LIP-001: Convert Protocol fees into LISTA Tokens for Distribution under Community Incentives

Summary:

This proposal seeks to convert all existing community incentive rewards that come from Protocol fees into LISTA tokens, which will be bought on the open market and distributed to veLISTA holders. The conversion will streamline reward distribution and enhance liquidity within the Lista DAO ecosystem.

This proposal targets the protocol fees that are accumulated on Lista DAO and it does NOT affect community incentives that are coming from LISTA emissions.

Abstract:

The proposal aims to centralize community incentives into LISTA tokens, ensuring transparency and efficiency in reward distribution. By consolidating rewards into a single token, Lista DAO intends to simplify governance and bolster the liquidity of LISTA tokens on the open market.

Implementation will involve converting existing incentive mechanisms (slisBNB, WBETH, ETH and lisUSD) into LISTA tokens and distributing them to veLISTA holders. Users will only receive 1 form of reward, (LISTA), after this change.

Motivation:

This proposal addresses the fragmentation and complexity of current reward systems within Lista DAO. The existing mechanism involves distributing various types of rewards each week, often in small amounts, making it inconvenient for veLISTA holders. By converting these incentives into LISTA tokens, we can unify the reward structure, offering greater clarity and predictability for stakeholders.

Additionally, centralizing rewards into LISTA tokens aims to enhance token liquidity and market demand, thereby fostering sustainable growth and participation within the Lista DAO ecosystem.

Specification:

The proposal entails converting existing rewards, including lisUSD rewards, WBETH liquid staking rewards, slisBNB liquid staking rewards, that come from protocol fees, into LISTA tokens. The LISTA tokens will be acquired from the open market and distributed to veLISTA holders according to established governance protocols. Parameters such as distribution schedules and mechanisms will be specified in the implementation phase.

Benefits (Pros):

1. Simplification of reward distribution processes.
2. Enhanced liquidity and market demand for LISTA tokens.
3. Alignment of incentives towards LISTA token holders, fostering community engagement and participation.

Downside (Cons):

1. Initial adjustment period for stakeholders accustomed to previous reward mechanisms.

Voting:

1. A “Yes” vote signifies approval for converting community incentives into LISTA tokens and distributing them to veLISTA holders.
2. A “No” vote indicates disapproval of the proposal, maintaining the status quo of existing reward mechanisms.