DAO proposal to launch V2 - Emissions decision

With this proposal a decision is sought from the DAO to decide on one of three possible outcomes.

Launch V2 with 10% emission restriction Launch V2 with full emissions Continue with V1 and do not launch V2 at all The implications of each result will be outlined below for the DAO’s consideration and approval by voting consensus.

Option 1. Launch V2 with 10% emission restriction

As V2 draws closer and with SpiritSwap now officially a DAO with no centralized ownership, the development team who has been working on V2 feel its pertinent to exercise DAO protocol and ensure the community have their say surrounding the manner to which V2 is launched.

As such this proposal requests permission from the DAO for the commencement and subsequent launch of V2 upon its completion.

The plan, as many are aware, is to host a public beta period over a minimum period of 2 weeks. During this time a small portion of emissions will be dedicated to the V2 product suite.

It is proposed that 10% of emissions are dedicated to the various facets of the V2 protocol while the public beta test takes place. While the upgrades that encompass V2 have passed audits with flying colors, there is still that “unknown” that every developer worries about when setting such a large update live, which is why a 10% emission restriction is proposed for not only the safety of the protocol, but also to protect user funds of the community who choose to participate in the V2 beta testing period.

Limiting emissions, means limited incentives, for this period until the full migration has happened. Limited liquidity means less volume of loss should the untoward happen. This is by no means a sign of uncertainty or lack of confidence in the development team's work, but rather an added level of security for participants of the SpiritSwap ecosystem.

During the public beta period, remaining emissions (90%) will continue to flow to the incumbent V1 product suite, ensuring ample liquidity is hosted for swaps to continue. The new master router will allow swaps to run through both V1 and V2 liquidity pools.

After the public beta period (proposed for 2 weeks) if no major issues arise and after giving the community a chance to play with and test V2 for themselves, a second proposal will be voted on for all emissions to be directed to V2 thus making V1 redundant and cementing V2 as the official product suite of SpiritSwap DAO moving forward.

Intricacies: With only 10 % of emissions being dedicated to V2, this will effectively render V2 only 10% effective of its full ability to achieve its task of:

Stimulating volume for reward sharing Stimulate revenue earned by the DAO treasury Accelerate liquidity incentives from both community and protocol partners Drive growth and adoption to/of the SpiritSwap ecosystem Only upon full release will the benefits of the V2 upgrades come to full effect.

Risks: As is with all facets of DeFi there are always risks of contract exploits. SpiritSwap intends to mitigate these risks as best possible via limiting emissions as per the aforementioned, however it must be made explicitly apparent that risks are always lingering when releasing a completely novel product to the market that hasn't been “battle tested”, the DAO will be, in a sense venturing into the unknown. As always, do your own research before using any SpiritSwap related products.

Mitigations: To mitigate the aforementioned risks the DAO has several protection magnesiums in place.

A completed and passed audit from Zokyo (link to be provided upon launch)

A completed and passed audit from Peck Shield (link to be provided upon launch)

Peer review from (The Fantom Foundation)

Full review by DeFi Safety https://www.defisafety.com/app

Upon deployment there will be an active bug bounty with Immune FI with similar bug bounty programs catching vulnerabilities in contracts used by protocols such as Balancer. Immune FI is an extremely reputable firm utilized by many big brand protocols such as GMX, Olympus, Balancer, Pancake Swap, Sushi Swap and LiquidDriver to name a few.

Option 2. Launch V2 with full emissions

In short, this would circumvent part of the aforementioned protection mechanisms. This would mean a full dedication of SpiritSwap emissions resulting in full stimulation of the V2 product suite and expose a larger amount of not only emissions but user funds to potential vulnerabilities. This would be considered a high risk and unadvisable approach, however in the Spirit of decentralization and full adoption of DAO process, the option remains.

Intricacies: With all emissions being dedicated to V2, this will effectively render V2 in full effect and instantly set it on its course of achieving the following:

Full stimulation of volume for reward sharing Full stimulation of revenue earned by the DAO treasury Full acceleration of liquidity incentives from both community and protocol partners Full drive growth and adoption to/of the SpiritSwap ecosystem Risks: This approach would be deemed the riskiest but the most rewarding. By “unleashing the beast” there would be instant gratification of the aforementioned. It does however mean, any attack on contracts or the mechanics of V2 would see all funds at risk. The DAO would not cover any loss of funds if this option is opted for so inSPIRIT holders are implored to vote in accordance with their risk appetite. Note that this option will not be favored by the risk adverse, and opting for this option may in a sense have a negative / counterintuitive effect on the protocol, with users pulling liquidity rather than adding to it, as the more sensible participants opt to “watch on from the sidelines”. While the development team contracted by the DAO to build V2 wish to remain impartial and as objective as possible in governance decisions, it remains a fact the this is not a favorable option, and patience is recommended. Option 1 will allow the protocol upgrades to be tested and probed over a period of a month at which point, if everything goes according to plan, the full benefits of V2 can then be deployed.

Mitigations Even if option 2 is opted for by the DAO the same prevention mechanisms and mitigation tools remain. It is stressed however that these ARE NOT GUARANTEED, but rather backstops to ensure best practice remains.

Option 3. Continue with V1 and do not launch V2 at all

To remain objective and give a full suite of options to the DAO, this option is also relevant to the most risk averse.

Intricacies: This would limit the growth of SpiritSwap achieving its full potential and remaining competitive in an ever growing, ingenuitive and extremely fierce marketplace, but would also limit risk exponentially. This option would see all V2 dynamics abandoned resulting in V1 existing in its current format. It would also see the months of hard work and dedication of the contracted development team rejected by the DAO, noting that much of the DAO resources have gone into funding the development.

Mitigations: Mitigations pertaining to this option are not applicable as additional mitigation tools would not be required due to a non launch of contracts that pose vector potential.

Decision time: With all facts and options laid out on the table, the decision lies in the hands of trusty inSPIRIT holders. Take time to discuss among the community and ask any questions in the Proposal discussion channel of our discord. You have 7 days to make your decision with no quorum set due to a definitive decision being required. The option with the most number of votes will be determined as the DAOs official decision and the contract development team to the DAO will adhere to the DAO’s wishes as per the decision. Thank you for taking the time to review this proposal and for your participation in the inSPIRIT governance model.

Regards, Spirit DAO.