Draft Proposal: Credit Guild x Inverse Finance Coincentives
Hello all, OneTrueKirk from the Credit Guild here.
This is a draft proposal for coincentives on a DOLA lending pool using the Credit Guild.
Background
The Credit Guild is the first oracle free lending pool, currently live on Arbitrum One. Removing trusted, real time price feeds allows the protocol to remove the risk of market manipulation attacks (such as those perpetrated by Avraham Eisenberg against Aave and Mango Markets) and better support a variety of long tail collateral types. At the moment, our largest borrower demand is for leverage against Pendle principal tokens, with borrowers paying an average interest rate of 9.56% in the USDC market and 8% in the WETH market.
I’ve received user requests for a DOLA pool on the Credit Guild. While supportive of this idea, a competitive incentives program is necessary to bootstrap the pool to a size that is useful for borrowers.
Proposal Detail
Under the authority of the Treasury working group, conduct a pilot program where 7500 DOLA is distributed to DOLA lenders on Credit v1 over a two month period. This will be matched by 250k GUILD tokens (using our last round valuation of $30m FDV to determine a matching value since the GUILD token is currently nontransferable). While GUILD is nontransferable and thus of an uncertain market value, this is on top of the existing GUILD distribution rate that applies to all Credit Guild pools (10M GUILD per four week epoch in total), and 100% of INV emissions under this proposal are going to DOLA users, we feel this is a fair arrangement for the pilot program.
After the two month distribution concludes, we can assess whether further bootstrapping incentives are desirable and at what rate.
Motivation
Benefits for Inverse Finance:
- access an additional yield source for DOLA holders (lending oracle-free against fixed yield assets and other longer tail collateral)
- single-sided incentives are relatively efficient from the perspective of the DAO, since 100% of proposed emissions would go to DOLA users who also receive GUILD rewards
- offering a new use case on Arbitrum will help to encourage adoption there. Arbitrum-native borrowing will increase revenue for DOLA liquidity providers on the network so complements existing incentives there
The goals of the Credit Guild in submitting this proposal are:
- to become a premier hub for lending longer tail assets, including smaller stablecoins, liquid re(staking) tokens, and volatile cryptoassets
- to ensure new markets are competitive from a yield perspective and can attract enough lender-side interest to be useful for borrowers early on
- get a broader user base involved in protocol governance via GUILD distribution
Conclusion
This is a draft proposal and I welcome feedback on the specific parameters for the pilot. If there is support for the idea, we’ll get moving on our end to deploy the DOLA pool and prepare the formal governance proposal for the INV DAO.