TIP-008: Bunni v2 Migration and Enhanced Tokenomics Framework

Summary

This proposal establishes the framework for migrating to Bunni v2, including the transition from $LIT to $BUNNI tokens, implementation of new tokenomics, and introduction of a structured fee distribution system. The proposal encompasses token migration mechanics, emission structures, governance processes, and a comprehensive incentive program spanning 12 months, aligned with the anticipated launch of Uniswap v4.

Background

The current token ($LIT) lacks meaningful brand connection with the Bunni product, and the existing gauge system has proven suboptimal for directing emissions to encourage TVL growth and revenue generation. As Bunni approaches its v2 launch, this comprehensive tokenomics overhaul will align the protocol's incentives with sustainable growth and revenue generation.

Proposal

1. Token Migration Framework

• Convert $LIT to $BUNNI at 1:1 ratio (indefinite conversion window)
• Total $BUNNI supply: 1 billion tokens
• New $veBUNNI locking mechanism:
  • Direct $BUNNI locking
  • Maximum 1-year lock duration
  • $veBUNNI assumes control of governance
  • $veLIT continues receiving weekly $BAL emissions and $WETH distributions from remaining $oLIT exercises

2. Airdrop Distribution

• Snapshot block: 20866918
• Allocations (all with 1-year lock):
  • $veLIT holders: 98,631,856.48 $veBUNNI
  • $LIQ holders: 8,000,000 $veBUNNI
  • Testnet participants: 5,085,500 $veBUNNI
  • Note: $liqLIT holders included in $veLIT allocation

Migration Bonus Details:

• $veLIT holders receive 100% migration bonus
• Calculation: bptLocked * litPerBPT * 1.25 (includes $WETH value in $LIT from locked BPTs)

Testnet Quest Allocations:

• 11 Quests completed: 600 $veBUNNI per quest
• 8-10 Quests completed: 200 $veBUNNI per quest
• 5-7 Quests completed: 100 $veBUNNI per quest
• 1-4 Quests completed: No allocation

3. Protocol Fee Distribution Structure

Initial Protocol Fee: 10%

Graduated Distribution Schedule:

Period	Treasury	veBUNNI	Referral
0-3 Months	0%	0%	100%
3-6 Months	20%	15%	65%
6-9 Months	30%	25%	45%
9-12 Months	45%	30%	25%
Onward	45%	40%	15%

Technical Implementation:

• Euler's FeeFlowController mechanism for fee auctions
• WETH as designated purchase token
• Protocol fee and distribution parameters adjustable by governance

4. Emissions and Incentives Framework

Current System Changes:

• Elimination of current gauge system
• Pause of all Bunni v1 gauges on November 1st
• Implementation of transferless staking contracts:
  • Improved gas efficiency
  • Permissionless liquidity mining incentives using any token on any chain
  • Integration with on-chain referral system

Epoch-Based Model:

• 3-month epochs
• Initial Epoch 1 allocation: 25,000,000 $BUNNI
• Fixed allocation structure:
  • 10% to support ETH/BUNNI liquidity
  • 70% to support core revenue generating pools
  • 20% to new incentive applicants

Incentive Program Requirements (12-month duration):

• Each epoch proposal published by the TEU and TGU must include:
  • Previous epoch performance metrics
  • Cost-benefit analysis
  • Revenue generated per pool
  • Strategic pool selection rationale
  • Performance targets
  • TVL efficiency metrics
  • Growth trajectory data
  • Swap fee revenue projections
  • Market share goals
  • Revenue distribution forecasts

5. $oBUNNI Implementation

• Provision for future activation pending technical requirements, such as a liquid ETH/BUNNI market for reliable oracle pricing. Activation will be subject to governance approval.
• Historical success: 1700 WETH generated over 20 months in v1.

6. Technical Implementations

• FeeFlowController mechanism for protocol fee auctions
• Transferless staking contracts deployment
• New governance mechanism activation
• Migration system deployment

Implementation Path

Phase 1: Technical Foundation

• Contract deployment ($BUNNI, $oBUNNI, $veBUNNI)
• FeeFlowController implementation
• Transferless staking contracts deployment
• Security audit completion

Phase 2: Migration Activation

• Enable $LIT to $BUNNI conversion
• Process airdrop distributions
• Launch $veBUNNI locking
• Initialize new governance system

Phase 3: Incentive Activation

• Deploy initial liquidity pools
• Activate Epoch 1 emissions
• Implement performance monitoring

Budget

Audit Requirements:

• Vendor: Pashov Audit Group
• Cost: 48,000 USD
• Scope: All migration and new mechanism contracts

Initial Incentive Allocation:

• Amount: 25,000,000 $BUNNI
• Purpose: First 3-month epoch
• Primary focus: ETH/BUNNI pool and key revenue-generating pools

Next Steps Upon Approval

Following achievement of quorum and majority support:

Immediate Actions:

• Initiate audit process with Pashov Audit Group
• Complete contract development and testing
• Prepare technical documentation

Pre-Launch:

• Complete security audits
• Deploy and verify smart contracts
• Release migration documentation
• Configure monitoring systems

Launch:

• Activate token migration
• Process airdrops
• Enable governance mechanisms
• Begin incentive distribution

Post-Launch:

• Monitor system performance
• Prepare first epoch metrics
• Enable governance proposals with support of veBUNNI token.

Conclusion

This proposal represents a comprehensive overhaul of Bunni's tokenomics and governance structure, designed to maximize protocol value through:

• Clear brand alignment with token migration
• Efficient emission distribution
• Structured fee sharing
• Performance-based incentives
• Community-driven governance

The implementation prioritizes security, sustainability, and community participation while establishing clear metrics for success. The graduated fee distribution schedule and epoch-based emissions provide flexibility for governance to optimize protocol performance over time.

Notes:

• All allocations and calculations are subject to final verification before implementation
• Governance maintains the ability to adjust parameters as needed
• Regular performance updates will be provided to the community