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Join the Herd (AlpaCareers)
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)

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