Draft Proposal Staking Rewards and Fee Burns

As we start to move towards our xDAI migration and the release of Bao Baskets, we have to begin to think of which model to use in order to handle the fee capture of the Bao ecosystem.

As this is a complicated model, it is best for us to have a proposal put forward and let the community discuss and provide feedback before moving it to a governance vote.

The following is the rough idea I have been working with:

  • We will create 3 pools that are similar to Sushi’s xSushi.
  • They will be “Staking” (xBao), “Pledging” (pBao), “Sacrificing” (sBao).

xBao:

  • xBao will work exactly like Sushi’s xSushi and allow the buying and selling of the xBAO token on a bonding curve.
  • 10% of the fees gathered from the issuance, redemption and trade of synth assets and Bao Basket trades will go here, by buying Bao tokens and distributing them proportionality into the pool.
  • On redemption 10% of the exiting position will be burned, so users must ensure their gain has been large enough before exiting.

pBao:

  • pBao will work the same as Sushi’s xSushi but every deposit you make will lock your Bao in for a minimum of one-year. That lock-in will be extended with any new stake.
  • 20% of the fees gathered from the issuance, redemption and trade of synth assets and Bao Baskets will go here, by buying Bao tokens and distributing them proportionality into the pool.
  • On redemption 5% of the exiting position will be burned.

sBao:

  • sBao will work similar to Sushi’s xSushi, but instead of a bonding curve where users deposit/withdraw Bao, they will be burning it to enter into a share of the pool.
  • The users will be able to claim their new Bao out of the contract, but there is no share redemption.
  • The amount to burn per share will be put against an oracle on a linear ramp meaning it will get more expensive over time and as more people enter the pool. This means the raw number of Bao burnt to enter can change but the USD price will always be rising.
  • 40% of the fees gathered from the issuance, redemption and trade of synth assets and Bao Baskets will go here, by buying Bao tokens and distributing them proportionality into the pool.

Burn:

  • Finally another 30% of the fees gathered from the issuance, redemption and trade of synth assets and Bao baskets will be burned directly when used.

Users should provide questions and feedback on this proposal in our Discord #governance-discussion channel.

Just a simple Bao bun.

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