Referral Program for Ethereum - Final Reform

Background

The bear market and recent market events has shown the importance of increasing the adoption of defi and more decentralized infrastructure. With increased centralized competition, speed of execution is of the utmost importance for the whole industry. To date, Lido DAO’s referral program has exceeded expectations. However, the current model is unsustainable. With protocol sustainability in mind, referral rewards need to be reduced to a manageable level.

A longer-term revenue share model is outside the scope of this proposal.

The initial focus will be on Ethereum.

Proposal

We are submitting the following proposal:

1. Implement a new referral model for stETH structured as per referrer:
   • 2.5 DAI per ETH referred up to $100m worth of ETH
   • 3.5 DAI per ETH referred up to $250m worth of ETH
   • 4.5 DAI per ETH referred up to $500m worth of ETH
   • 5.0 DAI per ETH referred up to $1.0bn worth of ETH
   • 5.5 DAI per ETH referred up to $5.0bn worth of ETH
2. The new model starts at 0 and is cumulative during the term of the program for participants.
3. Limit the initial reward pool to a maximum of 1,000,000 DAI. Depending on success and market dynamics, refreshing the pool in 1M DAI increments will be voted on and discussed. Updates will be provided in this thread.
4. Begin winding down the program before withdrawal operations are enabled on Ethereum.
   1. Optional transition to successor program after withdrawals are enabled

Operations

Operations will be handled by the same Referral Program committee & miltisig through Aragon votes and Easy Track payment processing akin to the updated reWARDS setup with limits, paying in DAI.

The new model, if approved, would:

• Supersede and formally replace the current referral program on Ethereum, effective immediately after the conclusion of a successful snapshot and vote. All referrals in the legacy setup will be honored for final distribution. Including an update the terms and conditions of the program.
  • Change payout timings. Payouts are to be calculated every calendar month with a twap of 30 days for ETH/DAI. This is to create stability in the pricing mechanism in case of volatility in the market. If there is detected manipulation of DAI pricing, USDT and USDC may be used as backup.
• Implement an exit clause or emergency trigger. In the event of manipulation or overwhelming success, there will be certain limits placed on the payouts of the program in order to protect Lido DAO. This is a non-exhaustive list:
  • Lido DAO will not suffocate itself financially in facing overwhelming success of the program
  • No cycle staking. Old or new, just don’t do it.
  • Manipulating the exchange rate of stETH or DAI.
  • Yet to be identified attempts to game or manipulate the program which will be documented on the public site linked above.

This proposal, if approved, would not:

• Define the programs for other Lido on other chains.
• Change the current payout process.
• Define or scope the successor program.

Conditions

1. Only allowed referral addresses will be eligible for rewards.
2. Users are given the ability to generate a unique referral URL that is specific to their Ethereum address.
3. Rewards are calculated once per month using a 30 day TWAP of ETH/DAI.
4. To be eligible for rewards in the current rewards calculation period, referral should drive at least 5 ETH in referee stakes during ‘the period’
5. Referral rewards will paid out after review to spot any wrong doing or manipulation listed in terms and conditions.
6. A referral receives payout based on the proposed model (final conditions will list this explicitly on the Lido DAO site).
7. The Lido DAO referral program does not have any fixed time frame. The program ends when there are no more tokens in the reward pool (i.e., the total amount of DAI tokens that can be distributed to participants of the program) or when the DAO makes an active decision to cancel it.
8. The Lido DAO can stop, pause, and resume the program at any time.
9. The Lido DAO determines the size of the reward pool, amount and terms of the DAI reward, and can change them at any time.
10. The Lido DAO can at any time change the operating conditions of the Lido DAO referral program.

Vote Outcomes

YAY: Approve new program terms and initial fund of 1,000,000 DAI. NAY: Do not approve new program or funding.