Stove Labs has previously developed both the Wrapped Tezos contract and the Tezos Farming contract for StakerDAO. After observing both of these contracts in usage by the community, and evaluating alternative products now in use on Tezos, we propose to add several new features to these contracts to enhance the revenue generation capabilities of StakerDAO’s services.
- Enable the functionality to implement a “stability fee” on Wrapped Tezos. The fee may be charged at the time of deposit or redemption on either the Tez itself or the wXTZ.
- Set a “stability fee” of 4% on the redemption of wXTZ when a user exits a portion or all of their vaulted XTZ. With the collected wXTZ, burn 3% of the collected tokens and send 1% of the collected tokens to the StakerDAO treasury.
- Enable the functionality on StakerDAO’s Tezos farms to lock LP tokens and STKR reward claims for a period of time to lock liquidity and to implement the ability to charge a fee at the time of withdrawal from the farm.
- Following the completion of the current XTZ/STKR farms and the completion of #3, turn on a lock functionality for the XTZ/STKR farm that locks LP tokens and STKR claims for a period of 30 days following the deposit of LP tokens.
Benefits to Staker:
For item #1 of this proposal, Wrapped Tezos would benefit from a fee as it does not trade 1:1 with Tez. From the outset of the project, it was understood that charging a “stability fee” would be implemented at some point in order to drive the price of wXTZ closer to the price of XTZ. If a fee was implemented for wXTZ on the redemption side, it would require users to purchase additional wXTZ to fully unlock their Tez. This would create demand/buy side pressure for wXTZ that can help create a 1:1 peg.
Like the functionality of algorithmic stable coins like MakerDAO and Kolibri, the community will use its governance capabilities to assign and adjust this stability fee as well as to apportion the usage of that fee.
In item #2, we recommend the community test an initial 4% Stability Fee to be charged in wXTZ when a user exits all or part of the vault. We recommend burning 3% of the collected wXTZ and assigning 1% to StakerDAO for revenue related to this product.
In item #3, it would be beneficial for Staker to lock up liquidity and rewards claiming in some of its farms for longer periods of time. This is similar to functionality we note on the Crunchy Network farms. It may also be beneficial to have the capability to set a fee that is charged upon exiting of farms as a percentage of the tokens in the farm. This is similar to functionality we note on Plenty DeFi. These fees would be remitted to the Staker Treasury for use under the direction of the community.
In item #4, this proposal suggests that the community implement the functionality described in Item #3, initially focusing on the XTZ/STKR farms.
Compensation and Timing
The Stove Labs team bills their time at 100 EUR/hr, and estimates that the above work will take 160 hours of effort to build and 80 hours to test, audit and deploy for a total of 240 hours. This proposal allocates 24,000 EUR to be paid to Stove Labs upon delivery of the functionality. This 16,000 EUR will be paid in with 15,000 EUR in USDC and 9,000 EUR in STKR at the time of delivery.