SCP-177 ThorFOX/RFOX Minor Update: Accepting FOX/ETH Uniswap V2 LP Tokens for Staking

Proposal Discussion
1

Summary

This proposal seeks to update the current ThorFOX/RFOX tokenomics to allow staking not only with FOX tokens on Arbitrum but also with FOX/ETH Uniswap V2 LP tokens on Arbitrum. This change aims to enhance liquidity provisioning, strengthening the FOX ecosystem.

Abstract

This proposal is a minor update to SCP-166 ThorFOX, which established a mechanism by which DAO tokenholders can stake their FOX tokens and receive a share of the RUNE affiliate fees. This proposal aims to update the ThorFOX/RFOX tokenomics to allow staking with FOX/ETH Uniswap V2 LP tokens on ARB, thereby strengthening the DAO’s alignment with the THORChain ecosystem. This initial vote will set the parameter to 0% of total rune fee distribution, but allow for the inclusion of a token outside of the fox token on arbitrum.

Motivation

The primary motivation for this proposal is to ensure that the ThorFOX/RFOX program is beneficial to the DAO while providing more options for the stakers and DAO token holders. During the development process, we identified an opportunity to further optimize the system by allowing the staking of FOX/ETH Uniswap V2 LP tokens on arbitrum. This addition is not overly complex and can be implemented efficiently if decided quickly. By enabling staking with FOX/ETH Uniswap V2 LP tokens, we can enhance liquidity provisioning on both mainnet and Arbitrum, thereby supporting both ecosystems.

Specification

This minor update to SCP-166 only alters the portion of the proposal which details the tokens allowed for staking that are then eligible to receive a portion of the monthly RUNE affiliate fees distributed to stakers. Currently, 25% of the monthly affiliate fees are to be distributed to stakers, entirely to FOX stakers on Arbitrum. This proposal updates SCP-166 to allow for a portion of this 25% to be distributed to FOX/ETH Uniswap V2 LP stakers on Arbitrum.

If passed, this proposal would implement the following changes:

  1. Staking with FOX/ETH Uniswap V2 LP Tokens: In addition to FOX tokens on ARB, the staking contract will accept FOX/ETH Uniswap V2 LP tokens.
  2. Implied Lower Rewards for FOX Single-Sided Staking: Instead of 100% of the 25% affiliate fees being distributed to FOX token stakers on Arbitrum, FOX<>WETH LP token stakers would also be eligible for the pro rata monthly distribution.

To expedite the governance process and provide clear guidance for engineering and marketing, we propose a two-stage approach:

  • Initial Vote: This proposal serves as an initial vote to greenlight the engineering team to deploy a staking contract accepting both FOX tokens and FOX/ETH LP tokens.
  • Follow-Up Vote: Within five days of this governance vote ending, a follow-up vote will be conducted to decide how the allocated monthly affiliate fees will be distributed among the different staked tokens initially. It will also delineate how those yield distribution percentages will be adjusted over time (whether it be by governance or by DFC). And how frequently they should be adjusted. Stretch goal is to monitor the program holistically as an ecosystem.

Benefits

  • Multichain yield: The first of it’s kind, this allows us to incentivize liquidity with a different chains native token (RUNE) instead of using the DAO’s token. This is novel and intriguing.
  • Evergreen contract: This would, once proven on Arbitrum, may replace the FOX Farm Rewards contract on mainnet, eliminating the need for unstaking and restaking of participants.
  • Enhanced Liquidity: Accepting FOX/ETH Uniswap V2 LP tokens for staking will improve liquidity.
  • Stronger Alignment with THORChain: This update reinforces the DAO’s commitment to the THORChain ecosystem.
  • Increased Flexibility for Stakers: Stakers will have more options for earning yield, potentially attracting more participants or allowing larger portfolios to diversify and earn fees from the pool’s swaps, as well as the platform’s Thorchain swapping revenue.
  • Increased Governance Flexibility: Governance or DFC will be able to adjust rewards according to the needs of the different ecosystems where FOX tokens are being used, potentially leading to more efficient management of liquidity across chains.

Drawbacks

  • Engineering Work: This update will require effort from the engineering and product teams to implement and maintain.
  • Complexity in Yield Distribution: Determining how to distribute affiliate fees among different types of staked tokens may add complexity.
  • Less Rewards for Single-Sided Staking of FOX: Currently, 100% of the total rewards set to be distributed are towards single-sided stakers of fox tokens. This would decrease that percentage to some other, non-100% value, meaning that single-sided stakers would be earning less per fox under the adoption of this proposal.

Vote

  • For: Enact the proposed changes to accept FOX/ETH Uniswap V2 LP tokens for staking, signaling to engineering and product to include multiple tokens in the rFOX/ThorFOX contract, and proceed with the follow-up vote on yield distribution and the mechanism for managing yield distribution percentages.
  • For with Changes: Support the proposal with modifications to be discussed in the forum or elsewhere.
  • Against: No changes will be made to the current tokenomics.
2 Likes
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Hey @ProfMcC thanks for making this proposal and discussing it during governance today.

Just to re-iterate some of the discussion and get my feedback posted in the forum here:

I think this part of the proposal makes a lot of sense personally, essentially just adding FOX/ETH LP as a token that can receive staking rewards (in addition to FOX single sided staked) from the already community approved rFOX mechanism?. It also makes sense to me to get this change in so the developers can at least have the FOX/ETH LP as a part of the contract before launching rFOX.

I think what you are proposing here can be made a good bit clearer though, e.g.:

  • when looking at the total amount of staked FOX and FOX/ETH LP how is that dealt with since they will have different values/denominations. is it $1 of FOX is treated the same as 1$ of FOX/ETH LP, or how will that be standardized for staking rewards to be accurately calculated for this? This is important to figure out for this purpose since 1 FOX does not equal 1 FOX/ETH LP token.
  • You mention " allow for a portion of this 25% to be distributed to FOX/ETH Uniswap V2 LP stakers on Arbitrum." → related to the first point, this isn’t clear to me if FOX/ETH LP will simply be its own bucket (in which case FOX governance voters can vote on what, if any % of total RUNE revenue to direct to this) or if this becomes part of the “same” staking revenue bucket that already exits and its pro-rata split between FOX and ETH/FOX stakers. My personal opinion, given the difficulty in the first point to figure out, is this is better off as its own bucket, then any calculations can be done only among FOX/ETH LP stakers independently of anything else.
  • SCP-166 also mandates that the withdraw period for “unstaking” will be no less than 28 days once FOX is staked into rFOX in order for stakers to gain staking benefits. Will this also apply to the FOX/ETH LP or will this be handled in some other manner? This isn’t currently clear in the RFC.

As mentioned on the call, I would personally suggest narrowing the scope of this proposal when it goes into ideation to only be about whether or not to add the FOX/ETH LP bucket to rFOX so it doesn’t get conflated with other things in this proposal.

This is the part of the proposal I would probably suggest splitting out as its not narrowly related to the question of whether to the add another eligible staking token (FOX/ETH LP) and it also brings up two other debatable issues (1) what % of RUNE revenue is directed towards LP stakers (something there should be specific community discussion about IMO) and (2) whether and how to change the mechanism for adjusting the parameter %'s (right now this was specifically mandated to be done via governance in SCP-166, any change to how that works should also be discussed IMO).

Its worth noting, for the purposes of (1) that whenever the %'s are changed, all the parameters may be up for debate at that point and its possible the community wants to power this new bucket with some % of the 50% that is slated to be held by the DAO treasury rather than just from the currently allocated 25% (im not personally suggesting this, but more pointing out that 100% of the allocations may be up for debate whenever the community considers such a change, so it probably shouldn’t be assumed this % for LP “will” come from the currently defined 25% for FOX stakers unless the community has that discussion and decides that is the best path forward through governance).

Where I personally stand on things right now:

(a). I see no issue with a narrower version of this proposal moving forward to ideation to add ETH/FOX LP as a potential eligible reward token to the rFOX contract, and similarly see no issue with adding a new bucket for this (that would default at 0% and could be updated with a subsequent community vote to specifically update the parameters, I think that subsequent vote likely deserves its own proposal because there is plenty to discuss around that specific point regarding parameters).
(b). I personally would like to see rFOX launch, in the form the community already approved, with the parameters the community already approved, before further adjusting those parameters (how long after to wait or wether to wait to adjust those params at all is of course debatable, but personally i’d like to see at least a month or more of data or so before voting to adjust the parameters further).
(c). Whether or not to adjust the governance mechanism for adjusting the parameters (such as delegating that to the DFC) seems like a controversial aspect that should also be its own proposal IMO as it has nothing intrinsically to do with (a) or (b) in any narrow sense (those could be adjusted without adjusting this). SCP-166 was passed specifically with the idea of keeping the parameter adjustments within the control of governance, to me this is an important aspect of how rFOX should work (and was debated during that governance process) and I wouldn’t currently support changing that mechanism, but regardless of my personal feelings on it I do suggest letting any such change to that mechanism be its own proposal so as to not conflate with (a) which seems more additive than changing anything of substance that was already voted on with SCP-166.

Thanks @ProfMcC , look forward to seeing how this discussion around this RFC develops.

2 Likes
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i like the LP idea, allows fox staking to the lp pool bolstering the liquidity. Keepking the mention out of the first proposal makes sense. IE: a further proposal to set the parameters in future.

From my understanding, this would make it so both Staking fox, and staking fox/eth gain the benefit assigned to just staking fox. so im golden there.

1 Like
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Hey @JonisJon,

Thanks for the discussion up at governance and putting these points down on paper. I appreciate your efforts in clarifying them and posting them on the forum for posterity.

I agree that the proposal should focus on a narrower scope moving forward. You’re correct that the percentages discussed can be voted on at any point, and a follow-up vote doesn’t make sense since there’s no specific epoch that rFOX is committed to. This will streamline the process and ensure clarity.

  1. Separate Buckets for Staking: It’s better to have FOX/ETH LP as its own bucket for staking rewards. This avoids complications in calculations and allows for clear governance on the distribution percentages. Percentages would be 100% fox token, 0% to LP for now, with an intention to move towards 50%/50% fox token/lp once LP is accepted (future proposal necessary for this action).

  2. Unstaking Periods: 28-day unstaking period for FOX will also apply to FOX/ETH LP. Aligning the unstaking periods will simplify the user experience.

  3. Narrow Scope for Proposal: I support narrowing the scope of this proposal to only be about whether or not to add the FOX/ETH LP bucket to rFOX. Other aspects like yield distribution percentages and governance mechanism adjustments can be addressed separately.

Looking forward to further discussions on this.

Thanks again for your insights.

Revised RFC:

Summary:
This proposal seeks to update the current ThorFOX/RFOX tokenomics to allow staking not only with FOX tokens on Arbitrum but also with FOX/ETH Uniswap V2 LP tokens on Arbitrum. This change aims to enhance liquidity provisioning, strengthening the FOX ecosystem.

Abstract:
This proposal is a minor update to SCP-166 ThorFOX, which established a mechanism by which DAO tokenholders can stake their FOX tokens and receive a share of the RUNE affiliate fees. This proposal aims to update the ThorFOX/RFOX tokenomics to allow staking with FOX/ETH Uniswap V2 LP tokens on ARB, thereby strengthening the DAO’s alignment with the THORChain ecosystem. This initial vote will set the parameter to 0% of total RUNE fee distribution but allow for the inclusion of a token outside of the FOX token on Arbitrum.

Motivation:
The primary motivation for this proposal is to ensure that the ThorFOX/RFOX program is beneficial to the DAO while providing more options for the stakers and DAO token holders. By enabling staking with FOX/ETH Uniswap V2 LP tokens, we can enhance liquidity provisioning on both mainnet and Arbitrum, thereby supporting both ecosystems.

Specification:
This minor update to SCP-166 only alters the portion of the proposal which details the tokens allowed for staking that are then eligible to receive a portion of the monthly RUNE affiliate fees distributed to stakers. This would allow pro rata bucketing before any split of the revenues. If passed, 0% of the monthly affiliate fees would be distributed to the LP bucket, with 100% of (the 25% of total thorchain fees) fees/rewards distributed to FOX single staking bucket.

If passed, this proposal would implement the same 28-day unstaking period.

If passed, this proposal would implement the default that characteristics should be identical when possible for the LP token treasury remission/staking/burning protocols.

If passed, this proposal would implement the following changes:

  • Staking with FOX/ETH Uniswap V2 LP Tokens: In addition to FOX tokens on ARB, rfox/ThorFOX as a program would technically be accept FOX/ETH Uniswap V2 LP tokens.
  • Implied Lower Rewards for FOX Single-Sided Staking: Instead of 100% of the 25% affiliate fees being distributed to FOX token stakers on Arbitrum, FOX<>WETH LP token stakers would also be eligible for the pro-rata monthly distribution (to be determined later).

Benefits:

  • Multichain Yield: Incentivize liquidity with RUNE, a different chain’s native token.
  • Evergreen Contract: Once proven on Arbitrum, this model may replace the FOX Farm Rewards contract on mainnet.
  • Enhanced Liquidity: Accepting FOX/ETH Uniswap V2 LP tokens for staking will improve liquidity.
  • Stronger Alignment with THORChain: This update reinforces the DAO’s commitment to the THORChain ecosystem.
  • Increased Flexibility for Stakers: More options for earning yield.

Drawbacks:

  • Engineering Work: This update will require effort from the engineering and product teams to implement and maintain.
  • Complexity in Yield Distribution: Determining how to distribute affiliate fees among different types of staked tokens may add complexity.
  • Less Rewards for Single-Sided Staking of FOX: Currently, 100% of the total rewards are distributed to single-sided stakers of FOX tokens. This would decrease that percentage.

Vote:

  • For: Enact the proposed changes to accept FOX/ETH Uniswap V2 LP tokens for staking as a separate genesis bucket.
  • For with Changes: Support the proposal with modifications to be discussed in the forum or elsewhere.
  • Against: No changes will be made to the current tokenomics.

Let me know if there are any further adjustments needed!

4 Likes
5

https://snapshot.org/#/shapeshiftdao.eth/proposal/0xf2cf29e81dd839d3a4b74d3488d986a0db48aabb77af294982666b4dfc78e14a

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I would be against this because Uniswap v4 is about to launch in Q3 of this year and any dev time spent on legacy v2 would be a short-lived benefit and and overall waste of time
https://docs.uniswap.org/contracts/v4/concepts/intro-to-v4

7

Re: waste of time, The Arbitrum pool already exists and executing evergreen LP staking contracts has to happen by September anyways.

For v4, which hook would you suggest is superior? Migrating & incentivizing the liquidity on a different Uniswap contract standard is fine but what specifically is a stronger incentive for LPs in v4?