LIP-006: veHND Acquisition Proposal and the introduction of liHND (Liquid veHND)

Proposal: Liquid Driver to introduce a wrapped version of veHND (vote escrowed HND token) similar in nature to linSPIRIT.

Brief Background on Hundred Finance ($HND) (https://hundred.finance/): $HND is the native token of Hundred Finance, a multi-chain decentralized money market protocol. Hundred Finance is live across Ethereum mainnet, Arbitrum, Harmony One, and Fantom. Hundred Finance has $67 million in TVL on Fantom and $168mm total cross-chain. Hundred Finance recently introduced its veToken model, similar to Curve Finance. Users can deposit $HND into the vote-escrow contract for periods of 1 week up to 4 years, receiving veHND in return. Holders of these non-transferable tokens are able to vote on which stable pool gets a greater portion of future HND emissions. The current set up allows for voting on USDC, USDT, DAI, MIM and FRAX gauges. Users also receive an APR boost of up to 2.5x on the stables they farm.

Rationale / Justification

• The introduction of a wrapped veHND token similar to the existing wrapped inSPIRIT (linSPIRIT) would allow Liquid Driver to accumulate HND voting power and transfer boosted returns to users who farm single-sided stables;
• Stable farming can be particularly attractive to users wishing to mitigate impermanent loss and also during periods of market instability.
• This feature would further diversify Liquid Driver’s sources of revenue. The majority of this revenue would be paid out to xLQDR holders in the form of liHND.

In parallel, we would set up a liquidity pool for our wrapped veHND and HND balancer pool (similar to linspirit / spirit pool) on BeethovenX. LiquidDriver would further incentivize this pool to promote a strong peg and continuous liquidity.

Benefits

• Additional source of revenue from Hundred Finance stable farming; Ability to scale TVL as stable pools with 0 Impairment Loss are an attractive product;
• It would introduce a liquid version of veHND similar to the linSPIRIT token while earning a portion of Hundred Finance fees for depositors A liquid veHND model would create additional revenue for potential depositors and enhance shadow farming returns. It would potentially earn additional revenue in the form of bribes for HND gauge voting

Risks

• A potential depegging of a liquid veHND and HND in the BeethovenX pool;
• Beluga Finance (https://beluga.fi/) currently offers single-sided vaults for farming on Hundred Finance.

Risk Mitigants

• Liquid Driver has shown a strong ability to maintain a peg between Linspirit and Spirit in the past;
• Beluga has very low TVL compared to Liquid Driver and does not offer a liquid wrapper. Vaults on Beluga are currently yielding below the max boost APR available on Hundred Finance. Additionally, Beluga auto-compounds HND rewards into a BeethovenX HND-FTM-USDC LP. Our proposal would aim to provide max APY rewards while paying HND depositors and xLQDR holders fees in HND tokens

Before making any final decision feel free to discuss the proposal in the xDAO section of our discord http://discord.gg/LiquidDriver

For: Approve veHND acquisition and the introduction of stable farming with a wrapped veHND Against: Do Nothing