IIP-001: Add the stake IMX to earn USDC staking option

Summary

Currently Impermax protocol profits are distributed to stakers through IMX buybacks and the stake IMX to earn IMX staking pool (xIMX). The proposal is to use part of the protocol profits to buy USDC instead of IMX, and then distribute USDC to IMX stakers through a second staking pool. IMX stakers will be free to choose which pool to use, so they will have 2 staking options.

Motivation

Considering the current market cap of $1.93M, the protocol generated revenues in Q4 2021 of $245,067, and the resulting P/E of 1.96, IMX is arguably undervalued.

The main objective of IMX staking is to use protocol generated revenues to provide economic support to the IMX price. By distributing revenues to stakers we should create a correlation between protocol profits and token price. However, IMX price is now near the all time low despite the consistently increased profits.

Part of that reason is general low awareness behind how the current staking mechanism works. For most cryptocurrencies staking rewards come from inflation, so many investors associate a high staking APY to a negative thing. For Impermax the opposite is true: a high staking APY is a sign that the protocol generates a lot of profits compared to its market cap. However as reflected in the token price the current mechanism isn’t attracting many buyers. On the other hand, distributing protocol profits as USDC will make the mechanism work like a dividend for a traditional stock. This will help in a few ways:

• raise awareness about IMX economic fundamentals;
• turn IMX in one of the first cryptocurrencies paying a cash flow in a stable asset;
• attract crypto investors who are looking for a sound investment.

Specification

If this proposal passes:

• The Impermax team will deploy a StakingRewards contract on Ethereum. IMX can be deposited in this contract to earn USDC.
• Part of the profits currently used to buyback IMX will instead be used to buy USDC and distribute it through the StakingRewards contract.
• The percentage of profits directed to the 2 IMX staking pools will be adjusted with time depending on the demand for each pool.

Expected Staking APRs

We expect some correlation between the APRs on the 2 staking pools, but finally they will vary depending on several market factors and users’ demand.

However, we could estimate the APR by considering the current market value of IMX staked and the protocol profits generated in Q4 2021.

IMX staked market value: $1.04M Annualized protocol profits: $0.98M Estimated APR: 94% (at the price of $0.088)