Stargate Foundation RFP Proposal

INTRODUCTION

The Stargate Community has engaged in extensive discussions regarding the use of the potential LayerZero Token allocation received as a result of the LayerZero RFP Process. This proposal sets forth what we believe to be the best and highest use for those such allocations, considering the Communities objectives. It pertains to both the LayerZero Token allocation to the Stargate Protocol, and the AptosBridge.

Approval of this proposal will result in a final and definitive mandate by the StargateDAO, superseding prior other proposals on the subject matter herein. Any subsequent proposals will complicate this process further, and may jeopardize the Stargate Foundations ability to collect the necessary data in time for the May 31, 2024 LayerZero RFP Deadline. Two snapshot proposals were posted but are not in the interest of the community as they seem designed to, in some way, direct the StargateDAO’s allocation to private holders and as such should be rejected.

PROPOSAL GUIDELINES You are able to abstain from voting if you do not agree with a proposal, and do not want it to reach quorum.

STARGATE PROTOCOL PROPOSAL

The Stargate community has identified three groups of classes to which a LayerZero token allocation should be allocated: bridgers, LP providers, and STG stakers. The Proposal would distribute of the StargateDAO potential LayerZero Token rewards as follows to those groups as follows:

60% allocated to bridgers 42% to users who have bridged, volume-weighted 18% reserved for partner protocols in nested RFP Process 20% allocated to veSTG holders 10% to LP providers 10% developer allocation as recommended by LayerZero

60% – Bridgers Bridging volumes drives value and fees to the protocol/DAO. As such it is the primary performance metric of Stargate and thus the highest use of LayerZero Token allocation. The 60% portion will be allocated as 42% to users who have bridged, and 18% reserved for partner protocols who have composed Stargate (such as LiFi, WOOFi, etc.) for a nested RFP process.

The 42% allocation for bridging users will be volume-weighted. More specifically, users who bridged more volume will receive a larger allocation. All volume through Stargate will be considered from 17th March 2022 to 1st May 2024 (LayerZero’s Snapshot #1). It is worth noting that users who have bridged using Stargate (and therefore sent a LayerZero message) will likely also receive a separate allocation from LayerZero at TGE.

The 18% allocation reserved for partner protocols has two key points: Applications built on top of Stargate have driven roughly $2b of Stargate’s volume. They have been very aligned with Stargate and have done tremendous things for branding and awareness, as well as value to the protocol (fees). These protocols are NOT eligible for LayerZero’s Protocol RFP, since all of their volume is attributed to Stargate on LayerZero Scan. The process for distributing this allocation is that Stargate will reserve 18% for these protocols, who will work with the Stargate Foundation to collate the allocations and user addresses from all partner protocols, to LayerZero’s Commonwealth Forum - as a nested RFP. Further details regarding how the partner protocols should reward users is provided here. The deadline to work with the Foundation on this is 5th June 2024 (two days before LayerZero’s partner protocol RFP deadline). Protocols looking to participate in the nested RFP process will work with the Foundation to have their valid submissions added as a comment to Stargate’s original post.

20% – veSTG holders STG holders who engage in voting escrows help secure the Stargate protocol and support its growth via governance and voting. As such, it is reasonable and appropriate that they receive a 20% portion of the StargateDAO’s LayerZero Token allocation.

This allocation will be time-weighted and volume-weighted, with a consideration for (amount locked * duration locked for), which will provide an accurate time-weighted score. Any users who re-locked, or added an additional amount of veSTG, will have this summed to their score. This ensures that users who staked a smaller amount but for a long time are rewarded, while users who stake large amounts for a short time are not overly-rewarded.

The Stargate Foundation is additionally recommending that the lower bound for inclusion is >20veSTG (~$10 for much of this period), at time of locking. The Foundation is presenting the following data to back up this recommendation, which has been collected from various Snapshot proposals. Votes if VP <= 0.1: 45701 (10.98%) (11% of wallets that voted have <0.1 veSTG) Votes if VP <= 5: 278366 (66.86%) Votes if VP <= 10: 297354 (71.42%) Votes if VP <= 20: 342996 (82.38%) (82% of wallets that voted have <20 veSTG)

Applying a threshold of >20veSTG cuts out 82.3% of wallets that have voted on proposals for Stargate. This will significantly reduce the number of botter’s and sybils that would otherwise receive an allocation. While this may seem like a high number, it is important to note that the vast majority of these wallet addresses are generated by sybil clusters that are outside the scope of LayerZero’s sybil filtering process. This is because some veSTG holders only vote on Stargate proposals, and do not conduct LayerZero messages – therefore they will likely not be included in the LayerZero Sybil Reporting process.

Users who staked their STG tokens before the 1-year anniversary of Stargate (17th March 2023) will get a 1.3X multiplier to their score. This will also help to account for a flurry of inorganic activity post-1-year anniversary.

Wallets that have posted proposals to Snapshot should not receive an isolated allocation, but rather their regular allocation according to the above descriptions. Also, STG wallets with veSTG as a result of investment in LayerZero Labs will be precluded from this allocation.

10% allocated to LP providers Liquidity Providers play a central role in the function of the Stargate Protocol by ensuring there is sufficient liquidity for bridging to be facilitated through Stargate. While this service is important, they are already being rewarded by pool incentives which pay between 8-20% APY. As such, their allocation should be more constrained.

This portion of the allocation should also be time and volume-weighted. Every address that interacted with a Stargate pool will be scored based on the amount of liquidity provided in USD.

For example: User A deposits $1000 on Day 1 On Day 100, User A withdraws $500. Their current Score is 1000100 = 100,000, and continue earning on their $500 On Day 150, User A adds $100. Their Score on Day 150 is 100,000 + 50500 = 125,000. They will now start earning for $600. On Day 200, User A withdraws all liquidity, and stops earning a Score. Their score at this point is 155,000. This will be done for every single Stargate pool, across every chain. Each user will then be ranked according to their score, and allocated accordingly.

APTOS BRIDGE PROPOSAL In August 2023, StargateDAO took over the AptosBridge from LayerZero following a governance vote, and now owns and operates the bridge. The AptosBridge has had a cumulative $2B in volume over its existence, the majority of which has come since the StargateDAO began actively promoting it. AptosBridge is eligible for an allocation, and the Foundation is recommending the following distribution: 90% allocated to users who have bridged through the AptosBridge, volume-weighted from inception to 1st May. 10% allocated for partner protocols who have built on the AptosBridge, or otherwise driven volume through it. This will be a separate nested RFP process to the Stargate core protocol. Any wallets that are eligible for distribution under the above criteria will be subject to filtering by the LayerZero Sybil criteria.

CLARIFICATIONS

The Foundation will provide a list of the addresses that are eligible under this RFP, should it pass, and should it be approved by the LayerZero Foundation. Any addresses within this that are marked as sybil by LayerZero will be removed from the list and their allocation will be split amongst the remaining eligible wallets.

The Stargate Foundation will make reasonable effort to remove any malicious entities that have interacted with Stargate (either hackers via bridging, or staking STG for governance attacks, for example).

The allocation recommendation sums to 90%, as 10% is recommended to be allocated to the developers. The Stargate Foundation is a not-for-profit entity, and will use this allocation in its entirety for forward-looking budgeting, including but not limited to; marketing, community initiatives, protocol owned liquidity.

CONCLUSION The Stargate Foundation is recommending the above LayerZero Token distribution to the Stargate Community based on the discussions within the Stargate community. The goal of this entire process is to reward real, durable, users and members of the Stargate Community, without compromising the long-term goals of the protocol. The Foundation believes that this proposal is the most equitable, and will reward as many important users as possible.