OD Vault Keeper Minting Rewards Program
At this time, a similar protocol on Optimism, HAI (as of analytics page on 11/15/24):
- $3,849,317 Total Collateral Locked (about 1238 ETH in value)
- 1,238,047 Outstanding HAI
- 157 Active Vaults
- $849,115 in HAI Liquidity Pools
- $33,700 Projected Annual Earnings
In comparison, Open Dollar (as of analytics page on 11/15/24):
- $356,270 Total Collateral Locked (about 115 ETH in value)
- $154,837 Outstanding OD
- 100 Active Vaults
- $72,436 in Camelot Liquidity
- $2650.28 Projected Annual Earnings
Although a PI/Reflexer based protocol can be confusing due to the more flexible USD peg and redemption rate, it has shown that it can have bigger adoption in a smaller ecosystem. This is due to multiple reasons like their marketing approach and partnerships, but there are also two other options that are currently available to Open Dollar DAO at a very low experimental cost.
First is incentives for borrowing and minting OD as a way to distribute governance tokens to vault users. The other is leveraging the local network’s VE33 DEX to encourage providing liquidity. A weekly voting incentive program will be in a separate proposal.
Open Dollar should adopt a similar reward method that has contributed to HAI’s minting. To test and measure the results, I would be in favor of a 12 month program with a monthly claim based on the user’s percentage of the total minted OD for that collateral with the following monthly schedule:
25,000 ODG monthly total DAO Treasury cost:
- WETH - 12500 ODG
- RETH - 2500 ODG
- WSTETH - 7500 ODG
- ARB - 2500 ODG
This program would be a total 12 month cost of 300,000 ODG from the DAO treasury.
This is based on the current adoption of collateral types. For example, Aave’s Arbitrum’s Market has the current collateral usage:
- 35.76k WSTETH ($132.6 Million)
- 3.20k RETH ($11.22 Million)
- 120.02k WETH ($375.34 Million)
- 60.9m ARB ($43.19 Million)
This is likely not the same user that would be using Open Dollar but it should give the context of Arbitrum’s typical user’s collateral usage.
Please note that the rewards might be more favorable to ARB and WSTETH collateral types but these appear to be two collaterals with some of the biggest room for growth of TVL and minting while also bringing more ARB voting power to the protocol for future programs that align with Open Dollar growth.
Motivation - The Open Dollar community should implement the proposal to both reward the minting of OD and distributing governance power back to the vault users which are key to the adoption of Open Dollar.
Specifications - There shouldn’t be any additional platforms and technologies that will be used. There might be an additional reward contract needed but a structure similar to HAI’s current should be reviewed.
Steps to Implement - There will be front-end and back-end developer costs and manpower needed to this program for updating the “Earn” page to show the estimated rewards APY with an active calculation and claim button for vault keepers to claim their monthly rewards upon distribution of the ODG from the treasury.
There will also be marketing and communication costs and manpower to explain the rewards program and promote it.
- Timeline-
With the change of minter/vault keeper rewards and voting incentives, the community should set goals and measure the impact. At the risk of using HAI of too much of a benchmark, I think we should use their current metrics as some guidance:
6 months goals from launching:
Total collateral locked in ETH value - 400 ETH
Total OD minted 550,000
Total DEX OD Liquidity $245,000
If these goals are not reached there should be a proposal to alter this program based on collateral usage.
12 months goals
- Total collateral locked in ETH value - 1000 ETH
- Total OD minted 1,250,000
- Total DEX OD Liquidity $750,000
While these metrics do fall very short of the 20K ETH in TVL and total minting cap, I think that there is likely a large overlap of Open Dollar users and users that would adopt Nerite or Liquity V2. This is anticipating some of the current Open Dollar TVL flowing to those protocols once they launch.
After the 12 month program, we should look at the impact of OD minted and Total DEX OD Liquidity as a measure of increase of both per ODG value for minter and voting incentives.
Overall Cost - The total cost to implement the proposal to be taken from the DAO treasury fund is 300,000 ODG over 12 months.
