SCP #85 A Partnership with Revest Finance to Reduce ShapeShift Emissions of FOX
Jun 14, 2022

‘I don’t believe NFTs are all about art. NFTs are, among things, FINANCIAL INSTRUMENTS, and they should be used as such.’

Summary -
As of 6/4/2022, there is a little over 130,000,000 FOX ($16 million USD) sitting in the ShapeShift treasury all but collecting dust. This proposal would redeploy those tokens in a way that would benefit the DAO.
Here’s an example of one possible use:
“Ashley has 10,000 $FOX, and they will have 15,000 $FOX in one year of staking.
“Ashley utilizes the Resonate protocol and separates their principal stake (10,000 $FOX) from her interest (5,000 $FOX, (in one year.))
“The ShapeShift Treasury purchases the rights to the interest of 5,000 $FOX, (in one year) for 3,000 FOX, upfront.
“Ashley, understanding the time/value of money, gets an upfront, one-time payment of 3,000 FOX. (Every lotto winner and/or anyone who receives a pension is given a choice: an annuity paid out over the next 30 years, or a one-time, lump-sum payment. For example: With an annuity, you would receive a total payout of $200MM but with a lump sum you would receive $120MM. By accepting a lump sum payment you gain control over your income assets; even if the lump sum is less than the promised annuity payment.) Ashley would also retain the rights to their principal stake of 10,000 $FOX.
“ShapeShift is able to extend the staking APR bonus of 52.73% (as of midnight 6/5/2022) and, at the same time, reduce the emissions from the treasury by 40%.
“ShapeShift succeeds in locking up $FOX tokens for 12 months, removing them from the primary market, (which utilizes DEX’s,) and forcing them to be sold on the secondary market.
“Ashley sells the principal FNFT (10,000 $FOX) on a secondary market like OpenSea for ETH (equivalent to 9,000 $FOX,) ending with a net profit of $2,000 $FOX (or USD equivalent,) all while not affecting the price of $FOX.
(Ashley produces two FNFTs using the RESONATE dApp; one containing the principal and the other containing the rights to the interest:
a.) They deposit 10,000 $FOX into the ‘principal’ FNFT.
b.) They sell the rights to the ‘interest’ FNFT for 3,000 $FOX utilizing the RESONATE dApp.
c.) They sell the ‘principal’ FNFT on OpenSea for the ETH equivalent of 9,000 $FOX.
ShapeShift buys the rights to the interest of 5,000 $FOX for an upfront payment of 3,000 $FOX saving a total of 2,000 $FOX in interest payouts, slowing emissions. ShapeShift was also able to lock a total of 10,000 $FOX for 12 months, reducing the total circulating supply of FOX, and increasing the price.
Result:
Ashley: 9,000 $FOX + 3,000 $FOX = 12,000 $FOX gross profit.
ShapeShift: (50,000 $FOX) - (30,000 $FOX) = 20,000 $FOX saved.
In this example, we saw Ashley stake 10,000 $FOX for 12 months earning a 50% APR. They took a 60% buyout and then sold their principal FNFT on a secondary market. But the best part about RESONATE, my favorite part, is that we will not be restricted to a certain time frame, the amount staked, or even the amount for which we sell the interest-bearing FNFT.
Abstract (A summary in detail) -

Definitions
FNFT - Financial Non-Fungible Token
Voucher Decoupling - the separation of a stake’s periodic interest payments from its principal repayment obligation to create a series of individual FNFT’s. With Voucher Decoupling, the underlying stake becomes a principal-bearing FNFT and each interest payment can be claimed through the interest-bearing FNFT at any time.
Principal FNFT - This is the FNFT where the original sum of tokens staked is held.
Interest FNFT - This is the FNFT where the interest from the principal FNFT will be sent. You are able to withdraw the interest accrued at any time.
Fixed-Term - This is a type of voucher decoupling where the interest FNFT is locked for a certain length of time no matter how much interest accrues. i.e. 12 month vest, whether the APR is 75% or 2%.
and scene - You and I decide to go on a train vacation through the alps. The vacation is 7 days long, we expected to eat 21 meals while on vacation but lucky for us they had an abundance of food and we were able to eat much more.
Result - The trip took 7 days as expected but you were able to eat 33 meals. Your only requirement to be happy was a 7 day trip, you were happy.
and scene - The next time we traveled to Switzerland we took the exact same vacation.
Result - This time the trip again took 7 days, which made you happy but we were so busy you only got to eat 13 meals. You didn’t care about the food, just the length, so you were happy.
Fixed-Income - This type of Voucher decoupling is one where the interest FNFT is locked until a specific sum of money is paid out. I.e. As soon as 5,000 $FOX tokens are paid, the vest is concluded, so it might be 9 months or it might be 14 months.
and scene - A year passes and we decide to collect 3 jars of sand from 2 different beaches, you don’t care how long we’re at each beach, you just want to collect 3 jars of sand and then leave. The first is from Tokoriki. Since that place is garbage we collect the sand in 3 days and hop on the first flight to Malta.
Result - The trip to Fiji took 3 days and you collected 3 jars of sand.
and scene - Malta isn’t a pile of garbage so we stay for 11 days.
Result - The trip to Malta took 11 days and you collected 3 jars of sand.
Concept art of our eventual UI/UX:

Abilities of Resonate:
The ShapeShift DAO will be able to vote on:
Time of lock
Buy out percentage
Yield
Fixed Term or Fixed Income styles
Buying interest with FOX or a stable coin
Amount of FOX to utilize from treasury
NET EFFECT OF USING RESONATE VOUCHER DECOUPLING -
1.) The price of $FOX increases because the total amount of $FOX on the primary market decreases.
2.) The treasury emissions decrease by up to 40%, allowing the promotional APR to continue for a longer period of time.
3.) Stakers are able to sell not only the interest but also their principal, on a secondary market, not affecting the price of $FOX at all; all while removing themselves from the position they would otherwise have been forced to stay in for 12 months in total.
Drawbacks- As a protocol, shapeshift has the possibility to lose money if the interest rates drop because it’s paying money out upfront, though this can be prevented by using a ‘Fixed Income’ approach.
By agreeing to be one of our initial launch partners, resonate and ShapeShift will participate in joint marketing, we will tweet out to our 30,000+ followers about our relationship and ShapeShift will be prominently displayed on our website.
Vote -

poll
Total Votes: 18
·
Voting Closed
FOR - A Launch partnership with Revest Finance to utilize Resonate with NO amendments/ changes
72.22% (13)
FOR - A Launch partnership with Revest Finance to utilize Resonate WITH amendments/ changes
11.11% (2)
AGAINST - No partnerships
16.67% (3)
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willy
willyJun 16, 2022

I think some community members made good points on the governance call today that this proposal seems a bit premature.
The reason for this is that just because a proposal passes now saying that we are open to idea of reducing emissions, we would need a subsequent proposal or TMDC decision to actually decide to use Resonate (and how).
If there are any benefits to the DAO for committing to be a launch partner, please let us know. Otherwise, I think this is on the community’s radar but doesn’t seem to be a priority currently, especially with launch still 2-3 months away.

1
0xean
0xeanJun 16, 2022

I think it would make sense to wait until the product launches before the DAO formalizes a partnership.
2-3 months is a long time, the product may change and the needs of the DAO may change.

2
AdamHasan
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AdamHasanJun 15, 2022

This initial vote is purely to show ShapeShift is open minded to the idea of reducing emissions, launch isn’t until September so we’ve got time. That said…
That depends on your DAO set up. Either it would allow the Treasury team to make decisions within the bounds established by the DAO or, alternatively, it would begin a series of smaller votes deciding the options involved in the Resonate protocol. For example:

  1. How much FOX would the treasury deploy?
  2. Would the DAO, (being the producer,) buy the rights to the interest; in FOX or stable coin? (One might prevent sell pressure.)
  3. Would the DAO prefer ‘Fixed Term,’ ‘Fixed Income’ or a combination of both yield futures?
  4. What’s the vesting period?

Now again, if you’ve allowed your treasury council some latitude, they can make these decisions on your behalf.
Does this make sense?

3
jonisjon
jonisjonJun 14, 2022

I’m a little confused by this proposal. What exactly would a vote of yes via governance commit the DAO to?

2
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