of business, but also to support and bolster the network by growing on-chain TVL and helping to secure the network with more FTM tokens staked onto more validators. Through the hard work and dedication of the Equalizer team, their protocol has become widely used by their own following of a unique user base. We aim to tap into that unique user base and gain further visibility for the sFTMx token. We also are constantly in the pursuit of garnering cooperation and strength in unity on the FTM network. With this proposal the DAO will take yet another step closer in accomplishing all of these goals.

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Proposal:

This proposal would grant Music Directors the ability to move treasury assets to Equalizer and create a BEETS/sFTMx classic xy=k traditional liquidity pool and gauge. It would also enable them to use treasury assets to bootstrap the first epoch’s incentives.

With this proposal the MDs will be granted an allowance ceiling cap of moving up to $100,000 USD value of treasury BEETS and FTM or sFTMx per month, never exceeding $500,000 in aggregate. The purpose of this stated ceiling is to not take away from the already allotted treasury management amounts granted in the original framework meaning these ceilings for this specific purpose are in addition to the general management amounts already allotted to the MDs. These ceilings are simply limits and do not in any way mean this much monthly discretionary value will be utilized. The MDs will use their discretion in determining the most prudent and efficient use of these treasury assets for this purpose.

The proposal also includes a first action of acquiring the sFTMx. This will be done by either minting or market buying, or a combination of the two, whichever is the most efficient. MDs will decide incentive values with the aim of maintaining an emissions APR that is deemed suitable, while also aiming for the POL to be self-sustainable by using farmed tokens as voting incentives. Excess farmed equal will be stored until a monthly evaluation takes place. At this point the MDs will decide whether to use this excess to bootstrap incentives for a larger TVL injection, compound into the position, lock the tokens to begin “incentive recycling”, or any other purpose they see fit.

The initial deposit amount would not count towards the existing $200,000 monthly discretionary treasury asset reallocation limit, nor would use of the EQUAL emissions for voting incentives count towards the $10,000 monthly incentives limit nor the $20,000 monthly non-protocol fee revenue generation limit. Swapping, compounding, locking or any other action taken with the farmed equal tokens will be similarly excluded. Similarly, any withdrawals of the POL will not be counted against the above cited framework limits. Any further deposits to Equalizer which are outside of this scope would be subject to the monthly limit unless otherwise approved by governance.

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Impacts/Risk Assessment:

A BEETS/sFTMx pool on Equalizer would provide an additional avenue for DeFi participants to encounter and engage with both tokens.

The resulting BEETS/sFTMx protocol owned liquidity, and any additional liquidity that enters the pool would deepen liquidity for both tokens. The net effect of this would depend on the value relative to other pools with these tokens. For sFTMx, the pool would likely have minimal impact compared to existing sFTMx pools on Fantom. For BEETS, the pool would likely have greater relative impact although this would still be small compared to existing BEETS pools on Fantom.

By providing liquidity, DAO assets would be exposed to risk of impermanent loss which could be irreversible. Although the POL would receive EQUAL emissions, it is possible that the value of these does not offset the value lost.

Moving Treasury assets as proposed introduces an added layer of smart contract risk specific to Equalizer protocol.

In accordance with BIP-57, being a new partner, this proposal falls under risk level 3 and in line with tenet 5 to the extent that greater awareness, exposure, and marketing of sFTMx will benefit the DAO as a whole. Any direct realized gains are viewed as ancillary and are not the sole purpose and intent of this proposal.

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Specification/Execution Plan:

If this proposal passes, MDs would have the ability to deposit DAO Treasury funds within ‘Classic Constant Product AMM’ and ‘Classic Stableswap’ pools on Equalizer DEx.

FTM would be converted to sFTMx which would then be paired with the equivalent value of BEETS to deposit on Equalizer.

MDs would have discretion to place gauge vote incentives for the pool, and the emissions earnt by the DAO’s position would be used for voting incentives, asset accumulation, position compounding, or locking and recycling at the discretion of MDs.