Should the following proposal for improved tokenomics be adopted?

With revenue flowing into the Stacker Ventures Treasury, the community has been discussing various ideas to improve the tokenomics of the STACK token.

Discussion in Discord following the latest failed tokenomics proposal has made it clear that there is interest by both core contributors and community in supporting the long-term sustainability of the DAO while rewarding STACK token holders for their continued participation in the DAO.

The following proposal seeks to find a balance between both.

1. Build the STACK vault on Polygon

Gas fees on L1 have continued to bar community members from participating in our DAO. When gas prices spike, buying, staking and unstaking tokens costs in the high hundreds of dollars.

As we started Stacker Ventures with the mission of creating more inclusive access to opportunity, I believe it is important to consider this for our staking.

While there are a few EVM-compatible L2s and L1s that offer negligible fees, Polygon aligns with our plans to launch a USDC Active Yield Fund and promote liquidity on the network. Polygon also offers a relatively seamless and inexpensive experience when bridging assets between networks.

The STACK vault would be a single-asset vault, where DAO participants can stake their STACK for more STACK!

2. Incentivized Staking

I propose that 5% of STACK over 1 year be distributed to the vault. In addition, all profit from interest earned on the DAO’s treasury would be converted to STACK via Uniswap/Sushiswap and distributed to stakers. The DAOs treasury is split between ETH, USDC, and WBTC, and these funds are invested into stackETH, stackUSDC, stackWBTC AYF vaults. Currently, the DAO seeks to keep its treasury at a 60-20-20 split between stackUSDC, stackETH, and stackWBTC.

As the treasury grows from fees from funds and other products, so would the interest distributions to STACK holders.

3. Rewarding Holders

In order to eliminate profit arbitrage and encourage long-term behavior, a four week cooldown (lockup) period for staked STACK would be implemented. This would match an initial schedule of monthly interest buyback distributions.

4. Promoting the Sustainability of the DAO

This structure would reward STACK holders for decisions that maximize the DAO’s treasury over the long-run. As the treasury grows, so do rewards to stakers. We seek to make the DAO as sustainable as possible, with a preference to pass necessary but lean budgets, and push to grow the treasury wherever possible.

5. Voting and Other Perks

There are many other possible perks that could be built on top of the STACK vault, including vote boosts on Snapshot, and so on. We can continue to build on top of the STACK vault to increase token utility and incentives to hold STACK. Since we will be using our AYF fund structure, additional STACK strategies can be implemented in parallel to the buyback.

As an example, in the future, STACK could be on a lending market, and we could use it as collateral to loan USDC and invest this for more STACK rewards. This is already possible from our current AYF fund structure.

6. Fees

Our AYF Vaults conform to the standard 2&20 fee structure that is favored by fund managers. We are proposing to take a 20% performance fee on our STACK vault as well. This fee will be distributed to the DAO. This will allow the DAO to receive a steady income stream in STACK tokens. This will allow future products and funds to be incentivized with STACK rewards, even if/when the initial fixed supply of 1,000,000 STACK tokens are fully distributed to the community. The DAO would be able to alter and fine-tune these numbers if needed in the future. In addition, a 0.5% withdrawal fee is proposed, which would be distributed to other stakers, incentivizing long-term behavior.