[RFC] Digest re: CORN contribution proposals/discussions

This post aims to collect in a single place all the CORN contribution proposals/discussions that gained traction with the community in order to provide some relief to the victims of the pDAI jar hack.

Context

Under the Pickle & Yearn co-operation dill, the CORNICHON token (aka CORN) was announced to track the losses of the Evil Jar exploit. Since then:

  • CORN has been released (code by @banteg): $0.0767 | Cornichon (CORN) Token Tracker | Etherscan
  • @Larry_Cucumber has kindly decided to give up the 2% of emissions going to the devaddr (i.e. the “dev fee”) in favour of CORN holders.
    • this source of funds has so far been used to market-buy CORN and burn it, thereby reducing the supply of CORN for the benefit of the remaining CORN holders.
    • down the road, Larry’s idea is to use these funds to deposit DAI so CORN holders can burn their tokens and collect the DAI deposited.
  • Other proposals that would add to the utility of CORN have been discussed but none have been implemented or put to a vote as of yet.

Proposals

Besides the devaddr donation, these other proposals have aimed to bring new sources of funds to benefit CORN. I have numbered them here for ease-of-reference, without implying any favour.

(1) PICKLE emissions to CORN

According to the current emissions schedule (PIP-5), perpetual PICKLE emissions are implemented. As both emissions and emission allocations are governance parameters, a percentage of emissions could be proposed and voted for as either:

  • (a) rewards for staking naked CORN.
  • (b) converted for DAI at regular intervals to deposit for CORN burning.
  • (c) added to the devaddr funds, in order to market-buy CORN.

Or some other way the community determines in consideration of development costs and time.

(2) Incentivized PICKLECORN pool

CORN fundamentals and PICKLE fundamentals should be sufficiently correlated. Moreover, the CORN market could benefit from additional liquidity. This proposal aims to set up a PICKLE-CORN pool where rewards can be directed to.

The incentives could come from:

  • (a) emissions, similar to (1).
  • (b) revenue-sharing, for example, part of the excess that is given to the community members (as per PIP-15).
  • (c) a combination of (a) and (b).

There are several possible homes for this pool:

  • (i) SushiSwap, another Yearn partner, where we could apply to get SUSHI rewards on top of our incentives.
  • (ii) Uniswap, where our PICKLEETH rewarded pool resides.
  • (iii) Balancer, together with the Smart Treasury, where we could make this pool programmable e.g. set. ratios different than 50-50, allow for single-sided liquidity adds/withdraws, and determine trading fees.

Other pool pairings with CORN are also possible. Discuss below if you favour a different pairing (e.g. the same CORNDAI referenced above).

Or, choose a source from here to combine with (1) above (i.e. (2)(b) or (2)(c) as a source but used as per (1)(c)).

(3) Matching for Community Strategist donations

Under the current implementation of the Pickle revenue model (PIP-16), a strategist fee of 7.5% of performance is charged to jar users, on top of 20% of basic performance fee that goes to the treasury. Currently, this fee (also called “dev fee”, unrelated to the fee that comes from emissions) has been waived for many internally-developed strategies (by the core team) but could be reimposed.

Some members of the community have kindly proposed creating strategies and donating some or part of their strategist fee to CORN. For example, @purplezky’s proposed USDN3CRV strat promises to do this.

In order to generate extra revenue specifically for CORN, Pickle could:

  • (a) match the percentage points that the Strategist donates to CORN out of his strategist fee e.g. if the Strategist donates 5% (out of 7.5% in total, keeping 2.5%), Pickle will donate 5% that would otherwise go to the Treasury.
  • (b) match some or part of the Strategist donations based on how much of the strategist fee is donated. e.g. if the Strategist donates half of his fee, Pickle would donate half what would otherwise go to the Treasury.
  • (c) earmark part of all of the fees for its own internally-developed strategies to CORN. This would mean reimposing these fees on all or some jars that currently do not have it. For example, assuming 5% is earmarked, across all jars, Pickle would reimpose this fee (turning 20% performance fees to 25% performance fees) for CORN's benefit.

Poll

This is not meant to be an exhaustive list of options. However, feel free to reference the numbers in your replies as a way to organize the discussion so that we can arrive at a proposal for the time being.

I am adding a poll to see where forum posters stand regarding sentiment. A narrower Discord poll could use this RFC and this poll / the replies here as guidance.

Thank you for putting some time and thought onto this matter.

  • I’m leaning towards (1).
  • I’m leaning towards (2).
  • I’m leaning towards (3).
  • We should combine / do something else (read my reply).
  • Do nothing.

0 voters

6 Likes

Thanks for kicking this discussion off @leekuanjew - it’s an important one to have.

I think consideration of a fourth category is warranted, which broadly involves allocating a percentage of all protocol profits towards CORN payments. For example, regardless of the source (whether it’s from internal strategies earning Yearn’s strategist fee or from the tentative 30% fees from PICKLE emissions) a percentage, such as 5%, of all income would go straight to CORN payments.

I generally prefer this option over options (1) and (2) because PICKLE emissions are most effectively used to drive revenue for the protocol; after which it can be employed how we see fit. This is related to the belief that we’ve been over-incentivizing PICKLE liquidity when they could be used for incentivizing depositis/profit (which would then flow to CORN).

7 Likes

I buried something like that in my mega-post :blush:. So you are suggesting (2)(b) as a source but used as per (1)(b) in my (slightly convoluted) terminology. And 5% is your current working number.

What would you say towards working to put this in a proposal based on current numbers? As the governance landscape under DILL might change significantly.

2 Likes

Thanks for this. Could we explore another option where 1% of the excess above $400,000 to be directed for CORN repayment, before Smart Treasury. Few thoughts as to why:

  1. We need to be able to cater for on-going Pickle expenses and be profitable and sustainable in the long run for us to repay the debt.
  2. The 1% parameter can be tweaked or be voted on later by Pickle governance as I understand not everyone is a pDAI victim and wouldn’t want to contribute to the repayment. We could set the floor as 1%.
  3. I have looked at how YAM spent their huge Treasury and they have allocated 1% for Gitcoin donation and felt its a reasonable % to begin with.

Another option that we can look at is utilizing the farmed BALANCER token received from our Smart Treasury as part of the repayment plan. As we grow our Smart Treasury, more funds will be available (selling BAL) for us to repay our debt.

3 Likes

I think this is a pretty good idea. It’s aligned with our incentives, flexible, and as you mentioned follows well-regarded practice for other projects that donate.

The BAL token is a nice cherry on top and compounds the alignment with incentives.

One thing we should probably look into doing more or less at the same time or together with passing this resolution would be exploring a mechanism by which other events were users could potentially lose funds at Pickle would be dealt with. Without becoming a moral hazard, without putting aside security, without impacting our ability to remain at the forefront of DeFi innovation.

Some ideas:

  • others like AAVE have implemented safety module (SM) for their governance token, with the understanding that the value therein could be used to back shortfall events, voted for in governance, with some limits.
  • jar-wide insurance, with a certain caps – deeper integration with protocols like COVER which focus on insurance primitives and are also part of the Yearn ecosystem could make this possible.
  • system-wide insurance, with a lowish cap. Think of it as Pickle Deposit Insurance Contract (PDIC) that covers the average investor. So, say, your first $5,000 would be PDIC-insured, and bigger fish and whales would have to procure their own insurance beyond that.
1 Like

1% from treasury is ok for donations, but not for repaying the debt. Even if tvl grows a lot, that’s hundreds of years to repay, so it’s just pretending that we are solving the issue. We either have something substantial of at least 20%, or forget about the debt at all. I understand that many stakers care only about their short term profit and won’t vote for that, but that doesn’t mean we shouldn’t try to make a fair proposal. That’s pure hypocrisy that pickle stakers are taking a cut from jars profit, while letting 100% risk on those who put their money in jars and giving them that profit. Making at least 20 cut from them is quite fair. Plus we have those in pickle uni pool, which should have more long term interest (as are not afraid of temporal IL), which can vote for that.

The general idea is that farming through vaults is very bad risk-reward, you are getting a small PICKLE reward, while risking to lose all the funds in a potential hack. The only pro of not farming directly without jars is that it saves some gas of reselling farmed tokens, which is true only for low amounts.

So we can increase risk-reward ratio by offering a guarantee that potential lost money will be refunded from that 20% part, which will be divided in case there will be more losses. That would put pickle at a higher level comparing to the rest industrial farming competitors. In this way we increase TVL, so stakers will get more from 80% than they’ll get from 100%.

Regarding BAL, I think that belongs to those who farmed it, same like Andre distributed farmed CRV to those who staked for YFI or dharma giving their users the uni they deserved. I guess we cannot do that retroactively, but that’s another topic.

1 Like

Just was looking at the liquidity incentive in Powerpool where CVP is used to increase the rewards/yield for ASSY (Aave, Sushi, SNX and YFI) when they are already staking.

I was also thinking about the fact we removed the fees for the Farms that are sushi based aside from MIC because of the 2/3 future sushi locked.

We could do something similar but instead of offering additional rewards we reduce fees if they are farming with pickle and stake/burn their corn, as well. Corn has the potential to defer up to $40 million dollars in fees for example. Thus we create buy pressure for corn to reduce fees for active users of our platform. Thus rewarding those still actively engaged.

The numbers would have to be played out, but this is a strategy .

This may be similar to 1, but instead of actually increasing emissions, we just reduce our cut.

On numbers, I am modelling the redistributions to CORN. Given we have a breakthrough with our new strats, things are starting to change rather quickly.

pickle-income-model

Numbers are of course, really rough, and based on assumptions that can change rather quickly. However, they do show:

  • (i) it pays to be degen;
  • (ii) every strat counts; and,
  • (iii) if we focus on growth, we can resolve the CORN situation rather quickly (18 months not 100+ years).
4 Likes