SIP-49: SafeYields <> Sperax Strategic Alignment

Author(s): SafeYields Team Reference: SafeYields' Whitepaper, Medium, Site, dApp Created: June 7th, 2023. Labels #New-Assets, #Product-Features

Abstract

With market volatility comes the opportunity for great profits on one hand and also losses on the other, the need for hedging against it should be paramount for an investor’s portfolio.

SafeYields developed the SAFE token (collateralized by USDC) which is mathematically designed to keep positive price action regardless of market conditions, the protocol also developed a second token called SAFE+ (collateralized by USDs) that scales the hedge of SAFE with the compounding benefits of USDs.

SafeYields proposes to the Sperax protocol the creation of a single token farm for SAFE+ which would require whitelisting the compounding rewards of USDs into SAFE+’s contract and require SPA emissions for investors who vest SAFE+ for a period of time. Furthermore, we are requesting a SPA gauge for this pool. .

The above will lock large amounts of USDs within SAFE+ while offering a new hedging product to the arbitrum community. .

Introduction

With not only market volatility but uncertainty of crypto stable assets comes the need to hedge against them; the SafeYields protocol brings just that.

The most incisive solutions are oftentimes born from catastrophic failure. The past market cycle has revealed some spectacular implosions caused by faulty tokenomic design. Algorithmic stablecoins like $UST, node projects like $STRONG and rebase protocols like Olympus DAO were instrumental in pointing us towards our north star as they proved to be masterclasses on which pitfalls to avoid, when building towards the vision of a robust and sustainable protocol.

These are the set of problems we have learned from, innovated upon, and overcome when building SafeYields:

1. The inflationary token emissions of rebase DAOs.
2. Death Spirals brought about by Algorithmic Stablecoins.

The convergence of these solutions results in the creation of the SAFE Ecosystem on the Arbitrum Blockchain. $SAFE tokens which mathematically cannot go down in value and are resistant to bank runs and death spirals.

Scope

$SAFE+ is 100% collateralized by $USDs and its unique architecture makes it mathematically impossible to drop in price. When trading $SAFE+ investors are taxed 0.25% on buys and 0.45% on sells (0.2% used to redeem USDs). Additionally, $SAFE+ is minted when bought and burned when sold. Part of the 0.25% tax is used to buy USDs and stays in the USDs Vault which acts as over collateral, raising the price over time from either buying or selling. In other words, there will always be more $USDs in the Vault than $SAFE+ tokens in circulation.

But what happens when here is no volume? The SAFE ecosystem is bootstrapping a treasury through the sale of NFTs (that act as shares of the protocol), which is invested and allocates 5% of rewards to buy USDs and inject directly into the Vault, that in turn, acts as over collateral for SAFE+, further raising its price over time regardless of market volume.

Methodology

SAFE+ Token

In order to keep SAFE+ price action in check, the token cannot be listed in any DEX or be part of an LP, since the SAFE+/USDs Vault is the only trading party, SafeYields is able to apply the following formula exclusively:

SAFE+ single staking farm

SAFE+’s unique architecture doesn’t allow for an LP listing, therefore we propose a single staking farm in partnership with the Sperax protocol.

This would result in SPA emissions and further listing on the Sperax Dapp for bribes.

Discussion & Conclusions

The SAFE+ token - as shown before - may act as a true hedge on the Arbitrum ecosystem. Furthermore, it uses USDs as collateral which can be compounded and increase USDs circulating supply. .

Accepting the creation of a single staking farm for SAFE+ and the addition of a SPA gauge would bring both SAFE and the Sperax communities the opportunity to scale its volume and consequently USDs’, meaning more value locked into Sperax and more SPA burns. Bribes from SY allows investors to scale rewards within the Sperax ecosystem, for SAFE it means a deepened Vault value (collateralized by USDs), SAFE also has an interest in governance, therefore it would use the rewards from bribes not only to benefit SAFE/Sperax holders, but also participate in future governance through SPA staking.

Technical Specifications

Not available

Voting

For:

Creation of a SAFE+ single staking vault (SPA emissions) and eligible for bribes.

Against:

No action