APY Platform Performance Fee

#1

The APY Platform Performance Fee would be set as a percentage of the total yield generated by the platform. The Platform Performance Fee would be set at 11% (EXAMPLE) of the total platform earnings generated by deploying the TVL across various pools.

The purpose of instating a platform performance fee is to create new incentives, benefits and utility for the APY Governance Token, the APY Platform and its users.

The following are basic use cases of this - the important piece is setting up a framework that generates capital passively and would be used to benefit the ecosystem and further APY’s mission.

1.) APY token holders would have the option to stake APY within a new contract (100% APY) and would receive 5% of the 11% Platform Performance Fee. This would be distributed based on the APY weight staked in the new contract and would be issued in APY tokens that were purchased off the market using the funds generated by the 5%.

2.) In order to ensure we are continuously allocating funds towards building a treasury for marketing, growth and/or development related initiatives (on top of whatever treasuries exist), 3% of the 11% Platform Performance Fee would go to a marketing & growth treasury account. The use of these funds would be approved by future governance via community or 3rd party proposals. These funds would say in the native crypto they are earned in or converted to USDC (or other stablecoin).

3.) The final 3% of the 11% Platform Performance Fee would be allocated towards insurance and would help offset losses in the event of a platform security breach or other events that could cause loss to the platform and its users. These funds would be converted to USDC (or other stablecoin).

Below is a hypothetical scenario based on many assumptions and inputs that may or may not be accurate, it is meant for discussion purposes only.

|  Platform Performance Fee Breakdown  |              |      Yield from Staking APY      |            |
|:------------------------------------:|:------------:|:--------------------------------:|:----------:|
| TVL in Platform                      | $250,000,000 | APY Tokens Held                  |     10,000 |
| Platform Yield (non-APY)             |          15% | APY Token Price                  |      $1.00 |
| Total Platform Earnings              |  $37,500,000 | Value of APY Holdings            |    $10,000 |
| Platform Perf Fee                    |          11% | Circulating Supply               | 51,000,000 |
| Platform Perf Fee Earnings           |   $4,125,000 | % of Circulating Supply Staked   |        25% |
| APY Staking %                        |           5% | Total APY Staked                 | 12,750,000 |
| APY Staking Earnings                 |   $1,875,000 | % of Tokens Held that are Staked |      0.08% |
| Marketing/Growth Treasury %          |           3% | Earnings from APY Tokens Held    |     $1,471 |
| Marketing/Growth Treasury Earnings   |   $1,125,000 | Annual Yield from Tokens Staked  |     14.71% |
| Insurance Allocation %               |           3% |                                  |            |
| insurance Earnings                   |   $1,125,000 |

Would love to hear some more discussion around this. I am particularly interested in understanding more about how we could efficiently leverage insurance or if anyone has any additional ideas around how we could leverage this framework to benefit the project and APY holders.

8 Likes
#2

I think numbers are quite feasible and looking for a go. However, the best way to define these numbers is to set an initial point and see how it converges throughout further adoption. We may or may not expect so much platform fees at the start but once the project is huge, 1% of the fees will even be great for insurance coverage, for example.

I think we can start given the numbers in that table above and see how it evolves.

I also think it would be nice to have a static APY only staking platform without farming just so that APY do not lose in value too much due to award dumpers from farming. It should somehow balance out if that 5% fee to award static stakers of APY is given on a separate contract.

If necessary later, 3% treasury and 5% awards to token hodlers can be moved to insurance in case of a breach (which I hope never happens). Additionally, 3% insurance fund can be used for the stablecoin farming to passively increase the insurance fund. If insurance fund reaches to a really great amount, then later some airdrops or distributions to LOYAL APY hodlers and/or stakers can be executed in proportion to their held APY amount.

Thanks for all the effort team! Keep it up.

4 Likes
#3

Can’t add too much technically but I’ve been in the crypto world for a while now and people do love staking. They love staking through any means possible such as platforms like Celsius. They don’t want their tokens just sitting in a wallet collecting dust. Nothing beats appreciation in token value plus staking rewards on top of that. It’s what keeps investors and newbies engaged. Launch + Widespread Marketing/Adoption + Top Tier Listings + Security + Staking = Success!!! But, this is a smart team so they already know all of this. So yes, I agree with Staking.

2 Likes
#4

One thing I’m concerned about is issuing rewards in APY tokens instead of stable coins is the temptation to introduce inflation at a later date. Although 88mph is great, the made this switch. True appreciation will come from a hard supply cap and increasing rewards as tvl and use of the platform increases. It will also allow us to lower fees as we grow as mentioned by the post above.

1 Like
#5

We always want to be on the side of compliance. If we focus on improving our decentralization first, we can be more flexible with things such as a performance fee.

That being said, there are many ways we can improve the utility of the token and create opportunities for holders. Something suggested by another community member was increased rewards for users of the platform that have provided liquidity, who also hold the APY token. Holding the token becomes a “boost” for platform users. Would be interesting to get your take on something like this.

2 Likes
#6

Maybe I’m missing something, but what is the compliance issue with issuing fee rewards that is absent when talking about issuing staking rewards? I believe any kind of audit would view these as essentially the same kind of transaction for both the issuer and receiver of the rewards.

#7

We always want to be on the side of compliance. If we focus on improving our decentralization first, we can be more flexible with things such as a performance fee.

I think the obvious questions that stem from this feedback are around what defines this criteria, it is rather subjective and I have yet to see any clarity around this which can make this a challenging barrier to overcome.

Something suggested by another community member was increased rewards for users of the platform that have provided liquidity, who also hold the APY token. Holding the token becomes a “boost” for platform users.

I just want to reiterate that a key piece of the previously proposed framework, let’s put the performance fee rewards to APY stakers aside for a moment, was to implement an economic engine that would be working for the project, community and its users in perpetuity. The use cases mentioned were merely examples to try and get folks engaged in ideas around what could truly be something that is unique to APY and further set it apart from other projects. I hope we don’t lose sight of that moving forward because of compromise.

That being said, progress in the direction of increasing utility of the token is still good progress. I ran through some scenarios to see how this could play out and depending on how it is implemented, I think the “boost” could be a sticky feature. I do think an important piece of the UX would be to have the user stake the APY to unlock the boost as it wasn’t clear in your description if that was the intention of what the community member suggested.

|           TVL Reward Distribution          |             |         Yield from Boost         |            |
|:------------------------------------------:|:-----------:|:--------------------------------:|:----------:|
| TVL in Platform                            | $51,000,000 | APY Tokens Held                  |     10,000 |
| Total Annual APY reward distribution       |  10,800,000 | APY Token Price                  |      $1.00 |
| Value of annual reward distribution        | $10,800,000 | Value of APY Holdings            |    $10,000 |
| Yield from Stablecoin Liquidity Staking    |      21.18% | Circulating Supply               | 51,000,000 |
| % of annual reward distribution for Boost  |         10% | % of Circulating Supply Staked   |        20% |
| Value of Boost reward distribution         |  $1,080,000 | Total APY Supply Staked          | 10,200,000 |
|                                            |             | % of Tokens held that are Staked |      0.10% |
|                                            |             | Earnings from APY Boost          |     $1,059 |
|                                            |             | Annual Yield from Boost          |     10.59% |

The above assumes the boost reward would come from the existing reward distribution for Stablecoin liquidity staking (30k per day), or rather - a part of that reward would be routed to people who are boosting.

The above is also assuming that the boost reward is dependent on how many APY is staked in the boost pool, as a user’s weight in that pool would determine how much of the reward they get. There are some holes in this assumption though.

That is my 2 cents.

#8

The biggest holes I see in this boost plan are:

  1. What is the bar being set at for the amount needed to be staked to receive the boost? For example, if I have 10k APY staked and I stick a single USDC in the platform would I qualify for the boost?

  2. The way that Silver laid out this boost of being 10% of the total 30k APY allotted to rewards per day, the numbers i ran seem to work out that if the Total APY Staked ever goes above 11 million then the boost would see less than 10% returns per year. That number decreases exponentially as the Total APY Staked goes up (at 20 million it would be 5% ROI), and I don’t see enticing many people to stake for anything less than 10%.

I think the goal would be to get more than 20% of liquidity staked, so I think this plan would need major tweaking. I am still in favor of Silver’s first governance proposal as it seems far superior to this one.