[TIP-015] REVISED Future of THORSwap & SwapKit

TL;DR:

Swapkit cannot generate fees so long as it is tied to the THOR token, let alone share them with holders. However, the contributors want to reward THOR holders for their continued belief in the project and the resources contributed to SwapKit's development. In response to feedback from TIP-014, this amended proposal offers an optimistic and independent pathway for THORSwap's future that aligns incentives for all participants, and aims to reward THOR holders for their long-term support and strengthen THORSwap's position as a leading cross-chain DeFi platform. Contributors remain fully committed to THORSwap's success and will continue its development and support. We are actively exploring potential strategic partnerships and mergers to enhance THORSwap's capabilities and reach. 

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The Problem

THORSwap (TS) is a DeFi project centered around the THOR token, enabling fee sharing, governance and trading discounts for its community of DeFi enthusiasts. The product serves a B2C market, while SwapKit (SK), a SaaS product originating from the TS ecosystem, targets a B2B audience, including wallets, applications, and institutional clients.

In engagements with potential clients, it became evident that SK's product viability requires a clear ownership structure and no ties to shared tokenholder benefits. Initial partnerships with major industry players further clarified that SK's ability to generate fees depends on maintaining compliance with strict regulatory standards. These include demonstrating transparent ownership and limiting risk exposure. Distributing fees to every THOR holder could, e.g., require KYC for all tokenholders, an impractical approach given the open nature of THOR tokens.

After extensive research, the Contributors concluded separating TS and SK is necessary to unlock SK's potential. 

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Moving Forward

This proposal outlines a path forward for the THOR community to derive value from SK without threatening the compliance or sustainability of each. Contributors believe this solution aligns with the community's interests, offering immediate benefits and long-term potential for THOR holders while allowing SK to scale without regulatory barriers.

Enabling SK's revenue allows it to absorb the costs of running a backend infrastructure and hire new talent to accelerate feature development and protocol integration. TS would benefit from a best-in-class SK integration at a discounted rate, ensuring long-term competitive advantage.

TS fees generated going forward can be focused on improving TS and all aspects of the user interface, including but not limited to user experience, supported wallets, referral programs as well as new and innovative features from supported cross-chain protocols.

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Proposal

Reorganization

• Ownership: SK's IP and revenue will be fully owned by SwapKit, Inc., with no connection to the TS project or THOR token.

• Funding: SwapKit, Inc. will independently fund its development.

• TS Improvements: This reorganization reduces TS's operational costs, freeing up resources to enhance the TS platform.

• Revenue Distribution: TS's revenue will continue to follow the 25/75 treasury and vTHOR split.

• Separate Management: TS and SK will transition to independent management structures, each with a dedicated team of contributors and vision. This will be done carefully, ensuring TS continues to have a dedicated vision and support.

Introducing New Staking Tokens

• uTHOR: A new staking token similar to vTHOR, but distributing rewards in USDC instead of THOR.

• yTHOR: A one-way staking contract in which THOR can be permanently staked to earn USDC rewards. THOR staked as yTHOR cannot be unstaked. This staking option is required for SK equity eligibility and is designed to prevent future THOR selling from SK equity holders, protecting small holders from dilution. 1 yTHOR retains the same voting power as 1 THOR. 

• vTHOR: Existing vTHOR staking remains unchanged, providing fee-sharing rewards in market-purchased THOR.

• TS fee sharing will be allocated proportionally among the three staking tokens and the LP pool.

SK Equity Distribution for Eligible THOR Holders

• Must hold >= 250,000 THOR (or vTHOR equivalent). Positions and wallets may be aggregated upon sufficient demonstration of joint ownership and control to satisfaction of SK.

• 30-day window to file your claim from the time the application is made available. Details on the claim process and application portal will be posted on https://claim.swapkit.dev and https://claim.thorswap.finance

• Snapshot was taken as of TIP posting

• LP positions in THORChain or Sushi pool qualify.

• Must pass KYC & AML screening to comply with laws.

• Must be an accredited investor and meet local requirements.

• Same class of shares and vesting schedule as contributors, currently illiquid.

• Token Locking Requirement: THOR holders must stake into the yTHOR contract to be eligible for SK equity. 

• Conversion Rate: The equity conversion rate will be 75% (1% of current THOR supply = 0.75% of SK equity). Allocated shares that are not claimed will be retired.

~$6M compensation for THOR holders

• Benefits holders not receiving SK equity. Those receiving SK equity per this proposal, must permanently lock their tokens and will not benefit from these distributions.

• A total of ~$4M in RUNE will be donated to the THOR/RUNE LP in equal daily tranches over 90 days

• This will consist of 400K RUNE from the treasury + all remaining treasury LP positions (~162K RUNE & ~270 ETH as of publication).

• This will increase liquidity and provide direct rewards for the community

• ~$2M in THOR from circulating supply will be distributed to vTHOR holders over 90 days. This will come from the Treasury LP positions as well

• If any SK team member opts out of equity conversion, any vested THOR tokens will be locked during the reward period.

THORSwap Benefits

• 25% of the fees generated by TS will now go 100% to funding the development and maintenance of TS

• TS Contributors commit to launching a referral program by the end of 2024. This will enable community members to benefit directly from driving new customers to TS.

• 75% Lifetime Discount on SK: TS will receive a 75% discount on SK. This will ensure TS enjoys a continuing competitive advantage over other market competitors on pricing for so long as TS remains an independent project.

Enhanced Tokenomics

• Preserving THOR Value: The yTHOR staking mechanism is intended to preserve THOR liquidity and value for smaller holders. While some have suggested burning these tokens, that feels unduly punitive to large holders. yTHOR instead allows those receiving equity to continue to benefit from TS's success, while safeguarding smaller holders from potential market dumping and preserving all available market liquidity for their needs going forward.

• Liquidity Pool Consolidation: Consolidate LP positions from Sushi and THORChain:

• RUNE contributions will be donated to the THORChain Pool. This will transfer liquidity ownership from the treasury to the community.

• THOR will be distributed to vTHOR holders

• SushiSwap pool assets (ETH) will be converted to RUNE and allocated accordingly.

• Improved Fee Distribution

• Fee sharing will change to a pro rata distribution system, equally distributed to THOR stakers whether they stake for vTHOR, uTHOR, yTHOR, or LP into the pool

• Improved FDV

• ~30% of the remaining token supply will be burned

• ~104M THOR will be burned from the community incentive pool

• ~20M additional THOR will be burned from the unallocated contributor vesting

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Future Vision for THORSwap

TS Contributors recognize the value of TS to both the users and the larger cross-chain community. We take very seriously the responsibility that TS is not only sustainable, but that it has a vibrant future. This proposal aims to preserve TS's status as a leading cross-chain interface, allowing it to grow with new features and solid financials.

If TIP-015 is approved, several contributors will transition to full-time SK employees. This change will have no practical impact on TS's daily operations; the platform's backend is already fully powered by SK and these contributors already work on the SK product exclusively. Several contributors, including frontend developers, product managers, and moderators/support staff will continue to actively maintain TS and develop new features, and SK will enter into a white-glove supplemental services agreement with TS to ensure ongoing access to those contributors who transition to SK, and ensure integration support for TS at or above that provided to any institutional customer.

In addition to the enhanced tokenomics described above, contributors commit to launch a new TS Referral program by the end of 2024. This will ensure future growth of the user base while allowing the community to participate in and directly benefit from the growth of TS.

Contributors are also actively working to ensure that there will be strong stewardship over TS into the future. Advanced discussions are ongoing with multiple parties around possible mergers or partnerships. There is a possibility that a partner may offer a future token merge with the THOR token. While nothing has been committed yet, and details of in-progress discussions cannot be disclosed at this time, we are very excited about the possibilities that have appeared.

This proposal represents a crucial step forward for TS. Enhanced tokenomics, new user incentives, and potential strategic partnerships will drive a stronger, more sustainable platform. We believe these changes will not only benefit our existing users and token holders but also position TS for continued leadership in the cross-chain DeFi space.