FOXy Community Discussion
FOXy is a proposed staking rewards system that allows FOX token holders the ability to stake FOX into a smart contract in order to receive rewards denominated in FOXy. FOXy is an ERC20, rebasing token that is redeemable 1:1 with FOX tokens. The FOX rewards generated by the staking system are provided to the contract via the Shapeshift DAO’s treasury swapping for Tokemak’s TOKE rewards, but this project aims to provide a design that is extensible in the future for other alternative yield generating strategies. The ultimate goal is for FOX holders to have a simplified interface in which to earn yield on their FOX tokens that outperforms other avenues available to them without active management. Several mechanisms of the system have implications for the DAO’s treasury and require approval by the formal DAO governance process to proceed. These include: 1) approval to create a liquidity reserve of FOX for users that would like to exit their FOXy immediately incurring a penalty that is accrued by the liquidity providers of this pool, 2) empowering the Treasury Management and Diversification Committee (TMDC) to manage TOKE to FOX swaps required to reward staking participants and 3) general approval to deploy the smart contract system on behalf of the DAO and the transfer of ownership of these contracts to the DAO multisig. This forum post is meant to serve as a precursor discussion to the needed proposals.
Currently, Toshi is leading the project to deliver the FOXy staking program to mainnet with a target date of early Q2 2022. The project is being funded solely by personal funds that have been committed to a bounty created by Beorn (link).
Items needing governance approval
Should the DAO approve the deployment of the FOXy staking system and the transfer of ownership to the DAO multisig?
Allows for the creation of an important mechanism for FOX holders to receive yield on their FOX and paves the way for future possibilities for the DAO to distribute additional FOX from other revenue sources to token holders
Any smart contract suite comes with security and operational risks that the DAO would be taking on. Formal audits will be in place prior to the launch and the community will be able to review all source code.
Should the DAO contribute N million FOX to the FOXy liquidity reserve to facilitate immediate redemption of FOXy for FOX for a X% penalty paid by users to the liquidity providers of this reserve pool. This reserve allows for FOXy to potentially be used as collateral in loans and other places in defi where immediate liquidity is required.
Allows for users to access immediate liquidity if required
- Enables the potential for FOXy to be used as collateral on other DeFi ecosystems since liquidators are able to immediately exit if need be.
- Opportunity costs for the DAO is very low given we have an excess of FOX and this pool can generate a return on that FOX.
Exposes N Million DAO owned FOX to the same smart contract risks mentioned above.
- Creates a non market based rate for the liquidation penalty due to the unique nature of the DAO’s FOX position. This will probably mean the penalty for immediate FOXy exit is lower than other market participants would accept in return for their FOX deposits.
Should the TMDC be delegated control of the redemption of TOKE rewards and the depositing of FOX rewards into the FOXy staking system?
Allows for a trusted committee to be put in charge of the TOKE rewards generated by the system and enables the DAO to be nimble with market conditions on whether to sell or retain the TOKE in the DAO’s treasury.
Puts additional trust and responsibility on the TMDC committee that they (of course) would need to be willing to accept.