Background:

In recent months, Fusion has experienced significant traction, attracting growing deposits and strategy deployments. The IPOR DAO Lending Optimizer offers the best risk-adjusted yield on the market. We have a full pipeline of Atomists to launch their own Fusion vaults, and dozens of protocols, funds and other DeFi participants have expressed interest in integrating Fusion or a vault. We have even seen other protocols building on top of the product layer using the Fusion optimizers as yield sources.

This success necessitates a dedicated focus on Fusion as a core product and requires sustained investment in technical development, operations, business development, and marketing. Consequently, the DAO is pursuing additional funding to accelerate Fusion development and expand into additional markets such as structured products.

Proposal:

In advance of additional funding and positioning the protocol for long-term success, IPOR Labs proposes the following:

• Token Migration: Take $IPOR token private, migrate from the $IPOR token to a new token, $FUSN.
• Protocol Renaming: Rebrand the protocol to "Fusion," reflecting its core focus.
• Fundraising: Raise additional capital via a SAFT agreement.
• DAO Transition: Transition the IPOR DAO to the Fusion DAO, inheriting all existing assets, liabilities, and protocols (interest rate derivatives, $IPOR indices, TVL, and POL).

The existing smart contracts and multisigs will remain. IPOR Labs will shift its focus to developing Fusion, with details to be set out in a subsequent IIP.

Interest rate swaps and indices will remain a core component of the protocol and will be further expanded. In the coming years, products will also be developed that combine interest rate swaps and Fusion vaults, such as a fixed rate earn product or fixed rate borrow. One-click structured products were one of the main reasons Fusion was built, and should drive significant derivative volume for both Fusion and the interest rate derivative products.

Token Migration & Distribution

• A snapshot of all $IPOR token holders will be taken to determine eligibility for the $FUSN airdrop. The snapshot will be taken within a maximum period of 2 weeks after the end of the voting period of this IIP, whereby the determination of the exact time will be decided by IPOR Labs.
• $IPOR token holders will receive $FUSN tokens at a 1:1 ratio based on their $IPOR holdings at the time of the snapshot.
• Immediately after the snapshot, protocol-owned liquidity (POL) will be withdrawn from DEXs and CEXs.
• $pwIPOR liquidity mining will be suspended after the snapshot. There is no need to unstake $pwIPOR tokens. $pwIPOR holders will receive $FUSN tokens.
• Since DAO governance will temporarily not be possible without the $IPOR token, IPOR Labs and the IPOR DAO workgroups (economic workgroup, governance workgroup, marketing workgroup) will act as guardians during the transition phase. A new snapshot space will be set up immediately after the launch of the $FUSN token. In the meantime, the workgroups will continue to exercise the decision-making powers delegated to them.
• A legal entity will be set up to sign a SAFT with investors, where the proceeds of the token sale will go to the DAO treasury to be used for continued protocol and business development by IPOR Labs.
• $FUSN Launch: The $FUSN token will be launched once the protocol has achieved significant traction and considering other market forces.

$FUSN Token Sale

• The $FUSN tokens of the new investors will be locked and subject to vesting.
• A significant portion of the liquid tokens belonging to IPOR Labs team members shall also be subjected to vesting in alignment with the new investors.
• $FUSN tokens of remaining token holders may also be subjected to vesting. If so, this vesting period shall be shorter than or equal to that of the new investors.
• The maximum supply of $FUSN will be 100M (equivalent to the $IPOR token).

After the token migration and sale, the distribution of the $FUSN token will be approximately as follows:

The numbers are based on the status at the time of writing and may differ at the time of the snapshot.

$FUSN Token Utility

The $FUSN token will offer various benefits:

1. Governance voting power: Decisions over protocol development, budget, incentives
2. Fee rebates: Asset managers and power users can lock $FUSN to reduce protocol fees in Fusion (similar mechanism as $BNB)
3. Buybacks: Protocol revenue can be used to buyback the token and burn or add DEX liquidity
4. Liquidity Mining power-up: Distribution and buyside demand on derivative pools

$FUSN tokenomics will allow up to 100% of the protocol's revenue to be used to buy back $FUSN tokens on the market for the DAO treasury. The use of these tokens will be determined in a detailed proposal at a later date. In the first phase, snapshot- and workgroup-based governance will decide on their use. $FUSN tokens can, for example, be used to improve the token's DEX liquidity. In the long term, a gauge system will allow $FUSN token holders to directly influence the distribution of protocol revenue (e.g., to buybacks and the treasury) at any time.