[For Discussion] Proposal for Deploying Governance Vault on Fantom

Community Discussion & Proposal
1

Background:

Our Fantom’s farm has seen a steady growth with TVL now over $37 Mn one week after launch. Our FTM and USDC lending pools also have the highest APY compared to other protocols on Fantom! With these strong metrics and our plan to launch more products on Fantom (as outlined here), we are confident Alpaca will grow to be one of the leading protocols on the chain.

As the platform grows, so does the protocol revenue. As a result, one of the questions many community members have been asking us is “What will happen to the protocol revenue generated on Fantom?”

Below, we’ll give some answers to that which will lead into a Proposal:

  • Lending performance fee goes towards buyback&burn: This is straightforward and how we already do it on BNB Chain. Since the $ALPACA on BNB Chain and Fantom have a shared supply, the buybacks benefit all ALPACA holders regardless of where they hold it.

  • Revenue from the farming performance fee: We believe what we do with this revenue channel warrants serious consideration because it can have a strong impact on Alpaca’s future growth prospects and token price. This will be the main topic of this discussion.

  • Grazing Range Rewards: Similar to above, how we decide to handle partners’ tokens will directly influence the attractiveness and success of our Grazing Range partnership program on Fantom.

Proposed Implementation:

There are several options to implement how we do revenue sharing on Fantom:

Option#1

  • Create a Governance Vault on Fantom
  • All revenue + GR rewards on Fantom get distributed to Governance Vault stakers on Fantom, similar to how we do it on BNB Chain

Option#2

  • No Governance Vault on Fantom
  • All revenue from Fantom gets bridged and then distributed to Governance Vault stakers on BNB Chain

Option#3

  • Create a Governance Vault on Fantom
  • A fixed portion of the revenue generated + GR rewards on Fantom get distributed back to Governance Vault stakers on BNB Chain while the rest are distributed to stakers on Fantom.

Option#4

  • Create a Governance Vault on Fantom
  • Revenue generated on each chain are combined and distributed based on xALPACA amount on each chain so that the APR% achived in both governance vault are equal
  • A fixed portion of GR rewards on Fantom get distributed back to Governance Vault stakers on BNB Chain (no selling of rewards token; must claim on Fantom)

We senior alpacas had a long discussion inside the barn, weighing pros and cons of the three options above, and after much deliberation, we believe Option #3 (or #4) is the best solution for our community.

In the core team’s view, we believe 80% of Fantom’s revenue should go towards Fantom Governance Vault stakers while 20% would be distributed to Governance stakers on BNB Chain.

Similarly, 80% of the GR rewards from Fantom partners will be awarded to Fantom stakers, while the remaining 20% can be claimed by BNB Chain stakers on Fantom.

The GR portions of rewards for BNB Chain stakers will have to be claimed on Fantom using the same wallet addresses they stake on BNB Chain’s Governance, while the revenue portion will be bridged over and claimed together with the other rewards on BNB Chain.

Apart from the revenue distribution aspect, the other parameters on the Governance Vault will be the same between chains, these include:

  • Minimum & maximum lock time
  • Early withdrawal fee
  • Equal voting power; 1xALPACA on Fantom = 1xALPACA on BNB Chain

We explain our rationale below…

Rationales:

  • Build value and incentive to hold ALPACA: Without a Governance Vault on Fantom, it will be difficult to build value for ALPACA on the chain. It will be easier for users to sell their ALPACA rewards than to bridge it back to BNB Chain and go through all the steps of setting themselves up on a new network to stake ALPACA, and this would negatively affect the price for all holders. Moreover, users that do not hold our governance token will have a weaker relationship with the project , making it difficult for us to truly grow a strong Herd on Fantom and any new chains we expand to in the future.

  • Strong value proposition for our GR partners: With our proposed option, in addition to getting exposure to Fantom users, our partners will also get access to BNB Chain users which they might not have access to otherwise. (BNB Chain governance vault stakers will have to claim their GR rewards on Fantom, which would bring in a bunch of new users to Fantom, giving GR partners exposure to them.) We believe this makes the value proposition of our program very strong. Without many loyal ALPACA holders on Fantom, it will otherwise be difficult to convince GR partners to join our program, and that means less rewards for ALPACA holders and less demand to hold the token.

  • Rewarding our loyal early adopters: BNB Chain is our birthplace and we couldn’t have grown to this point without the strong support of our users and loyal Herd. Thus, it’s only fair that as we expand to other chains, a portion of the revenue gets allocated back to stakers on BNB Chain, which can be considered the main operating base for Alpaca. This also makes it so BNB Chain stakers will not have to worry about what is the best chain to lock up in; They can lock up on BNB Chain, and know they’ll get some rewards from Fantom and other chains.

EDIT NOTE:

  • 24 Feb: Added Option#4 based on @Bibendus input.
  • 25 Feb: Fixed typo in Option#4
5 Likes
2

I support Option 1. Fantom’s reward goes to Fantom can attract more users on Fantom

3

I could agree most of your opinions.
But it may cause Fantom vault’s apy is much higher than BNB chain’s, as ALPACA’s lending apy is much higher now.
If that happen, the team will hurt the most loyal alpacas’ heart. We know they are locking 30millions of ALPACA.
I perfer option 2 because “20%” can’t solve this problem in my opinion. (or can, but I need more explaination and caculation.)

4

I may have an Idea for option #4 but I don’t know if it can be implemented because it requires to check the xAlpaca snapshot on both chains and $Alpaca redistribution across chains.

To avoid choice paralysis and any backlash due to the fact that rewards on another chain become higher after you lock for a year in the wrong chain, I think that locking $Alpaca in the governance vault should give at least the same $Alpaca rewards to everyone, indipendently on the chain they are locked into.
That means I would count all xAlpaca in both chains and distribute all platform revenues of both chains depending on the xAlpaca distribution.

Here is an example:
BSC Vault: 800 xAlpaca (80%)
Fantom Vault: 200 xAlpaca (20%)
BSC platform revenue: 60 $Alpaca
Fantom platform revenue: 40 $Alpaca
Total platform revenue: 100 $Alpaca
BSC final rewards: 80$ (instead of 60$)
Fantom final rewards: 20$ (instead of 40$)

This option would require some sort of $Alpaca redistribution mechanism between chains but I suppose this has to be done already for the $Alpaca emissions APR because somehow these tokens must be bridged from BSC to Fantom (supposing there will be an emission APR on Fantom).

On the other hand I think that grazing ranges should stay on the specific project chain they belong. For that part I would be fine both with the 100% option but would prefer the 80%-20% for the increased appealing our grazing offer could have to partners.

5 Likes
5

1 xAlpaca on Fantom = 1 vote
1 xAlpaca on BNBChain = 1 vote
so IMHO 1 xAlpaca should give you the right to equal part platform revenue no matter the chain it’s on. But also… I think APY on Fantom and BNBChain will eventually balance. It may takes some months but I don’t think there will be a big discrepancy (the same happened with 1inch).

Because Alpaca is a multi-chain token it should have functionalities on all chains, otherwise Alpaca is just used as incentive for users. Fantom users will just sell their Alpaca if it has no functionality on Fantom. So Option #2 is a no for me.

Grazing ranges on Fantom should be exclusive to Fantom. I think it can be hard to convince onboarding projects to provide tokens if 20% goes to a foreign chain.

6

Although there is no perfect solution, I think option #3 is the best option here.

I agree that it will raise awareness and possibly help to onboard users to the FTM ecosystem as well as the individual projects. It will also help to sustain a healthy APY on the BNB Gov vault.

Especially if this serves as precedent and Gov Vaults on future chains follow the same protocol. This will compound the BNB chain Gov Vault APY and make sure that it continues to have a healthy APY.

1 Like
7

Thanks for the suggestion. We have checked with dev team and this is possible. I have added your suggestion as option#4

1 Like
8

Nice, then option #4 is best. But will the GR rewards be claimable on Fantom? Because:

sounds like it’s sold for Alpaca and bridged to BNBChain.

Will BNBChain GR rewards also be claimable for Fantom users?

1 Like
9

As per the options, 20% of GR tokens would not go to foreign chains. They would be available on Fantom for BNB stakers to claim on Fantom. That means the projects will get exposure to users who are new to Fantom and likely to explore the new products.

2 Likes
10

The GR rewards will not be sold and all will be claimable on Fantom.

1 Like
11

That’s awesome, the value proposition will be great for onboarding projects! For a new projects (especially games) exposure to multiple chains is amazing.

12

Good, I agree option 4.
A fair option.

3 Likes
13

Great. Option 4 is the best .

3 Likes
14

Thank you everyone for the discussion and feedback. I have created an AIP for this topic here: [AIP - 2] Governance Vault on Fantom

Please provide additional comments and it will then proceed to a vote.

15

I think the 4 option is the best one

1 Like