TIP-040: tBTCv2 Liquidity Mining for Guarded Launch
Nov 2022 · Mr_T
*Summary: Allocate a minimum of 5,359,375 T tokens and a maximum of 8,039,062.5 T tokens for an initial tBTCv2 liquidity mining program to incentivize early minters of tBTCv2 and facilitate the desired engagement levels and user actions specified in the guarded launch schedule.*
tBTCv2 minting is expected to go live on January 9, 2023, via a guarded launch with caps (both per-deposit and system-level) that increase over time. This staged launch is designed to test the protocol as it grows, and ensure it is able to handle very high volumes of deposits and redemptions. Each stage entails a maximum deposit per transaction as well as a hurdle (system-wide TVL and number of deposit transactions) that must be met in order to move on to the next stage.
tBTCv2's guarded launch is designed to rigorously test the deposit and redemption funcitonality prior to scaling TVL. This liquidity mining program is designed to facilitate the targeted number of deposit transactions in the early capped stage, NOT to naively grow TVL.
Allocating T token incentives to early depositors will facilitate the deposits and engagement necessary to properly test the protocol’s functionality and move through the stages in a timely manner.
Additionally, targeting eligibility for the liquidity mining program to specific communities and power DeFi users provides an opportunity to strategically grow the Threshold community and tBTC user base.
*Allowlist of addresses*
An allowlist of eligible addresses drawing from the existing Threshold community, relevant power user communities (LobsterDAO and Degenscore), and the Threshold alumni network (Curve and Tally Ho) will be eligible for rewards.
Specifically, the allowlist includes:
* T stakers
* Liquid T holders with a balance >= 100,000 T
* lobsterdao NFT holders (https://www.lobsterdao.io/)
* DegenScore Beacon soulbound token holders (https://degenscore.com/)
* tBTCv1 minters
* veCRV holders
* Tally users (as per some TBD metric)
While there's value in keeping the allowlist exclusive initially, it could potentially be expanded to include the following communities, if desired:
* vlCVX users
* wBTC/renBTC minters
* BadgerDAO users
* Other relevant communities or users
Liquidity mining rewards will proceed in step with the guarded launch schedule previously proposed, along with two proposed changes/clarifications:
* Since the System Cap and Total Deposits must be fulfilled before moving on to the next stage, “Week” is renamed to “Epoch”. An Epoch will be at least a week, but may last longer if the specified targets are not met.
* For accounting simplicity, fluctuating USD values are ignored in favor of BTC-denominated accounting.
In epoch 1, the System Cap is 0.5 BTC and the Deposit Per-Transaction Cap is 0.005 BTC. Once 100 deposits of 0.005 (totaling 0.5BTC) are made into the System, rewards for that epoch will be exhausted. Only deposits equal to the 0.005 BTC per-transaction deposit cap will be rewarded.
In Week 8, the System Cap is 150 BTC and the Deposit Per-Transaction Cap is 0.05 BTC. Once 1,000 deposits of 0.05 BTC (totaling 50 BTC) are made into the System, rewards for that week will be exhausted. Only deposits equal to the 0.05 BTC per-transaction deposit cap will be rewarded.
*Rules & Mechanics*
To qualify for rewards, participants must hold the minted tBTC until redemptions are enabled (currently expected in Epoch 8, but subject to change). Since earlier epochs are required to hold for a longer period, the implied T per BTC rewards decrease each epoch.
As a reminder, the goal at this stage is to test system functionality (primarily deposits and redemptions), NOT to naively grow TVL. As such, only transactions that comply with the specified “Deposit Per-Transaction Cap” and that don’t exceed the “System Cap” for the specific week will be eligible for rewards.
Participants that sell, transfer, or otherwise dispose of their minted tBTC prior to redemptions going live will be disqualified from receiving rewards, at the sole discretion of the Threshold Council and Threshold Treasury Guild Committee.
T rewards will be paid out at the end of Epoch 8, pending a manual review to ensure no inappropriate gaming of the system has occurred.
At any point during the liquidity mining period, participants can optionally LP their minted tBTC into the Curve pool for at least an 8 week period, in order to earn a 1.5x boost on their T rewards (meaning the maximum possible T tokens paid out by the DAO for this program is `1.5 x 5,359,375 = 8,039,062.5`).
To recap, to qualify for rewards users must:
* Deposit in the correct increment for the current epoch
* Hold (or LP in Curve) through at least epoch 8, when redemptions go live
* Optionally LP in Curve for at least 8 weeks to earn a 1.5x rewards boost
* Not attempt to game or circument the rules or intent of the liquidity mining program
To avoid being overly prescriptive, this initial proposal only describes liquidity mining for the first 8 epochs before redemptions start. This will provide learnings to inform changes and improvements to any potential future extensions of the liquidity mining program.
* Should there be an additional holding period after redemptions are live for an address to qualify for rewards?
* Should the reward boost for Curve LPs be something other than 1.5x?
* Should the allowlist be expanded? If so, with which communities?
* Are the T rewards calibrated correctly? Are they too high? Too low?
* Since this LM program incentivizes LP deposits, should the DAO continue to vote its vlCVX gauge weight for the tBTCv2 pool during this liquidity mining period or should it temporarily use that vlCVX for other purposes (e.g. voting for the teth pool)?