Introduce Liquidity Position lock to gain larger share of VIRES Token rewards

Proposal ID
HsaS3o5n47Fa3W6EgNx8QBZDLikZvcnDYyogTb5TpNX7

What do we propose:

We propose to introduce 3-6-12 month liquidity locks and change the distribution of VIRES rewards in favor of users who support the long term sustainability of the protocol.

  • ∙ The longer lock would mean the larger share of the daily rewards(+25% daily for the 6 months lock, +50% daily for the 12 months lock);

  • ∙ The total amount distibuted is not affected in order not to dilute the existing VIRES tokens;

  • ∙ The distribution is proportional to total borrow for each market.

  • Here’s how it will change the distribution across all markets and actions:

|              |          Borrow |   Regular Supply |   Locked Supply |
| ------------:| ---------------:| ----------------:| ---------------:|
| Before impl. | 125 VIRES daily |  125 VIRES daily |               - |
|  After impl. |               - |   25 VIRES daily | 225 VIRES daily |

Why is this important?

We’ve seen with the UST/Luna situation the catastrophic problems a bank run situation can have on a stablecoin and lending protocol, but despite a relatively similar situation occurring on with USDN/Waves the differences in mechanisms and fast actions of the community meant we avoided the same fate.

However we need to prevent further bank run situations. We believe there are many community members who want to support the long term sustainability of Vires, so this is behavior the protocol needs to incentivise and reward. However there are also many users that want to leave and we want to give them that opportunity to do so, in a way that is sustainable - that doesn’t cause critical liquidity problems.

This solution means users are rewarded a larger share of the VIRES token rewards based on the amount of time they lock their positions. It will also contribute to creating predictable withdrawal dynamics as users will demonstrate their long term confidence (or not) in the platform with the amount of time they lock up their positions. If the majority of users lock up their positions, the minority that want to exit the protocol will be able to do so without causing large scale liquidity exit issues.

Example

∙ For example, for a total of $10 million position locked for 3 months:

∙ They receive 225 (VIRES) *90(days) *62(Vires price) = $1,255,500;

That is an extra 60% APR on top of the existing APY returns on USDT/C.

Limitations

  • ∙ There’s no need to export LP tokens to lock;
  • There’s no import limitations after the lock period is over;
  • ∙ It’s always possible to add more assets;
  • ∙ There’re a minimum amount of LP tokens to be locked: 100 LPs for USDT/USDN/USDC/EURN, 10 for WAVES, 0.01 for BTC and 0.1 for ETH.

Transaction Payload

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  "fee": 50000000,
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}
2 Likes

i need some info:
if i lock, for example 100.000 USDT for 12 month and after one week i’ve 700 usdt of interest (so my wallet will be 100.700 usdt)

CAN I WITDRAW 700 usdt of interest or not?

p.s. this number are only to understand better my example.

5 Likes

Yeah that wasn’t clear - is it ALL the amount of a given token that gets locked for the period, or just the set amount you lock initially. (It really should just be the amount you locked initially.)

1 Like

I don’t understand:
“There’s no need to export LP tokens to lock” not equal to “There’re a minimum amount of LP tokens to be locked: 100 LPs for USDT/USDN/USDC/EURN, 10 for WAVES, 0.01 for BTC and 0.1 for ETH”.

Buy/change/export to vtoken (LP) is needed? If this token cost in change more (f.ex. 1:1.30), maybe tomorrow this cost below (1:1). After bet months by plataform you can lost money?

1 Like

Yeah, this proposal is unclear.

It’s a good question, whether interest gets locked with supply. Auto compound would be nice as an option, not as a requirement.

I “think”, and I emphatize “think”… it shouldn’t have much influence. LPs for your supply, don’t exist untíl you export them. The number you have under “exportable” is if you export it, then you’ll get that amount.

I get what you’re referencing tho, and yeah, there could be a problem with importing then. They would need a new LP token for new exports instead. But I don’t think what you’re thinking of, is going to happen.

I’ll vote yes for this proposal I think. It doesn’t matter too much, if locked interest compounds or not. It would be good to know, but essentially irrelevant. If someone smarter than me finds a problem with the proposal tho, I’ll listen.

Can I lock already exported LP tokens?

3 Likes

First of all you don’t lock USDT but you lock LP ( liquidity pool) tokens being vires_usdt_LP the ones representing USDT supply positions.

ALSO you don’t receive “interest” in USDT but you receive extra reward in VIRES token that you can manage in same way you do now with your vires reward ( as nothing different is stated in the proposal)

Few questions about the proposal if passed:

  1. Is the LP token lock mandatory or can you opt out of it? If you don’t export your LP tokens, would the system force you to choose between a 3-6-12 month liquidity window option for your entire LP token position?

  2. Does it affect your interest earned in the native cryptocurrency asset? For instance if own 100000 VIRES_USDT_LP by supplying USDT and never exported those LP tokens, do you still accumulate USDT in interest per minute as usual or is that affected by the lockout period? In other words, does this only affect the VIRES token rewards and associated rewards in 7 different types of cryptocurrencies or does it also affect your conventional interest earned in the supplied cryptocurrency asset pool?

  3. After the lockout period is over, it is noted that " There’s no import/redeem limitations". Does that mean after the lockout period and if there is supply available for USDT in this example but say the utilization is still above >95% (meaning per the Adaptive Borrow and Withdraw Limits, you would normally be able to withdraw $1k USDT per the day), would you now be able to overwrite the $1k/daily restriction for the USDT pool in this case and redeem or import a larger proportion of your LP token supply (to a maximum of the entire position) as long as there is adequate supply available regardless of the utilization rate?

Thanks.

Does this proposal allow locking of LP tokens bought on waves exchange, or puzzleswap or wherever they are traded?

this

and this

As far as I’ve understood the proposal, the lock only affects vires rewards. You get a boost from locking, the longer lock the more vires % you get on top of interest from supply.
Interest from debt shouldn’t be affected by lock, at least I assume. You should still accumulate like usual. Your vires share payout, will just be less if you don’t lock. That’s about it. At least, that’s how I’ve understood it.

I got no clue about question 3 tho.

Adding to my doubts in previous post, I am thinking that it is very worrying to block money here. Not because of market changes, but because of changes from proposals. After locking up your money for months, there may be a stupid proposal to limit the APY to 1% maximum (or other ridicule value).

4 Likes

I agree, it’s definitely a risk locking money on this platform. But you don’t have to take the risk anyway. It’s 0.09% vires apy on waves… it’s not like you’ll be missing much, and you’ll still get APY from debt without locking. At least that’s what I understand from it.

As far as I see this proposal it’s to reward people willing to take the risk, while freeing up liquidity for people who want to get out.

1 Like

I voted yes despite having my doubts about it. First of all the proposal should ideally have been broken into separate pieces for individual voting. The convoluted way it is drafted requests voters to vote for more than one key decision. My yes was mainly for abolishing Vires Rewards distribution to the frenemy whale that carries a $500 million USDN collateral and a large USDT+USDC borrow position of circa $400 million. This whale has accumulated 69K vires rewards (circa $4.2 million over a month or so) and has not bothered to claim or lock them which is a good thing. if he/she locked it, he/she would be receiving vires single sided staking rewards the bulk of which is in USDT and USDC. One component of this proposal abolishes borrowers to earn Vires rewards which in my humble opinion should have been simply put for a stand-alone vote. Through this vote the frenemy whale will be cornered for an accrued 4.2 million dollars (luckily there is not enough exit liquidity for him in the WX pool for Vires-USDN. Most importantly had he dared to claim this reward and lock, he would also be holding a large governance voting power. This proposal will reduce his future vires rewards and if he locks it, he/she won’t be getting any additional vires rewards for his/her borrow position. The rest of the proposal needed more work in crafting but hey we have to live with what we have. If this proposal gets rejected, I strongly recommend the proposer separates or carves out the part that I voted yes for a stand alone governance voting.

1 Like

Overall idea is pretty interesting, as we need to:

  1. limit the distribution of vires to suppliers-borrowers at the same time as they literally utilizing the system and receives bonus rewards for doing so - reward should come mainly from supply and this proposal introduces locked supply with increased vires reward bonus
  2. create a more stable liquidity market based on locked supplied tokens

On the other hand - as decent amount of vires already released (but not yet claimed) could potentially have an effect on whole rewarding scheme and provides a risk for all users:

  • vires price can decrease
  • staked vires APR decrase
  • any other vires related risk

To mitigate that and mainly the risk there is big vires whale holder, I believe locked LP tokens (read: accumulated vires rewards based on LP token locking) should have part of “locked vires power” to get share of accrued income (but no voting rights until claimed and staked) on daily basis without locking/claiming that vires until its claimed. That way LP providers via LP token staking could be receiving daily rewards (for instance if liquidity provided with loaned capital and provider needs to pay regular interest on that such daily reward could be very interesting) as well as direct return on supply is concealed within LP token price increase over time.

How can I lock the LP and select either 3, 6 & 12 months? It seems no change in the interface.

1 Like

Probably still needs to get implemented and deployed to prod.

Seems like they’re implementing the new system now.

Ya’ll will be disappointed to know, that APY compounds the entire time. You won’t be able to claim the profits until your lock is over. So if you lock for the 1 year like I was smart enough to do just now, your money is gone. You don’t get a paycheck on it, except for the vires rewards, and loooool, I locked for 2100% on euro, and a second later it was 600 and now it’s below 500.

  • Lock can’t be used as collateral either, keep that in mind if you’re a gambler and take on debt.
  • If you buy LPs on DEX, you can ONLY import them as a lock. You cannot import with zero lock. So if you bought to get full money for the LPs and not to put it as supply, you’ll still have to wait for more liquidity.

I won’t be locking more.

I thought (and preferred) that only the initial amount should be blocked and thus be able to count on the interest generated. So I’m not interested.

At least it was clarified that it was not necessary to export to lp tokens, which I think is good.

1 Like

Yeah, that’s really a killer for me too. Unfortunately I tested with my own money, instead of just waiting.

I tried regular supply as normal without lock, with waves. Functioned as normal.
Tried to import LPs I just bought… Didn’t work.
Then I tried the Euro thing, with 1 year lock. Worked fine. And noticed LPs had an option there. So I tried importing some USDC LPs directly for a years lock. Worked fine.

If I got the APY paid out, instead of it compounding, I would lock the rest of my LPs. But as it is now, I have zero incentive. Vires reward is gonna reach levels that won’t cover the risk, pretty fast. And unfortunately, life gives responsibilities to idiots like me, so I gotta make money. I can’t lock capital for years, without a single payday until the lock is over. It’s simply too risky, I might end up needing money for hospital or whatever else.

  • Tho it would be less of an issue for me to lock, if I could use it as collateral, in case I do end up needing bills covered for whatever reason. But Lock does not count as collateral, so. yeah. <.<
2 Likes

I believe the proposal was before Sashas tweet. However, I’m sure he talked to people before posting the tweet, so if you think this proposal is a response to him, you could be right, who knows. Won’t change much tho. Sasha can’t lock the supply for vires rewards, since all the supply is collaterized for debt. And I’m 90% sure he’s not actually doing it to make a profit, even tho he will.

Fairly simple, buuut, not what you’d expect… It’s not on the LP page… Instead you just use the “supply” button on front page… for me there, It automatically chose LPs since I didn’t have USDC in my wallet.