VIP8: veDAO - The People's Cooperative

https://github.com/ve-DAO/governance/blob/main/VIP8.md

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vip: VIP8 title: "veDAO: The People’s Cooperative" status: WIP author: nickbtts [multisig signer]

sponsors/seconders: Information Token [team] discussions-to: https://forum.vedao.io/t/proposal-vip-8-vedao-the-peoples-cooperative/121/3

created: Wed 16th Feb 2022

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Simple Summary veDAO has the opportunity to become an established, powerful force in the Solidly and Fantom ecosystem by effectively compounding our power over the primary Solidly yield optimizer, Solidex. As a "people's cooperative," or subDAO of Solidex, the DAO's goal will be supporting and empowering the Solidly ecosystem, whilst driving maximum long-term value to the veDAO community.

Abstract In the wake of the Fantom 'liquidity wars', veDAO finished fourth in the overall TVL rankings, thus attracting a 4-year votelocked SOLID allocation. VIP-5 proposed a partnership with the yield optimizer 'Solidex' alongside Yearn, Curve, Geist, Multichain, Abracadabra and Saddle, giving veDAO a more liquid representation of the vote-locked NFT and the ability to compound power over the Convex of Solidly, and thus, Solidly itself.

Of course, this was just the first step. We believe Solidly, and thus Solidex, has the potential to become a dominant force in the DeFi ecosystem, and with an engaged strategy we can grow and compound our voting power. As long term co-operative players in the space it’s important that we work collaboratively with the brightest and best to generate value for holders while leaving open the possibility of future revenue streams, products and utility.

We have seen the accumulation of Convex tokens by DAOs in order to influence liquidity provision on Curve; if Solidly is successful, SEX is likely to play an equally important part in the liquidity ecosystem.

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Motivation & Rationale In summary, the veDAO treasury is controlled by WeVE holders via governance, with VIP-7 an example of a fully community-driven proposal. This treasury will shortly hold WeVE, SOLIDsex and SEX, giving WeVE itself an 'inherent value', as voters could opt to distribute the treasury at any point, once votelocks had completed.

We propose that the DAOs assets be managed with the sole aim of increasing and compounding its long term power over Solidex / Solidly, by utilizing the most effective voting, staking and liquidity provision strategies.

We believe in the long-term future of both Fantom and Solidly and thus believe that compounding our voting power early will reap greater future rewards for when the platform succeeds.

'The People's Co-operative' “Co-operative: an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.”

What exactly does this mean? All of the initial Solidly voting power has been distributed to protocols; some have held votes over the future of this power, whereas others had teams making these decisions unilaterally. As a widely distributed project with a highly active, engaged community, we believe that the shared aspiration of growing veDAO means that together we can drive far greater value to the DAO than going it alone. The community have already shown a willingness to contribute greatly, with several members even stepping up to offer key analytical and managerial help: we hope that this community involvement will continue and expect that this will be a broadly shared venture as we move forward.

Solidex Since the overwhelming support for VIP-5 confirming our partnership with Solidex, we have been working hard to model how exactly that will look in the short, medium and long term; this is, of course, difficult due to a large number of variables that cannot be easily estimated. The percentage of LPs that utilise Solidex versus base layer (considering many LPs may not have veSOLID to boost rewards), the amount of SOLID locked as veSOLID, the amount of SEX votelocked over time, the amount of LP SOLID locked into Solidex for SOLIDsex; these are some of the elements that we've been assessing.

It was important to you as a community, and us as a team, to know that our overall Solidly voting power would not be diluted by our partnership with Solidex. We assess that with co-ordinated SEX accumulation strategies, max votelocking, and effective vote strategies (see below), we would maintain our percentage voting power over Solidly in the short-term, and would probably increase our percentage voting power in the medium term, notwithstanding the actions of other parties. Moreover, if any other major holder does not follow an optimal route, our power would in fact increase. This is where our agility is key; we have no prior commitments or product to support, thus we are able to pursue the optimal strategy.

Some projects have opted to self-manage; this is probably an effective route for an enduring protocol, but to retain their voting power they must continually relock their veSOLID for four years. Our partnership with Solidex gives us liquid assets (SOLIDsex) and assets that would be illiquid for a maximum of 16 weeks(vote-locked SEX). This gives WeVE holders optionality and allows us to be more dynamic as Solidly and Solidex evolve and as our own option set expands. In the early weeks, only protocols will have significant amounts of veSOLID, meaning Solidex is one of few options available to LP with full boost (2.5x); this means more SOLID locked into Solidex, and more emissions to our treasury.

Strategy The treasury will have liquid assets as a result of our partnership with Solidex. The initial strategy for these (IMPORTANT: this is subject to change):

SOLIDsex. Initially this will be staked for SEX rewards (3.5% of all mints & downvote protection fees) and SOLID (10% of all Solid farmed). This can be eventually directed to the SOLIDsex/SOLID LP pool, as this has a hardcoded emissions vote from the protocol. SEX emissions would be max votelocked, whilst SOLID would be locked for SOLIDsex or, more likely, paired in the LP pool, dependent on the balance of rewards. SEX. This is our voting power, allowing us to earn a share of the total fees and bribes earned by Solidex (mix of tokens), veSOLID expansion rewards (SOLIDsex), 5% of LP fees (SOLIDsex) and whitelisting fees (SOLIDsex). In order to earn these rewards and vote, SEX must be votelocked, with a max lock of 16 weeks. It would be our intention to max votelock our SEX allocation. Our emissions would be continually votelocked (SEX) and staked/LP (SOLIDsex), thus accelerating the flywheel. WeVE. The treasury also holds WeVE in the 'ecosystem' fund. It is difficult to assess available rewards and bribes for the early stages of Solidly, and it is likely that in initial weeks SOLID emissions are highly valued. Thus, incentivising our own gauge (WeVE><USDC) and providing liquidity from ecosystem fund WeVE paired with outside USDC, is a likely strategy, and will be subject to a separate proposal. Liquidity We initially plan to incentivise liquidity using some of our Solidex voting power. However, this does restrict our agility (ability to earn rewards/bribes), and so we intend to continue discussions aiming towards a blend of different provisions, such as POL, bribes, rewards and voting.

With emissions beginning on the 24th of Feb, it is recognised there is a 'liquidity gap' where WeVE emissions will end, thus capping the total supply and ending pool 2 incentives. We currently believe that there will be enough tail liquidity to cover this period prior to Solidex launch.

Above & Beyond Not just great trance! This is a big first step in a long-term plan, and we have the resources to potentially incorporate new strategies, products or teams who wish to use us as a gateway into Solidly. Voting power for liquidity is valuable, and we look to work with forward-thinking projects to add more value to the ecosystem. These discussions have already begun, but it's important for us to establish this clear direction prior to progressing into more complex iterations.

It should be noted that the team are general believers in revenue share with the community; this is something we would aim to do in the longer term (around any legal constraints) once we have compounded our early voting power and have an established revenue stream.

Specification Team The veDAO project was incubated by Information Token, with different members taking on various roles of responsibility. It is important, however, that veDAO establish a defined core team, with set roles and responsibilities, to complement key contributors from both IT and the community.

Long-term team appointments will be confirmed by proposal in coming weeks, but for the purposes of Solidex launch it’s important we have clear responsibilities in place on an interim basis.

For the interim, we propose a Core of nickbtts and jack-anorak for strategy and ops, cryptoboi and triangulair for bizdev & community , ElReyDeTrent for marketing and Zoomer for front end development. Community members 2x and ol.chunka.coal have been instrumental in helping us model the way forward and have agreed to continue with strategy assistance in the interim. Gabagool, Solve and BasedXeno will assist where possible with ops, strategy and bizdev. As mentioned, community members have been fundamental in developing veDAO and its ethos; we hope to onboard further willing members from the community into Core as the team develops.

We intend to build out easily accessible front-end data for the community to review, whilst a clear direction allows us to solidify our marketing and creative strategy.

Treasury Dynamism As an 'unknown' project to the Fantom ecosystem, we agreed to add external multisig signers (FTMAlerts and Spiritswap) to the treasury Gnosis safe. They will remain in the interim. Interacting with Solidex will require many transactions and may be time critical, so we wish to, in the near future, implement a multisig that consists of team members and / or community members. It is incumbent on the community to volunteer or nominate suitable individuals prior to a further proposal.

FAQ What does the WeVE token do? WeVE represents governance control over the veDAO treasury and the future of the DAO.

What is WeVE worth? Fundamentally: the treasury will, once Solidex launches, hold revenue-generating assets. The team will utilize these to generate and compound more assets over time. The treasury value is effectively a ‘floor’ for the aggregate token value. The degree to which the token commands a premium over this value is most likely determined by 1) anticipated growth in Solidly & Solidex value, 2) belief in our ability to outperform on our Solidly/Solidsex position over time, and 3) speculative belief in our ability to accrue value for the token beyond this particular initiative.We emphasize that this last piece is indeed speculative; our operating scope at this point is simply to provide, pound-for-pound, exposure to this ecosystem.

Since we partnered with Solidex, more news has come out about competitors. What about them? 0xDao published a Medium article with some details of their future Convex-type platform. However, with no launch date, no tokenomics and no numbers detailed, it is not possible to assess this as a viable option. We’ve discussed this at length in the discord, and suggest browsing those discussion in the #general and #governance channels.