VIP 10: Varen Tokenomics Reorganization and Foundation Building

Voting ended almost 4 years agoSucceeded

Abstract/Executive Summary

Herein we propose to adopt the Varen Tokenomics Reorganization and Foundation Building plan in order to (1) simplify the Varen DAO ecosystem, (2) reorganize the Varen tokenomics to maximizes project strength, and (3) transition to a long term revenue distribution model that better supports the Varen ecosystem and products.

Specification

Phase 1: Simplification of the Varen DAO

The first phase of the reorganization plan will center on the retirement of the Governance Vault.

To accomplish the goal of simplifying the Varen DAO, we propose three initiatives:
- 1. Transition from Vault based design by retiring the Governance Vault in order to reduce gas costs (from staking/unstaking) and minimize smart contract risk to VRN holders.
- 1. Open voting to all holders of VRN to broaden participation in the governance of the Varen DAO.
- 1. Change the voting quorum to 10% of all eligible voters to reflect the larger vote base.
Note: The Protocol Owned Liquidity program wallet will also be set up at this time.
Phase 2: Reorganization of Tokenomics

Once DAO simplification is complete we will proceed into the second phase, the reorganization of Varen Tokenomics, which will be focused on using revenue to build up Protocol Owned Liquidity to support renAssets being traded on VarenX in order to facilitate higher volumes with less slippage.

Varen tokenomics will be reorganized by means of the following three initiatives:
- 1. Retire the Governance Vault and move to a Buy Back and Burn mechanic in which revenue from Varen products will eventually be employed to market buy VRN and burn it, reducing supply. Similar to the model used by MakerDAO (without the auction mechanic), this will align the incentives between VRN token holders and the governance of the Varen DAO.
- 1. Creation of a Protocol Owned Liquidity program designed to build up liquidity in the VRN-ETH pool and other LP pools that will support Varen products.
During this phase 100% of revenue will be directed to the Protocol Owned Liquidity program as described below.

Focus Assets:
- renBTC Liquidity Goal: $500k
- renLuna Liquidity Goal: $500k
- renDoge Liquidity Goal: $500k
Non-focus Assets:
- Other Cross-Chain assets Liquidity Goal: $100k
Revenue in specific renAssets will be sent directly to the appropriate pool, with half sold for ETH to pair with the remaining renAssets, until that pool’s liquidity goal is reached. Once the goal is reached, the renAssets that would have gone to that pool will be directed to the other Focus Asset pools until they reach their goals. Once all 3 Focus Asset goals are hit the plan will move into the third phase.

Additionally, we propose to authorize the OTC of up to 200 VRN when favorable to provide seed funds to Focus Asset pools in order to jump start the build up of the POL program.

As other revenue streams are developed as part of the Varen ecosystem they will also follow this plan by contributing toward building toward liquidity goals in order to accelerate the process.
Phase 3: Burn & Build

The third phase will be the transition to the desired long term revenue distribution model for the Varen project. Our goal is to introduce revenue distribution flexibility to efficiently utilize revenue to build value and support the Varen ecosystem and products. This will be accomplished by directing revenue generated to the following three categories depending on project needs (note: these allocation percentages may be changed by future governance proposals as needed):

1. Buy Back and Burn (70% of Protocol Revenue):

-70% of fees will be used to market buy VRN and burn it. This will provide consistent buy pressure and will reduce the circulating supply of VRN over time.
2. Protocol Owned Liquidity (20% of Protocol Revenue):

-20% of fees will be used to continue building liquidity. After the initial Focus Asset phase the VRN-ETH pool will be added as a priority pool in order to slowly lessen the need for LP incentivization, which ideally will reduce LP incentive VRN emission in the long run.
3. Treasury Diversification (10% of Protocol Revenue):

-10% of fees will be used to bolster and diversify the treasury. These funds will be held in ETH or Stablecoins to ensure the treasury is able to adequately and efficiently fund project development in a variety of market conditions. These funds will be considered part of the treasury and, thus, can only be allocated via Varen governance.

Off-Chain Vote

For: Execute Proposal

3.96K VRN82.2%

Against: No Action

858.12 VRN17.8%

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Discussion

VIP 10: Varen Tokenomics Reorganization and Foundation Building

Timeline

Apr 11, 2022Proposal created

Apr 11, 2022Proposal vote started

Apr 14, 2022Proposal vote ended

Oct 26, 2023Proposal updated

Abstract/Executive Summary

Herein we propose to adopt the Varen Tokenomics Reorganization and Foundation Building plan in order to (1) simplify the Varen DAO ecosystem, (2) reorganize the Varen tokenomics to maximizes project strength, and (3) transition to a long term revenue distribution model that better supports the Varen ecosystem and products.

Specification

Phase 1: Simplification of the Varen DAO

The first phase of the reorganization plan will center on the retirement of the Governance Vault.

To accomplish the goal of simplifying the Varen DAO, we propose three initiatives:

1. Transition from Vault based design by retiring the Governance Vault in order to reduce gas costs (from staking/unstaking) and minimize smart contract risk to VRN holders.
1. Open voting to all holders of VRN to broaden participation in the governance of the Varen DAO.
1. Change the voting quorum to 10% of all eligible voters to reflect the larger vote base.

Note: The Protocol Owned Liquidity program wallet will also be set up at this time.

Phase 2: Reorganization of Tokenomics

Once DAO simplification is complete we will proceed into the second phase, the reorganization of Varen Tokenomics, which will be focused on using revenue to build up Protocol Owned Liquidity to support renAssets being traded on VarenX in order to facilitate higher volumes with less slippage.

Varen tokenomics will be reorganized by means of the following three initiatives:

1. Retire the Governance Vault and move to a Buy Back and Burn mechanic in which revenue from Varen products will eventually be employed to market buy VRN and burn it, reducing supply. Similar to the model used by MakerDAO (without the auction mechanic), this will align the incentives between VRN token holders and the governance of the Varen DAO.
1. Creation of a Protocol Owned Liquidity program designed to build up liquidity in the VRN-ETH pool and other LP pools that will support Varen products.

During this phase 100% of revenue will be directed to the Protocol Owned Liquidity program as described below.

Focus Assets:

renBTC Liquidity Goal: $500k
renLuna Liquidity Goal: $500k
renDoge Liquidity Goal: $500k

Non-focus Assets:

Other Cross-Chain assets Liquidity Goal: $100k

Revenue in specific renAssets will be sent directly to the appropriate pool, with half sold for ETH to pair with the remaining renAssets, until that pool’s liquidity goal is reached. Once the goal is reached, the renAssets that would have gone to that pool will be directed to the other Focus Asset pools until they reach their goals. Once all 3 Focus Asset goals are hit the plan will move into the third phase.

Additionally, we propose to authorize the OTC of up to 200 VRN when favorable to provide seed funds to Focus Asset pools in order to jump start the build up of the POL program.

As other revenue streams are developed as part of the Varen ecosystem they will also follow this plan by contributing toward building toward liquidity goals in order to accelerate the process.

Phase 3: Burn & Build

1. Buy Back and Burn (70% of Protocol Revenue):

-70% of fees will be used to market buy VRN and burn it. This will provide consistent buy pressure and will reduce the circulating supply of VRN over time.

2. Protocol Owned Liquidity (20% of Protocol Revenue):

-20% of fees will be used to continue building liquidity. After the initial Focus Asset phase the VRN-ETH pool will be added as a priority pool in order to slowly lessen the need for LP incentivization, which ideally will reduce LP incentive VRN emission in the long run.

3. Treasury Diversification (10% of Protocol Revenue):

-10% of fees will be used to bolster and diversify the treasury. These funds will be held in ETH or Stablecoins to ensure the treasury is able to adequately and efficiently fund project development in a variety of market conditions. These funds will be considered part of the treasury and, thus, can only be allocated via Varen governance.