ZIP — ZyFAI Incentives: Buyback & Burn + Native Yield for Stakers

Author: Gauthier / ZyFAI DAO
Date: 2025-08-31

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TL;DR

• Each month, the DAO uses protocol fees to market-buy ZFI.
• 50% of purchased ZFI is burned (deflationary).
• 50% is redistributed to stakers in native ZFI, streamed linearly over the following month.
• Rewards are computed on total staked ZFI aggregated across ZKSync + Base and streamed on the chain(s) where the stake was held at the monthly snapshot.

Motivation

ZyFAI is pioneering autonomous DeFi via agent-powered smart wallets and curators, steering on-chain capital through non-custodial, auto-rebalancing methods.
The ZFI token accelerates ZyFAI’s products and growth loops. Prior DAO initiatives (e.g., rZFI incentives approved July 22) helped lift TVL by ~105% to ~$5M.
A Buyback & Burn + Native Staker Rewards flywheel reduces circulating supply while routing protocol value directly to aligned stakers — reinforcing token strength and user incentives.

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Specifications

Fee Source

• Protocol performance fee: 10% collected to the DAO multisig.
• Illustrative estimate (context): ~$62,500/month (10% performance fee on 15% average annual yield over $50M TVL → 50,000,000 × 0.15 × 0.10 ÷ 12).

Monthly Flow

1. Route monthly fees → market-buy ZFI.
2. Burn 50% of the purchased ZFI (send to a null address).
3. Distribute 50% to stakers in native ZFI via linear accrual over the following month (streaming/epoch-based).

Staker Set & Aggregation

• Snapshot: End-of-month snapshot aggregates active stakers across ZKSync + Base.
• Pro-rata: Each wallet’s reward is proportional to its share of total staked ZFI at snapshot time.
• Chain handling: Rewards are streamed on the chain(s) where a wallet held stake at the snapshot.
• Eligibility: Staking during Month A entitles the wallet to a ZFI stream during Month B (linear over Month B). Early unstake in Month B stops further accrual.

APY Calculation (yields in ZFI terms)

Let M = monthly staker rebate in ZFI (50% of ZFI purchased that month), and S = total staked ZFI across ZKSync + Base at snapshot.

• APR: APR ≈ (12 × M) / S
• APY: APY ≈ (1 + M / S)^{12} − 1

Illustrative Example (using ~$62,500 monthly fees and 50,000,000 ZFI staked)

Item	Value
Token price	$0.028
Monthly fees	$62,500
ZFI purchased monthly	62,500 / 0.028 ≈ 2,232,143 ZFI
Staker rebate M (50%)	≈ 1,116,071 ZFI
Estimated total staked S	50,000,000 ZFI
APR (illustrative)	≈ 26.79%
APY (illustrative)	≈ 30.33%

If the DAO ever directed 100% of purchased ZFI to stakers (no burn), same inputs imply APR ≈ 53.57% and APY ≈ 68.89%.

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Reporting

A monthly public report will include:

• Fees collected
• ZFI bought, burned, and distributed
• Snapshot data (total staked, participants)
• On-chain proofs of distribution

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Costs

• Operations: DAO multisig executes monthly buyback & burn; Ondefy Ltd handles snapshotting, allocations, and streaming via Merkl.
• Infrastructure: Uses existing staking dashboard + Merkl; no new infra required.
• Gas: Users cover claim transactions (if any).
• Admin: No additional DAO costs expected beyond routine ops.

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Implementation Plan

1. DAO multisig executes the monthly cycle: route fees → market-buy ZFI → burn 50%.
2. Staker rewards (Ondefy Ltd):
   • Take end-of-month snapshot across ZKSync + Base (aggregate total stake S and per-wallet stakes).
   • Compute M = 50% × (ZFI purchased); allocate pro-rata by snapshot share.
   • Stream native ZFI over the following month via Merkl; claims live on the staking dashboard.
   • Publish the monthly report (fees, buyback, burn, distribution, proofs).
3. Start timing: First snapshot at the end of the first full calendar month following approval; first reward stream runs during the subsequent month.
4. Governance: No additional vote required unless parameters (burn/split, fee source, scope) change.

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Execution & Admin

• Custody / Execution: DAO multisig (buyback & burn).
• Ops provider: Ondefy Ltd (snapshots, allocation math, streaming via Merkl).
• Distribution primitive: Merkl streams; claims surfaced on the staking dashboard.

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Decision

Approve the Buyback & Burn + Native Staker Rewards program as specified above, with:

• 50% of monthly purchased ZFI burned.
• 50% of monthly purchased ZFI distributed to stakers in native ZFI, streamed over the following month.
• Aggregation across ZKSync + Base (no fixed per-chain split); distributions are pro-rata to each wallet’s share at the monthly snapshot.

Choices: For / Against / Abstain