TIP 009 - Bunni v2 Migration and Enhanced Tokenomics Framework

TIP-009: Bunni v2 Migration and Enhanced Tokenomics Framework Change Log (Updated October 30, 2024)

Following the rejection of the TIP-008, the Timeless Ethereum Unit (TEU) and Timeless Governance Unit (TGU) have collaborated to create an amended version of the proposal. This updated version addresses key community concerns and strengthens the protocol's strategic positioning. The proposal is planned for submission on November 5th, 2024.

Key modifications from the original proposal:

Snapshot Timing: Updated to November 5th, 2024 at 2:00 PM UTC (planned proposal publication on snapshot)
    Rationale: By using the block at which the proposal is published for voting, all stakeholders have a clear, transparent opportunity to evaluate the proposal and position themselves according to their conviction in Bunni v2's potential success. This approach ensures fairness and allows for informed decision-making by the community.

Migration Bonus Structure: Changed to proportional system based on remaining lock time
    Example: 3-year remaining lock receives 75% bonus
    Previous: Flat 100% bonus for all veLIT holders
    Rationale: This change better rewards long-term holders who demonstrated stronger protocol commitment through longer locks, while preventing potential abuse from last-minute locking.

LIQ Allocation Increased: from 8,000,000 to 10,000,000 $veBUNNI allocation to LIQ holders
    Rationale: The 25% increase in $veBUNNI allocation (from 8M to 10M) aims to encourage LIQ holders to migrate to the Bunni ecosystem.

Updated Fee Distribution Schedule:
    Now starts with 25/25/50 split (Treasury/veBUNNI/Referral)
    Ends with 50/45/5 final distribution
    Rationale: The new schedule immediately rewards veBUNNI holders while maintaining strong referral incentives during the crucial growth phase. The gradual shift to a higher treasury/veBUNNI allocation ensures long-term protocol sustainability while preserving significant value for token holders.

Uniswap v4 Strategic Alignment: Added explicit focus on launch timing and strategic partnerships
    Rationale: The imminent Uniswap v4 launch presents a unique opportunity for market dominance. Maintaining centralized emission direction through TEU and TGU initially allows for rapid, strategic deployment of incentives and swift partnership formation. This approach maximizes our ability to capture value during the critical launch period, with the flexibility to adapt governance structures once market position is established.

Summary

This proposal establishes the framework for migrating to Bunni v2, including the transition from $LIT to $BUNNI tokens, implementation of new tokenomics, and introduction of a structured fee distribution system. The proposal encompasses token migration mechanics, emission structures, governance processes, and a comprehensive incentive program spanning 12 months, aligned with the anticipated launch of Uniswap v4. Background

The current token ($LIT) lacks meaningful brand connection with the Bunni product, and the existing gauge system has proven suboptimal for directing emissions to encourage TVL growth and revenue generation. As Bunni approaches its v2 launch, this comprehensive tokenomics overhaul will align the protocol's incentives with sustainable growth and revenue generation. Proposal

1. Token Migration Framework

   Convert $LIT to $BUNNI at 1:1 ratio (indefinite conversion window) Total $BUNNI supply: 1 billion tokens New $veBUNNI locking mechanism: Direct $BUNNI locking Maximum 1-year lock duration $veBUNNI assumes control of governance $veLIT continues receiving weekly $BAL emissions and $WETH distributions from remaining $oLIT exercises

2. Airdrop Distribution

   Snapshot: Block around 2:00 PM UTC, November 5th, 2024 (planned proposal publication on snapshot) Allocations (all with 1-year lock): $veLIT holders: TBD after snaphot Testnet participants: 5,085,500 $veBUNNI 3-month claim period.

Migration Bonus Details:

$veLIT holders receive proportional migration bonus based on remaining lock time
    Example: 3-year remaining lock receives 75% bonus
    Calculation: bptLocked * litPerBPT * (1 + (remainingLockTime/4))
    Includes $WETH value in $LIT from locked BPTs

Testnet Quest Allocations:

11 Quests completed: 600 $veBUNNI per quest
8-10 Quests completed: 200 $veBUNNI per quest
5-7 Quests completed: 100 $veBUNNI per quest
1-4 Quests completed: No allocation

3. Protocol Fee Distribution Structure

Initial Protocol Fee: 10%

Graduated Distribution Schedule: Period Treasury veBUNNI Referral 0-3 Months 25% 25% 50% 3-6 Months 30% 30% 40% 6-9 Months 35% 35% 30% 9-12 Months 40% 40% 20% Onward 50% 45% 5%

Technical Implementation:

Euler's FeeFlowController mechanism for fee auctions
WETH as designated purchase token
Protocol fee and distribution parameters adjustable by governance

4. Emissions and Incentives Framework

Current System Changes:

Elimination of current gauge system
Bunni v1 gauges will be paused if the current Snapshot proposal receives majority support.
Implementation of transferless staking contracts:
    Improved gas efficiency
    Permissionless liquidity mining incentives using any token on any chain
    Integration with on-chain referral system

Epoch-Based Model:

3-month epochs
Initial Epoch 1 allocation: 25,000,000 $BUNNI
Fixed allocation structure:
    10% to support ETH/BUNNI liquidity
    70% to support core revenue generating pools
    20% to new incentive applicants

Strategic Alignment with Uniswap v4:

Flexible emission direction through TEU and TGU to maximize launch opportunity
Strategic partnerships and co-incentives with selected partners
Focus on rapid growth and market share capture
Centralized emission direction maintained initially to ensure swift deployment and maximum impact

5. $oBUNNI Implementation

Provision for future activation pending technical requirements, such as a liquid ETH/BUNNI market for reliable oracle pricing. Activation will be subject to governance approval.
Historical success: 1700 WETH generated over 20 months in v1.

6. Technical Implementations

FeeFlowController mechanism for protocol fee auctions
Transferless staking contracts deployment
New governance mechanism activation
Migration system deployment

Implementation Path

Phase 1: Technical Foundation

Contract deployment ($BUNNI, $oBUNNI, $veBUNNI)
FeeFlowController implementation
Transferless staking contracts deployment
Security audit completion

Phase 2: Migration Activation

Enable $LIT to $BUNNI conversion
Process airdrop distributions
Launch $veBUNNI locking
Initialize new governance system

Phase 3: Incentive Activation

Deploy initial liquidity pools
Activate Epoch 1 emissions
Implement performance monitoring

Budget

Audit Requirements:

Vendor: Pashov Audit Group
Cost: 48,000 USD
Scope: All migration and new mechanism contracts

Initial Incentive Allocation:

Amount: 25,000,000 $BUNNI
Purpose: First 3-month epoch
Primary focus: ETH/BUNNI pool and key revenue-generating pools

Next Steps Upon Approval

Following achievement of quorum and majority support:

Immediate Actions:

Initiate audit process with Pashov Audit Group
Complete contract development and testing
Prepare technical documentation

Pre-Launch:

Complete security audits
Deploy and verify smart contracts
Release migration documentation
Configure monitoring systems

Launch:

Activate token migration
Process airdrops
Enable governance mechanisms
Begin incentive distribution

Post-Launch:

Monitor system performance
Prepare first epoch metrics
Enable governance proposals with support of veBUNNI token.

Conclusion

This proposal represents a comprehensive overhaul of Bunni's tokenomics and governance structure, designed to maximize protocol value through:

Clear brand alignment with token migration
Efficient emission distribution
Structured fee sharing
Performance-based incentives
Community-driven governance
Strategic positioning for Uniswap v4 launch

The implementation prioritizes security, sustainability, and community participation while establishing clear metrics for success. The graduated fee distribution schedule and epoch-based emissions provide flexibility for governance to optimize protocol performance over time.

Notes:

All allocations and calculations are subject to final verification before implementation
Governance maintains the ability to adjust parameters as needed
Regular performance updates will be provided to the community