Protocol Owned Liquidity - Grape
(This discussion is going to turn into a vote)
The Grape Network is aiming to build a treasury that will back the community with a basket of assets starting with GRAPE-USDC LP.
At a later stage, we will introduce a limited supply of bonds tradable for other assets such as USDC, SOL, and Staked SOL.
How to participate
There are two main ways of interacting with GRAPE in the DeFi 2.0 arena:
Staking and Bonding
Stakers stake their GRAPE tokens in return for more GRAPE tokens through Dynamic Rebasing.
Bonders provide LP tokens in exchange for discounted GRAPE after a fixed vesting period! (30 Day Maturity).
The Grape Network releases GRAPE from the treasury, with a portion of it going to stakers.
The main benefit for bonders comes from the price consistency. Bonders commit LP tokens upfront for a fixed return at a set point in time, paid in GRAPE. Bonders benefit from a rising or static GRAPE price.
With Dynamic Rebasing, stakers can see their balance of GRAPE resolve in real-time.
Bonders will have to wait for the date of maturity to claim their GRAPE tokens
What is Bonding?
Bonding is the process of trading an LP share to the protocol for GRAPE. The protocol specifies the tentative ROI of bonding, the amount of GRAPE participants will receive and a vesting period for the trade. In an optimal scenario, participants trade their asset or LP share for more GRAPE tokens.
You can own multiple bonds but maturity will if you withdraw your bGRAPE to GRAPE (withdraw from the redemption vault)
bGRAPE is minted and transferred to the redemption vault making the bond non-tradable.
bGRAPE (Bonded Grape) will start with 0 discount, the discount will start growing if the bond is not sold. The price of the bond will drop until someone buys it. Buying the bond would delay the falling of its price.
The rate of change of the discount has not been determined yet. (we can choose between a linear or an exponential decay function)
GRAPE-USDC LP Bonding
GRAPE-USDC LP Bonding allows you to contribute liquidity to the GRAPE-USDC pool on Raydium in return for LP shares, which can then be used to mint GRAPE bonds at a discount.
The Grape Network will have bond ceilings for all bond pairs. These are created to limit the amount of inflation GRAPE can experience in a given time frame. The Bond ceilings will help achieve sustainable inflation.
The GRAPE Bond Ceiling will be determined by the amount of GRAPE in the community treasury as available.
Where does the Grape come from?
Each Epoch we will deposit tokens to the Grape Treasury to be used for bonding and staking rewards.
There are three steps in the process:
- Grape Protocol mints bGrape from Grape.
- Grape auctions off bGrape for LP token.
- User unlocks Grape from bGrape.
Option one: Grape takes on the fee
When bGRAPE is minted a 3% fee will be charged. The Grape treasury will need to hold 3% more Grape than the amount it can sell as bonds. (fees at step 1)
Option two: The user takes on the fee
The user pays 3% more for the bond (fees at step 2).
Classic OlyPRO model: The fee is charged at step 2 and the user gets a worse price for the bond. Given the fact that we will not have anywhere close to the APY other Olympus forks have, we should not lower the APY more. (debatable)
To be decided if this vote passes:
A. Fee structure
B. Redemption of the bond: Should the bond be partially redeemable (dynamic release of the coins per block) or all the coins should unlock at the date of maturity?
C. Rate of change of the discount of the bond (linear vs exponential decay function)
D. Starting Bond Maturities? (30 Day, 365 Day)
Please propose changes/improvements, voice your concerns and in case you disagree please comment with your train of thought!