vbCLEAR Season 2 & Transition to Buy-Back Mechanism

Abstract

This proposal extends vbCLEAR into Season 2, focusing on maintaining staking participation while transitioning towards a buy-back mechanism.

It eliminates solver incentives, introduces a 12-month maximum staking lock, and utilizing protocol-generated fees for quarterly buy-backs starting in April 2025.

Motivation & Rationale

With the conclusion of vbCLEAR Season 1, staking incentives will be maintained while solver incentives will be replaced by EverScale program. The transition to a buy-back mechanism allows for long-term sustainability by using protocol revenue to support liquidity and redistribute value to stakeholders.

This proposal aligns with Everclear’s guiding principles by ensuring:

• A shift away from heavy emissions towards protocol revenue-based sustainability.
• A clear transition plan to an ongoing buy-back mechanism that strengthens liquidity and DAO treasury holdings.

Review of vbCLEAR Season 1

Key Outcomes:

• Total Staked: 13M vbCLEAR
• Total Rewards Paid:
  • 380,000 CLEAR
• Remaining Rewards:
  • 47.24923 WETH
  • 5,870,000 CLEAR
• Season 1 provided critical learnings, primarily the need to shift towards a more sustainable model.

Key Terms

• vbCLEAR: Staked version of CLEAR.
• Buy-Back Mechanism: Process where protocol revenue is used to repurchase CLEAR from Uniswap.
• Liquidity Provisioning (LPing): Allocation of repurchased tokens to strengthen liquidity pools.
• EverScale: A newly launched initiative replacing solver incentives, reducing the need for emissions-based rewards.

Specifications

1. Extension of vbCLEAR Staking
   • Staking continues using remaining incentives, specifically 25% of WETH that is remaining and all remaining CLEAR.
   • There are no new incentives for solvers as EverScale grants program replaces solver rewards.
   • Stakers can lock funds for up to 12 months.
2. Transition to Buy-Back Mechanism
   • Buy-backs will begin in April 2025, following DAO passing the proposal. First buyback will use 75% of remaining rewards WETH (±38 WETH) to buy CLEAR from Uniswap.
   • Moving forward, protocol revenue ETH will be used to repurchase CLEAR from Uniswap.
   • The cadence of future buybacks will be decided on together with the entire execution process.
   • 100% of repurchased tokens will be allocated to LPing on Uniswap.
3. Buy-Back Execution Details
   • Buy-backs will be conducted at market price first using part of remaining rewards and later using protocol-generated revenue.
   • This will gradually reduce circulating supply while strengthening the token’s liquidity position.
   • Revenue tracking and transparency mechanisms will ensure clear reporting to the DAO.
   • One time buyback in April can be done by Incentives multisig:
     • Signers: Ministro, Stefan, Veil, Khalil (Foundation Representative), James (Labs Representative)
     • Multisig Address: 0xf617C72ae242AFc7cD92BF2F1875fE4Abd9B1A03
     • Threshold: 4/5
     • CLEAR will then be sent to DAO treasury from where Security Council can deploy funds to Arrakis Vault.
   • Pending proposal passing, process for future execution will be defined and it will involve a set of scripts and smart contracts that will be fully automatic. Dynamic or shielded execution approach will be considered as suggested by Veil.

Steps to Implement

1. Social vbCLEAR Season 2 (April – June 2025)
   • Distribute remaining staking rewards.
   • Monitor staking participation and adjust as needed.
2. Implement Buy-Back Mechanism (April 2025 Onward)
   • Deploy ETH for buy-backs.
   • Utilize 100% of repurchased tokens for LPing.
   • Track and surface buy-back details transparently to the DAO.

Timeline

• March 2025: vbCLEAR Season 2 begins and staking continues.
• April 2025: ±38 WETH is used to buy CLEAR from Uniswap and allocated to LPing.
• June 2025: End of vbCLEAR Season 2; first quarterly buy-back with protocol generated ETH.

Overall Cost

• Staking Incentives: Funded using 25% remaining allocated rewards in WETH and 100% remaining CLEAR.
• Buy-Backs:
  • ±38 of remaining WETH will be used to buy CLEAR from Uniswap and then allocate to LPing.
  • The amount of ETH from protocol revenue is TBD.
• Operational Costs: Minimal, as no contract changes are required.