BIP 100 - Allocation of unclaimed ibBTC rewards
TLDR
There are funds left in a multi-sig from ibBTC from the yields generated by assets used to mint ibBTC. These funds are essentially user funds but the users themselves will be impossible to identify. This BIP proposes 3 different options on how to allocate those funds for the benefit of the DAO and its users. Badger voters will have the option to select from 1 of 3 possible options on how these funds should be used.
Detailed background
With the discontinuation of the ibBTC product, there are a series of yields that were generated to those vaults that have not been distributed to depositors. The amounts in question equate to roughly $300,000 worth of CVX and crvCVX tokens as shown here: https://debank.com/profile/0xB76782B51BFf9C27bA69C77027e20Abd92Bcf3a8
Identifying the exact depositors and how much they are owed is likely impossible and would most likely result in very small allocations of yield to individuals even if they could be identified. The assets however, are user assets and so have not been transferred to the treasury. To that end, the Badger Community council will represent the DAO in how these funds can best be allocated and they have decided to seek a community voice on 3 different options as discussed on the Badger Discord. Of note, each of the 3 options have been debated in “Request For Feedback” channels extensively and prepared in a manner that allows the community to then choose the preferred option. As a guiding principle, the 3 options do not include the allocation of these resource to the treasury, but instead are community funds and each option is focused on a different approach in how best to support the future of the DAO.
Option 1. Seed initial eBTC liquidity
This option seeks to sell the assets and prepare for the launch of eBTC. Place the assets into a very tightly bound wBTC / eBTC Uniswap v3 pool with 0.01% fees. This would be provide for great initial and perpetual liquidity, allowing for Badger to have an initial pool to swap in and out of for many users that we don’t need to incentivize with further Badger tokens. This plan assists in the vision of eBTC as a permissionless and perpetual option by providing initial liquidity without any drain on Badger emissions. Once eBTC is deployed, this option would see the LP launched by the treasury in support of eBTC.
Option 2. Extraordinary bootstrapping yield for eBTC
This proposal would see the funds sold and then used on the launch of eBTC to provide for extraordinary yield for the launch of eBTC liquidity pools. This would provide for a bootstrapping phase for eBTC of approximately 10% APR on $3M of initial liquidity. Note that this plan would see those funds distributed in conjunction with any other sources of yield and incentives as provided for in the treasury controlled launch of the eBTC token.
Option 3. Community council controlled yield assets
This option seeks to place the funds at the discretion of the community council with the purpose of investing and stacking more yield assets. The Community council would decide on what assets to keep and what to sell and then seek to use those yield assets across de-fi to build out a larger control of governance tokens and positions. This idea does not seek to emit the principal at all, but instead to invest the funds and then keep a portion of the earned yield to reinvest and emit a portion of the earned yield to vault depositors.
In this model, the council will attempt to adhere to the following;
- Invest in a variety of yield bearing assets and stack them perpetually until the launch of eBTC. This may include the market purchase of Badger tokens for depositing in LPs at a rate not to exceed 50% of the total yield being generated.
- The yield and governance stacking phase will last for 6 months to allow for an optimum investment of yield bearing assets after which time emissions will begin.
- Once the emissions phase begins, the council will seek to emit 50% of the monthly yield to vault depositors and retain the other 50% for the stacking of more governance and yield bearing tokens.
In this option, the community council will decide on the investment of all funds but will need to draft a new BIP to decide on where emissions go once the initial 6 month period has elapsed.
Vote options.
Option 1. Seed initial eBTC liquidity
Option 2. Extraordinary bootstrapping yield for eBTC
Option 3. Community council controlled yield assets