AIP Details

You can find the details of all the previous AIPs here:
​AIP-1: Handling of ITAM Rewards​
​AIP-2: Governance Vault on Fantom​
​AIP-3: Handling of Governance Vault's Early Withdrawal Penalty​
​AIP-4.1: Handling of a recent bad debt on WaultSwap’s position​
​AIP-4.2: Solution to eliminate bad debt risks from remaining Waultswap positions​
​AIP-5: Interest Model Adjustment​
​AIP-6.1: Limiting Access to Automated Vault​
​AIP-6.2: Limiting Access to Automated Vault​
AIP-1: Handling of ITAM Rewards
Background:
1.) ITAM was the first Grazing Range partnership which ran in April - May of 2021. These ITAM rewards were provided as extra rewards to ITAM-BNB farmers and BNB lenders. The distribution was completely different than our later Grazing Ranges. It’s not the case that users were staking explicitly to receive these rewards.
2.) Currently there are ~917k unclaimed ITAM (~USD 500k)
3.) ITAM was recently acquired and any tokens not swapped by March 31st 2022 will lose all of its utility
See excerpt below:
ITAM-to-ITAMCUBE token swap portal will close in [11:59PM UST] March 31, 2022.
“With this said, the token swap portal will close at the end of next month. If you have not yet swapped your ITAM token to ITAM CUBE token, we strongly ask you to do so as quickly as possible. For any ITAM token that has not been swapped afterwards will lose all its utility. We sincerely hope we can make it clear that Netmarble F&C will NOT support ITAM token and will NOT use ITAM token in any of its services and initiatives. Only ITAM CUBE.”
Original article: ITAM to ITAM CUBE Token Swap will close in March 31, 2022 | by ITAM CUBE | ITAM Cube | Feb, 2022 | Medium 1​
After discussions and feedback from the community, two voting choices were provided to the community:
Option1:) Convert 100% of ITAM to ITAMCUBE. Sell ITAMCUBE on MEXC to USDT. Swap USDT to ALPACA on BNB Chain. Allow for additional 12 months for claiming. Any unclaimed ALPACA will be burned. Due to number of character constraints on Snapshot, this option will be labeled as "Sell ITAMCUBE to ALPACA"
(there is now enough liquidity on MEXC to convert all ITAMCUBE amount w/ < 5% slippage which is better than trading ITAM directly on PCS.)
Option2:) Convert 100% of ITAM into ITAMCUBE. Allow for additional 12 months for claiming. Any unclaimed ITAMCUBE after 12 months will be swapped into ALPACA and burned. Due to number of character constraints on Snapshot, this option will be labeled as "Keep ITAMCUBE"
Resolution:
The community voted in favor of Option1
In total, there were 919,724 unclaimed ITAM (reference) which were converted to ITAMCUBE
ITAMCUBE were then sold into USDT on MEXC at an average price of $0.667.  A total of 613,840 USDT were acquired and deposited into this address: 0x8c968582a6935ece360Bc2665979458CD4D79203​
USDT was used to buy ALPACA over a period of 1 week from 4 March - 11 March 2022
A total of 1,554, 697 ALPACA were acquired
ALPACA is now available to claim by users
Users will have until 15 March 2023 to claim their rewards. Any remaining unclaimed ALPACA will be burned.
References:
​Snapshot Voting​
​Forum Thread​
AIP-2: Governance Vault on Fantom
Background:
Our Fantom’s farm has seen a steady growth with TVL over $37 Mn one week after launch. Our FTM and USDC lending pools also have the highest APY compared to other protocols on Fantom! With these strong metrics and our plan to launch more products on Fantom (as outlined here), we are confident Alpaca will grow to be one of the leading protocols on the chain.
As the platform grows, so does the protocol revenue. As a result, one of the questions many community members have been asking us is “What will happen to the protocol revenue generated on Fantom?”
Below, we’ll give some answers to that which will lead into a Proposal:
Lending performance fee goes towards buyback&burn: This is straightforward and how we already do it on BNB Chain. Since the $ALPACA on BNB Chain and Fantom have a shared supply, the buybacks benefit all ALPACA holders regardless of where they hold it.
Revenue from the farming performance fee: We believe what we do with this revenue channel warrants serious consideration because it can have a strong impact on Alpaca’s future growth prospects and token price. This will be the main topic of this discussion.
Grazing Range Rewards: Similar to above, how we decide to handle partners’ tokens will directly influence the attractiveness and success of our Grazing Range partnership program on Fantom.
Proposed Implementation:
There are several ways to implement how we do revenue sharing on Fantom:
Option#1
Create a Governance Vault on Fantom
100% of revenue + GR rewards on Fantom get distributed to Governance Vault stakers on Fantom, similar to how we do it on BNB Chain
Option#2
No Governance Vault on Fantom
All revenue from Fantom gets bridged and then distributed to Governance Vault stakers on BNB Chain
Note: For this option, while implementable technically, the Grazing Range could become much less attractive to our partners on Fantom. Without many loyal ALPACA holders on Fantom, it will be difficult to convince GR partners to join our program, and that means less rewards for ALPACA holders and less demand to hold the token.
Option#3
Create a Governance Vault on Fantom
A fixed portion of the revenue generated + GR rewards on Fantom get distributed back to Governance Vault stakers on BNB Chain while the rest are distributed to stakers on Fantom.
Option#4
Create a Governance Vault on Fantom
Revenue generated on each chain are combined and distributed based on xALPACA amount on each chain so that the APR% achived in both governance vault are equal
A fixed portion of GR rewards on Fantom get distributed back to Governance Vault stakers on BNB Chain (no selling of rewards token; must claim on Fantom)
We senior alpacas had a long discussion inside the barn, weighing pros and cons of the three options above, and after much deliberation, we believe Option #3 (or #4) is the best solution for our community.
In the core team’s view, we believe 80% of Fantom’s revenue should go towards Fantom Governance Vault stakers while 20% would be distributed to Governance stakers on BNB Chain.
Similarly, 80% of the GR rewards from Fantom partners will be awarded to Fantom stakers, while the remaining 20% can be claimed by BNB Chain stakers on Fantom.
The GR portions of rewards for BNB Chain stakers will have to be claimed on Fantom using the same wallet addresses they stake on BNB Chain’s Governance, while the revenue portion will be bridged over and claimed together with the other rewards on BNB Chain.
Apart from the revenue distribution aspect, the other parameters on the Governance Vault will be the same between chains, these include:
Minimum & maximum lock time
Early withdrawal fee
Equal voting power; 1xALPACA on Fantom = 1xALPACA on BNB Chain
We explain our rationale below…
Rationales:
Build value and incentive to hold ALPACA: Without a Governance Vault on Fantom, it will be difficult to build value for ALPACA on the chain. It will be easier for users to sell their ALPACA rewards than to bridge it back to BNB Chain and go through all the steps of setting themselves up on a new network to stake ALPACA, and this would negatively affect the price for all holders. Moreover, users that do not hold our governance token will have a weaker relationship with the project , making it difficult for us to truly grow a strong Herd on Fantom and any new chains we expand to in the future.
Strong value proposition for our GR partners: With our proposed option, in addition to getting exposure to Fantom users, our partners will also get access to BNB Chain users which they might not have access to otherwise. (BNB Chain governance vault stakers will have to claim their GR rewards on Fantom, which would bring in a bunch of new users to Fantom, giving GR partners exposure to them.) We believe this makes the value proposition of our program very strong. Without many loyal ALPACA holders on Fantom, it will otherwise be difficult to convince GR partners to join our program, and that means less rewards for ALPACA holders and less demand to hold the token.
Rewarding our loyal early adopters: BNB Chain is our birthplace and we couldn’t have grown to this point without the strong support of our users and loyal Herd. Thus, it’s only fair that as we expand to other chains, a portion of the revenue gets allocated back to stakers on BNB Chain, which can be considered the main operating base for Alpaca. This also makes it so BNB Chain stakers will not have to worry about what is the best chain to lock up in; They can lock up on BNB Chain, and know they’ll get some rewards from Fantom and other chains.
Resolution: 
For absolute clarity and fairness, we decided to hold a series of two votes:
Fist vote: Determine if we should add governance for Fantom or not.
The community voted in favor of having a Governance Vault on Fantom
Second vote: Since the first vote passed, we held the second vote which determined the mechanics of the Governance Vault
The community voted in favor of doing pro-rata distribution.
In consideration for the development resources required, we will start with the implementation of "simple" Governance Vault on Fantom (100% of rewards go to Fantom's Governance Vault stakers.) The development for pro-rata distribution will only start when the TVL on Fantom is > 15% that of BNB Chain. (This would roughly put Fantom’s TVL at $125 mil. A lower TVL would be an inefficient use of dev’s time)
References:
​Snapshot Voting (AIP2.2)​
​Snapshot Voting (AIP2.1)​
​Forum Thread​
AIP-3: Handling of Governance Vault’s Early Withdrawal Penalty
Background
We published an article last month on the early withdrawal feature for the Governance Vault Governance Vault Part 2 Is Here! Early Withdrawal, Governance & Insurance Plan! | by Huacayachief | Alpaca Finance | Jan, 2022 | Medium 8​
In the article, we outlined the penalty structure for an early withdrawal:
The penalty for early withdrawal will be 0.75% of the withdrawn amount per week of remaining locked time. ( There needs to be a sufficient penalty so that those who would consider early withdrawal could not game the mechanism by choosing a long lockup duration for higher APR, and then withdrawing early. )
Example:
Alice wants to perform an early withdrawal of 100 locked ALPACA from the Governance Vault, but her position still has 65 days locked time remaining. Alice will have to pay:
Penalty = 0.75% * roundup(65 / 7) = 7.5% of the withdrawn amount
And she will receive: 100 ALPACA * (100% — 7.5%) = 92.5 ALPACA
How the penalty from early withdrawal above will be utilized is the focus of this discussion thread. In the article we proposed the following:
50% of the penalty will go towards weekly burn
50% will be distributed as rewards to the Governance Vault’s stakers in the following week.
Voting
Four voting choices were presented and users can vote by Ranked Choice Voting (IRV) Voting types - Snapshot 24​
Option1: 100% to burn
Option2: 75% to burn 25% to stakers
Option3: 50% to burn 50% to stakers
Option4: 25% to burn 75% to stakers
Option5: 100% to stakers
Resolution: 
Community voted for Option#3 (50% to burn 50% to stakers)
References:
​Snapshot Voting​
​Forum Thread​
AIP-4.1: Handling of a recent bad debt on WaultSwap’s position
Background:
With WaultSwap’s migration and tokenomics change that took place in Q3 last year, we have deprecated our LYF integration with the platform and disabled new positions from being opened. Despite warnings and recommendations for users to close their positions, there are still 100+ active LYF positions on WaultSwap.
As liquidity in these LP pools decreases and debt value continues to accrue from borrowing interest, while the positions no longer earns yields, these positions pose higher risk of bad debt.
Several days ago, one such event occurred and incurred ~$12k USDT in bad debt. This happened because the LYF position is large relative to the underlying liquidity in the pool. When liquidation happened, a part of the LP must be swapped back to the borrowed asset (in this case from TUSD → USDT) but because there isn’t much liquidity in the pool, the swap caused a large price impact resulting in a much lower amount of USDT received and bad debt.
Ref to discussion thread: https://forum.alpacafinance.org/t/aip-4-handling-of-a-recent-bad-debt-on-waultswap-s-position-and-solution-to-eliminate-this-risk-in-the-future/264​
Proposed Implementation:
We would like to propose two independent votes to handle this issue:
First Vote: (AIP-4.1)
Yes or No on the activation of Alpaca Insurance Plan as outlined here: [Security - Alpaca Finance] (https://docs.alpacafinance.org/our-protocol-1/security#alpaca-insurance-plan)
If activated, 50% of the platform’s earnings would be directed to cover the $12k bad debt (which will be deposited back into the USDT pool.)
ALPACA governance stakers will still receive ALPACA emission rewards, Grazing Range rewards, and 50% of Protocol Revenue.
Once the bad debt is covered, 100% of the platform’s revenue will go back to Governance Vault’s stakers as usual.
Based on the current revenue run rate and structure above, it should take ~2 weeks to cover bad debt.
Resolution:
Community voted to activate the insurance plan.
The bad debt repayment has been completed with a total of 12,088.27 USDT repaid to the lending vault.
Repayment was done through a smart contract which can be seen here.
Reference:
​Snapshot Voting​
​Forum Thread​
AIP-4.2: Solution to eliminate bad debt risks from remaining Waultswap positions
Background:
With WaultSwap’s migration and tokenomics change that took place in Q3 last year, we have deprecated our LYF integration with the platform and disabled new positions from being opened. Despite warnings and recommendations for users to close their positions, there are still 100+ active LYF positions on WaultSwap.
As liquidity in these LP pools decreases and debt value continues to accrue from borrowing interest, while the positions no longer earns yields, these positions pose higher risk of bad debt.
Several days ago, one such event occurred and incurred ~$24k USDT in bad debt. This happened because the LYF position is large relative to the underlying liquidity in the pool. When liquidation happened, a part of the LP must be swapped back to the borrowed asset (in this case from TUSD → USDT) but because there isn’t much liquidity in the pool, the swap caused a large price impact resulting in a much lower amount of USDT received and bad debt.
Ref to discussion thread: https://forum.alpacafinance.org/t/aip-4-handling-of-a-recent-bad-debt-on-waultswap-s-position-and-solution-to-eliminate-this-risk-in-the-future/264​
Proposed Implementation:
We would like to propose two independent votes to handle this issue:
Second Vote: (AIP-4.2)
Yes or No to close all remaining WaultSwap’s positions and return funds to users to prevent future bad debt cases.
As of March 19th, there are 113 positions with total debt of $140k USD
Below please find the implementation plan:
1.We will upgrade the WaultSwap farming contract to allow for a privileged address (i.e., dev controlled address) to liquidate any WaultSwap’s positions (only for WaultSwap. No change to PCS or MDEX positions.)
2.We will change the liquidation method. Instead of swapping non-borrowed token in the DEX (this is the cause of bad debt due to low liquidity), we will use oracle price and let the new liquidation strategy deduct the necessary amount from our wallet as determined by the Oracle with a 5% discount.
3.Farming positions will now have all base assets and be able to pay back debt and close the positions
4.Any remaining value after debt repayment is sent back to users
In Step #2, Alpaca Core team will provide the liquidity required to close the positions. We will then manually swap them in CEX or other DEX to get back stablecoin. If there is any profit after, we will use them to buyback ALPACA and burn. Note: Some tokens e.g., MATIC no longer has DEX liquidity on BNB Chain and must be traded on CEX.
Resolution:
Community voted to close all the remaining positions
All positions have been closed. Details can be found here.
References:
​Snapshot Voting​
​Forum Thread​
AIP-5: Interest Model Adjustment
Background:
When we first launched Alpaca in March of 2021, the market was in a strong bull run.
It was a different environment with high speculative demand and higher yields. BNB Chain yields on DEXes (without leverage) were in the range of 50% - 100% APR for most pools. However, these yields dropped over time as more capital entered the market and farm tokens like CAKE depreciated in price.
Today, all the major farms have yields below 15% APR (as of 29th Mar 2022)
PCS BNB-USDT: 15.01%
PCS BNB-BUSD: 13.94%
MDEX BNB-BUSD: 10.31%
MDEX ETH-USDT: 13.31%
What does this mean for our interest model? The 20% rate in slope2 is too high for the current yield environment and there will be very few borrowers at 20%. It’s just not profitable to do leveraged yield farming at that borrowing rate.
As a result, lending pools’ utilization rarely rises above ~40% (borrowing interest = 15% @ 40% utilization) This was evidenced in the major pools where utilization was hovering between 30% - 40% prior to Automated Vault’s launch.This leaves a lot of unborrowed capital on the sidelines, which also means lower APY for lenders.
We believe a more efficient “equilibrium” could be achieved by lowering the borrowing interest at slope2, which will create higher utilization while still maintaining the same, or even higher revenue, to the lenders.
Example:
State
Supply (USD)
Borrowed (USD)
Borrowing Interest Rate
Annual Interest paid (USD)
Lenders APR
State1
100
30
10%
3
3%
State2
100
50
9%
4.5
4.5%
As seen in the simple illustrative example above, with higher utilization, borrowers enjoy lower borrowing interest (10% → 9%) while lenders also earn higher yields (3% → 4.5%)
The question then is: how do we ensure there will be an increase in borrowing demand to increase utilization, compensating for the lower interest rate?
Challenges:
While the core team has discussed this issue internally in the past, the question above is one of the reasons we have not lowered Slope2 borrowing interest until now. There was no guarantee that with a shift in the interest model, there would be a corresponding increase in the borrowing demand.
With no new borrowing demand, lenders and our protocol would end up with less revenue, which could lead to lending deposit withdrawal, potentially creating a vicious cycle where the protocol lost significant TVL.
In fact, we tried with this back in Q3 of 2021 where we moved the Slope2 starting point from 50% utilization to 60% utilization to try to incentivize borrowers to open more positions, but it had no perceptible impact, and we didn’t pursue it further.
Rationale:
With the introduction of Automated Vaults, the situation has changed. We have seen a strong demand from the community for Automated Vaults, with the TVL cap for each 8x pool reached within a few hours of launch.
So with Automated Vaults, we now have high confidence that we could move our system to a higher utilization state where all the participants in the ecosystem will benefit.
Adjusting the interest model would achieve five major benefits:
Higher APY for lenders
Lower borrowing interest rate for borrowers
Higher protocol revenue
Additional capacity for our Automated Vaults
Higher lending utilization which provides more platform stability
Proposed Implementation:
We propose the following target interest models for each asset:
Slope2 Kink: utilization at which Slope2 begins
Slope2 Interest: the borrowing interest rate for Slope2 (the flat part)
Asset
Slope2 kink
Slope2 interest
Lend APYs at Slope2
BNB
85%
12.5%
~ 10% - 12%
BUSD
85%
12.5%
~ 10% - 12%
USDT
85%
12.5%
~ 10% - 12%
BTC
85%
7.5%
~ 6% - 7%
ETH
85%
7.5%
~ 6% - 7%
USDC
85%
10.0%
~ 8% - 10%
As seen above, if we can raise the utilization to Slope2 portion of the model, lenders would also benefit from higher lending APY%
We would not make this implementation in one go, but rather adjust the slope gradually for each token each time we add a new instance of an Automated Vault. This way, we can ensure that lenders and platform revenue will not be adversely affected by a change. The core team will have the discretion to adjust interest models within the boundary above. For example, slope2 kink for BNB will never be beyond 85% and the slope2 interest rate will not be set below 12.5%.
The diagram below illustrates how the interest slope will change. The specific parameters will be based on various parameters at the time - e.g., TVL, APR, etc.
Resolution:
Community voted to adjust interest model
References:
​Snapshot Voting​
​Forum Thread​
AIP-6.1: Limiting Access to Automated Vault
Background:
Due to strong demand for Automated Vaults and potentially limited capacity, some community members have requested that the core team put up some sort of limitation on who can invest in the Automated Vaults.
Based on the current pool’s APR and liquidity, we estimate that an additional ~200 Mn TVL can be accepted by the Automated Vaults at current metrics. While this number is not small, we believe that the demand will be higher, given a good track record so far of the vaults’ performance and the current market conditions.
Rationale:
By limiting access to certain Automated Vaults, we can add value to the Alpaca ecosystem and give privileged access to valued community members. So far, we have launched 3x and 8x Automated Vaults. Their characteristics have several differences (APY, Sharpe Ratio, max drawdown.) Depending on their goals, investors can choose a vault that is more suitable for them. So far though, the 8x vault has been more popular given its higher APY. And because of its higher leverage, the capacity gets filled up quickly, recently within minutes of launch.
Given the facts above, after an internal discussion, we are proposing categorizing Automated Vaults into two groups and limiting their access as follows:
Low-Leverage Vaults: allow public access to <= 4x Automated Vaults
High-Leverage Vaults: limit access for > 4x pools Automated Vaults to only xALPACA holders
While we have only offered 3x and 8x automated vaults so far, in the future, we could potentially offer other leverage -e.g, 4x, 5x, etc., vaults on LP pairs with lower underlying yields such that the APY is comparable to the higher yield pool such as BNB-USDT. Our goal is to keep the Vault’s APY roughly the same across different LP pools to minimize decision making / rotation for users to seek higher yield, which would cost gas and swap fees.
Implementation:
Only xALPACA holders will be able to invest in the high-leverage vaults. The max amount a user can invest in all pools will correspond to the xALPACA balance they have. We propose a linear & dynamic allocation quota as described below:
Linear: the more xALPACA you hold, the higher allocation you get:
Example:
2 xALPACA = $1 total allocation across all high-leverage vaults.
Example: Alice has 10,000 xALPACA, she is entitled to invest up to $5,000 USD across all high-leverage vaults.
For clarity, this means that Alice, for example, can invest $2,000 in on high-leverage vault, $500 in another vault, and $2,500 in another vault etc. But overall when all her investments across all the high-leverage vaults are summed up, they cannot exceed $5,000.
The allocation is counted against the current value of the investment and not the cost-basis. So as the investment appreciates in value, it takes up additional allocation.
Dynamic: ratio will be adjusted periodically based on ALPACA price.
Example: current ratio is 2xALPACA = $1 allocation. ALPACA price increases by 100%, the new ratio becomes 1xALPACA = $1 allocation, maintaining a constant $ ratio allocation.
Other Implementation Notes:
The allocation refers to equity value. So $1 allocation means you can supply $1 worth of asset to have $8 TVL in the vault (for 8x vault)
We will track the amount invested in each vault’s smart contract (and not # of share token in the wallet.) So users cannot game the system by transferring the token out of their wallets to gain additional allocation.
xALPACA balance will be determined in real-time (or weekly snapshot pending implementation challenges), on-chain, at the time of the investment
It would add considerable implementation effort to account for cross-chain xALPACA balance, so the initial implementation will only be for BNB Chain stakers for access to high-leverage vaults on BNB Chain.
While this topic is in discussion, we will pause opening new high leverage vaults until the implementation of this proposal is completed (if passed.) Lower leverage vaults will continue to be added on a regular basis if the capacity is full in all the active vaults.
The estimated time for implementation is 2-3 weeks (once we add it to the sprint) If passed, you can expect it to go live towards the end of May.
We can’t do anything with the existing investors in the current high leverage vaults. However, once they withdraw, they can only invest back again if they meet the criteria.
Voting:
For absolute clarity and fairness, we will do a series of two votes for this AIP. This is the first vote in the series of two votes.
First Vote: To determine if we should limit the access to high-leverage vaults to xALPACA holders. This will be a simple YES or NO vote.
Second Vote: If the first vote passes, we will then have a second vote to determine the parameters for limiting access to the vaults.
Resolution:
Community votes to limit the access to high-leverage vaults to xALPACA holders
References:
​Snapshot Voting​
​Forum Thread​
AIP-6.2 Limiting Access to Automated Vault
Background:
Due to strong demand for Automated Vaults and potentially limited capacity, some community members have requested that the core team put up some sort of limitation on who can invest in the Automated Vaults.
Based on the current pool’s APR and liquidity, we estimate that an additional ~200 Mn TVL can be accepted by the Automated Vaults at current metrics. While this number is not small, we believe that the demand will be higher, given a good track record so far of the vaults’ performance and the current market conditions.
Rationale:
By limiting access to certain Automated Vaults, we can add value to the Alpaca ecosystem and give privileged access to valued community members. So far, we have launched 3x and 8x Automated Vaults. Their characteristics have several differences (APY, Sharpe Ratio, max drawdown.) Depending on their goals, investors can choose a vault that is more suitable for them. So far though, the 8x vault has been more popular given its higher APY. And because of its higher leverage, the capacity gets filled up quickly, recently within minutes of launch.
Given the facts above, after an internal discussion, we are proposing categorizing Automated Vaults into two groups and limiting their access as follows:
Low-Leverage Vaults: allow public access to <= 4x Automated Vaults
High-Leverage Vaults: limit access for > 4x pools Automated Vaults to only xALPACA holders
While we have only offered 3x and 8x automated vaults so far, in the future, we could potentially offer other leverage -e.g, 4x, 5x, etc., vaults on LP pairs with lower underlying yields such that the APY is comparable to the higher yield pool such as BNB-USDT. Our goal is to keep the Vault’s APY roughly the same across different LP pools to minimize decision making / rotation for users to seek higher yield, which would cost gas and swap fees.
Implementation:
Only xALPACA holders will be able to invest in the high-leverage vaults. The max amount a user can invest in all pools will correspond to the xALPACA balance they have. We propose a linear & dynamic allocation quota as described below:
Linear: the more xALPACA you hold, the higher allocation you get:
Example:
2 xALPACA = $1 total allocation across all high-leverage vaults.
Example: Alice has 10,000 xALPACA, she is entitled to invest up to $5,000 USD across all high-leverage vaults.
For clarity, this means that Alice, for example, can invest $2,000 in on high-leverage vault, $500 in another vault, and $2,500 in another vault etc. But overall when all her investments across all the high-leverage vaults are summed up, they cannot exceed $5,000.
The allocation is counted against the current value of the investment and not the cost-basis. So as the investment appreciates in value, it takes up additional allocation.
Dynamic: ratio will be adjusted periodically based on ALPACA price.
Example: current ratio is 2xALPACA = $1 allocation. ALPACA price increases by 100%, the new ration becomes 1xALPACA = $1 allocation, maintaining a constant $ ratio allocation.
Other Implementation Notes:
The allocation refers to equity value. So $1 allocation means you can supply $1 worth of asset to have $8 TVL in the vault (for 8x vault)
We will track the amount invested in each vault’s smart contract (and not # of share token in the wallet.) So users cannot game the system by transferring the token out of their wallets to gain additional allocation.
xALPACA balance will be determined in real-time (or weekly snapshot pending implementaion challenges), on-chain, at the time of the investment
It would add considerable implementation effort to account for cross-chain xALPACA balance, so the initial implementation will only be for BNB Chain stakers for access to high-leverage vaults on BNB Chain.
While this topic is in discussion, we will pause opening new high leverage vaults until the implementation of this proposal is completed (if passed.) Lower leverage vaults will continue to be added on a regular basis if the capacity is full in all the active vaults.
The estimated time for implementation is 2-3 weeks (once we add it to the sprint) If passed, you can expect it to go live towards the end of May.
We can’t do anything with the existing investors in the current high leverage vaults. However, once they withdraw, they can only invest back again if they meet the criteria.
Voting:
For absolute clarity and fairness, we will do a series of two votes for this AIP. This is the second vote in the series of two votes.
Second Vote: The first vote passed. We are now having a second vote to determine the parameters for limiting access to the vaults.
Based on the discussion and feedback so far, and in an effort to move this proposal forward in a reasonable time, I would like to propose that we lock in some of the mechanisms below:
Allocation will be across all high-leverage vaults
Linear Allocation
Dynamics ratio, adjusted on a monthly basis at the beginning of each month
To prevent manipulation, we will use TWAP of ALPACA for the 1 week prior to the ratio adjustment
Voting will be on setting the xALPACA allocation ratio only
Option1: $1.0 worth of ALPACA locked for $1 allocation
Option2: $1.5 worth of ALPACA locked for $1 allocation
Option3: $2.0 worth of ALPACA locked for $1 allocation
Option4: $2.5 worth of ALPACA locked for $1 allocation
Option5: $3.0 worth of ALPACA locked for $1 allocation
For example, with ALPACA current price of $0.66, option#1 would require $1 / $0.66 = 1.5 xALPACA for $1 allocation. option#2 would require $1.5 / 0.66 = 2.30 xALPACA for $1 allocation.
Resolution:
Community voted for Option#1 ($1.0 worth of ALPACA locked for $1 allocation)
References:
​Snapshot Voting​
​Forum Thread​