[Temperature Check] - $IDLE Gauges for Tranches

Summary

This Temperature Check introduces the Gauge Voting and Farming Boost modules, adding new Governance features to $IDLE on the Ethereum network.

This proposal routes 30% of the $IDLE currently allocated to the LM fund into the Gauge Voting for 6 months (178,200 $IDLE). The goal is to incentivize liquidity provision on the Senior class of the Perpetual Yield Tranches while aligning LPs and $IDLE token holders.

The approval of the proposal will empower Development League to build the smart contract infrastructure and transfer 178,200 $IDLE from the IdleController to the IdleGaugesFund contract.

With the launch of Gauges, Idle protocol will distribute $IDLE to Best Yield (BY) pools via IdleController and to Perpetual Yield Tranches (PYT) via Gauge Voting. The overall $IDLE emission rate will not change (3,300 $IDLE/day).

Motivation

Idle DAO has already implemented stkIDLE minting (locking system) and the fee-sharing mechanism.

This proposal aims to set up two additional features: Gauge Voting and Farming Boost.

By integrating the Gauge Voting and Farming Boost modules, token holders that lock their $IDLE (minting stkIDLE) will be able to vote on PYT $IDLE allocation and also boost their individual rewards.

In the beginning, only the Senior class of PYT will be eligible to receive Gauges incentives. That class receives a smaller share of the underlying yield due to the coverage protection they receive, and $IDLE farming would stimulate further liquidity deployment in this class of tranches.

Benefits

• Less $IDLE circulating supply due to more locked tokens
• Development of $IDLE booster vaults by other protocols
• New $IDLE-based products
• Protocols accumulating accrued $IDLE
• Alignment between LPs and $IDLE token holders
• DAO2DAO collaborations, with protocols fostering token holders to vote for their PYT

Tokenomics Specifications The Idle protocol currently distributes about 3,300 $IDLE per day, 1.2m $IDLE per year. Idle Best-Yield on Ethereum represents the main Idle product today, and it’s the place where most of the TVL is located; thus, it’s crucial to not drastically influence returns for current LPs.

This proposal routes 30% of the $IDLE allocated to the liquidity mining program into Gauges for 6 months, resulting in 990 $IDLE/day distributed over a semester (178,200 $IDLE in total).

The Best-Yield reward reduction represents a minor component of the yield generated via Idle protocol, while that amount would empower Idle to sustain Gauges funding.

Technical Specifications The system would consist of the following smart contracts, as in Curve Finance:

• LiquidityGauge: measuring liquidity provided by users over time.
• GaugeController: maintaining a list of gauges and respective weights.
• IdleDistributor: forked from Curve’s Minter, it will be slightly modified.
• IdleGaugesFund: holding and releasing $IDLE tokens on IdleDistributor request. This component will also maintain parameters for $IDLE distribution to Gauges.

The main difference between the Idle Gauge system and the Curve Gauge System is in the IdleGaugesFund that replaces the CRV token (that encodes the release schedule).

A scheme of the potential Idle Gauge system is reported below.

A detailed description of motivation, specifications, and final considerations is available in the forum post.

Voting Options

Please cast your vote on one of the following options: FOR: Approve $IDLE Gauges for Tranches AGAINST: Vote against $IDLE Gauges for Tranches DISCUSS MORE: Discuss more the proposal

This poll is available for both $IDLE token holders and stkIDLE holders. The final $IDLE voting weights will be calculated using the approved calculator.