Orkan Protocol Directive

Description and Rationale

We believe that Orkan should act as a meta-governance protocol over liquidity flow within the FTM ecosystem. Specifically, that Orkan should utilize perpetual bond issuance to acquire governance tokens from those projects on FTM employing liquidity gauges and locking mechanisms as exchange incentives (i.e. Spirit and Liquid Driver).

We propose to first focus on acquiring Spirit and LQDR as they are proven within the ecosystem and present a clear revenue generating opportunity. However, with the much anticipated launch of Solidly it is possible that adding additional bonds for assets with Solidly token allocations may be beneficial. We suggest that this consideration is monitored while both the Orkan and Solidly protocols begin to take shape.

As a long-term objective, we believe that a portion of voting power accrued could be used to enable deep liquidity and usage of wrapped BTC assets within ecosystem (i.e. wBTC and vBTC). This transition may also enable Orkan to adequately grow and maintain the peg of Strudel’s vBTC product via bond issuance and arbitrage.

These proposed directives benefit the Orkan community in the following ways:

a) Acquisition, and subsequent locking, of exchange related governance tokens allows Orkan to:

1. Accrue exchange-related fees, providing a perpetual revenue stream for the Orkan treasury
2. Allow $ORK holders to decide which liquidity pools to boost and, thus, where to drive liquidity
3. Provide additional revenue streams via bribe markets in the event they are created on FTM

b) Accumulation of wrapped BTC assets in the treasury over time will enable Orkan to:

1. Be a dominant provider of wrapped BTC liquidity on FTM, providing additional revenue streams and opening up discussion for potential partnerships
2. Grow and maintain a trustless wrapped BTC product within FTM

c) Establish the first DAO owned Bitcoin treasury and grow it in perpetuity with the following goals:

1. Leverage the value of the original liquidity primitive by creating incentives that foster a deep and varied liquidity landscape.
2. Transforming Strudel DAO into a powerful neutral entity which protects the values of BTC based products and drives its adoption across the interchain.

Stage 1 — Governance Bootstrapping (Treasury valuation of $20m)

We believe the first priority of Orkan should be to gain as much voting power as possible, as quickly and efficiently as possible. Therefore, the protocol should initially focus on acquiring assets employing liquidity gauges and locking mechanisms as exchange incentives.

In our opinion, the first assets that should be acquired are Spirit and LQDR. This opinion stems from the fact that both are gaining market share as a hub for decentralized exhange and yield farming on FTM. Moreover, locked Spirit (inSpirit) and LQDR (xLQDR) have current APRs of ~43% and ~103% respectively. Of note, we may later wish to accumulate those tokens governing protocols like Solidly or BeethovenX.

To incentivize Spirit and LQDR acquisition, we propose the following bond discount rates and treasury allocation based on the following targets:

We believe these targets can be achieved within the first four weeks of launch.

As Spirit is acquired we believe that half should be locked and wrapped as OinSpirit (OrkaninSpirit) and a swap pool in BeethovenX could be created for OinSpirit/Spirit to collect additional exchange fees in Beets. If creating our own wrapper is not technically feasible or slow, we believe 75% of spirit should be locked as inSPIRIT and 25% remain liquid. Similarly, we believe 75% of LQDR should be locked as xLQDR and 25% remain liquid.

Of note, Spirit and LQDR will be perpetually locked. Spirit votes will initially be used to boost the FTM/ORK liquidity pool to improve treasury LP rewards.

During the governance bootstrap stage all Spirit and LQDR rewards will be harvested and locked continuously to compound the treasury’s positions. Once initial targets are met, consensus should be reestablished as to what policy should be implemented in order to meet sustainable growth rates and whether we want to continue acquiring Spirit or move to alternative assets.

Stage 2 — BTC Accumulation and Utilization

Once the desired levels of voting power are accrued, we propose that Orkan shift more resources towards other potentinal partnerships (veDAO, 0xDAO) and growing a treasury of Bitcoin indefinetly. In our view, by becoming the first DAO to explicitly accumulate BTC we can over time control a significant position in the network. The Bitcoin design allows for value to be stored in perpetuity which makes it the perfect asset for a treasury to hold as backing.

The BTC allocation in the treasury will initially be mainly composed of wBTC which is the most widely used BTC wrapper on chain. Over time other wrappers will be introduced in order to diversify the risk profile of on chain BTC.

To acquire wrapped BTC assets, bonding discounts and treasury allocations targets will shift to the following (pending the need for additional FTM/ORK liquidity):

As wrapped BTC assets are acquired, we suggest putting them to work in money market protocols such as Scream, which will provide lending yield or allow the treasury to lever up its position. Alternatively, these positions can unwound to create or contribute to liquidity pools — deepening BTC liquidity on FTM. We could again use inSpirit voting power to boost rewards in these pools.

During the BTC Accumulation and Utilization stage 50% of Spirit and LQDR rewards will be locked to compound Orkan’s inSpirit position and 50% will be used to purchase wBTC or vBTC. Once the target holdings are met, consensus should be reestablished as to treasury allocations, bond dynamics, and acquisition of alternative assets.

Stage 3 — Secure the Peg of vBTC

Upon obtaining adequate and sustained protocol growth, we propose that Orkan contribute to maintaining Studel’s vBTC peg via perpetual bond auctions.

A perpetual bond auctions enable the control of the vBTC supply in the following two scenarios:

1. If the price of vBTC is under the peg the free-floating supply of vBTC needs to decrease, then $ORK bonds are incentivized by lowering the vBTC BCV, which increases the demand for vBTC to purchase bonds at a discount. Alternatively other treasury assets can be used to increase the treasury vBTC stock.
2. If vBTC price is above the peg the free-floating supply of vBTC should increase through increased bridge usage. Alternatively, vBTC stock can be swapped for other types of tokenized BTC in order to diversify the treasury balance sheet. The BCV can be increased if necessary.

In this instance, bond discounts will be dynamic for vBTC (depending on where it is trading in relation to the peg) and depend on the need to acquire additional assets.

At this stage, we suggest a higher treasury weighting for wBTC and vBTC as follows:

Apart from revenue generated from inSpirit and xLQDR rewards and yield/fees from wBTC, the procotol can participate in vBTC arbitrage to gain an additional revenue stream.

Orkan vesting periods

Linear vesting
Gradual unlock of tokens (on a per/block basis) over course of vesting period(s).

Team allocation (staked)
Team allocation will be staked, converting from ORK to sORK prior to first epoch. Team members will be able to claim their pro-rata share of sORK at each unlock.

Launch details

Presale:
$33.33
Friday, February 11th.

Launch & Airdrop:
$66.66
Tuesday, February 15th.

Snapshot:
It was available until Monday, January 17th. Locking your $TRDL after that, will not allow you to be part of the pre-sale.