SIP-66: Sperax Revenue Share

Author(s): Sperax Core Team Reference: USDs, Revenue, Burn, veSPA Created: Aug 2nd, 2024

Summary

We have had the 50% / 50% split of revenue/yield from USDs collateral strategies since the inception of USDs. This proposal aims to increase the revenue share for USDs holders, increase SPA burns, and identify a risk mitigation strategy.

Motivation

USDs yield reserves are depleting and we need to maintain a high yield on USDs SPA buyback and burns are not significant. We need a security module/hedge for shortfall events or loss in collateral.

Overview

Yield is generated organically by sending collateral to audited decentralized finance protocols. 50% of yield generated on collateral is used to pay USDs holders Auto-Yield. The remaining 50% of the yield is used to buy back SPA from the market. 50% of the SPA received is burnt and 50% is used to reward veSPA holders.

USDs reserves are depleting and we should maintain a high yield to keep USDs a premium stablecoin opportunity compared to other available stablecoins in the market. By increasing the revenue share of USDs auto yield by 40%, we maintain a high yield on liquid USDs. This will take the revenue share of USDs yield to 70% from the collaterals.

We have to start thinking about risk mitigation for USDs holders. We need a safety vault or a risk strategy to account for a loss in collateral. We can put in 15% of the revenue received from USDs collateral strategies to develop a plan for risk management.

The SPA burn is quite insignificant since USDs TVL is quite low. We propose SPA burn share 30% of the revenue for now. Once we have identified a risk mitigation strategy, the SPA burn revenue will decrease to 15%.

Increase the emission for veSPA holders to 420 000 xSPA tokens per week from the treasury to account for the decrement in APR due to cutting the allocation from bought-back SPA.

The APR contribution towards veSPA rewards has been pretty low (0.25-0.75%) since the last two quarters hence it will not affect the current APR as much.

Technical Specifications

• Increase the revenue share for USDs holders, currently at 50%, from the yield strategies to 70%.
• 30% of the remaining yield will be used to buy back SPA from the market and burn it.
• Identify and implement a risk mitigation strategy for USDs collateral. Once implemented, 15% of the revenue will go into this strategy and the SPA burn will be reduced to 15%.
• Increase emission from the treasury to veSPA holders to 420 000 xSPA tokens per week.

Voting

For:

Approve change in revenue structure, implement risk mitigation strategy, and increase emissions to veSPA holders from the treasury

Against:

Reject change in revenue structure, implement risk mitigation strategy, and increase veSPA emissions from the treasury