[DIP-1] ibDFD / ibDUSD vaults protocol fee split

Author @shutterbugsid, @atvanguard

Summary Proposing fee sharing to redistribute the protocol income to the ibDFD (Interest-Bearing DFD) or DFD buyback vault.

Abstract The vault bakes in a DFD buyback mechanism into the protocol that is intended to accrue value for the DefiDollar stakeholders.

Currently the protocol income is directed to provide interest for the ibDUSD - The savings product, where DUSD holders stake their DUSD to earn a claim on the protocol’s income.

We propose to split the protocol income currently channeled to ibDUSD to establish a source of funding for the ibDFD vault.

The vote will be for the following breakup of protocol interest:

1. ibDUSD - 50% & ibDFD - 50%
2. ibDUSD - 70% & ibDFD - 30%

Currently the distribution stands at ibDUSD -100% and ibDFD - 0%

Relevance

We are building a suite of products centred around the DefiDollar of which ibDUSD and ibDFD are the initial ones. The protocol income stream needs to be distributed accordingly in order to have positive network effects that lead to organic and sustainable long term growth of the protocol.

Below we highlight the pros and cons and also some concerns voiced by the community during our preliminary discussion on Discord.

Pros:

1. Value accrues to DFD holders which is essential to strengthen the ecosystem as their incentivization is critical for the stability module and protocol governance.
2. Given there is enough price appreciation created by the DFD buybacks there can be a surge in DUSD supply as more people would want to participate in yield farms using DUSD pools to farm DFD. This would lead to positive network effects.

Cons:

1. ibDUSD has 4.2mn DUSD locked in at the time of writing. Depending on the vote the interest rate that these users receive will be impacted.
2. The savings product will become less incentivized in the short term till network effects of the buyback are realized.

Note: Your DFD ballet across all farming pools will be picked up automatically! i.e. you will not need to unstake DFD to vote in case you are yield farming in any of the active pools.