ElasticSwap — Double the rewards, Double the fun!
As we continue to build out the ElasticSwap protocol and head towards the protocol launch, we have decided to innovate on the staking side of things as well. But rather than picking one token model over another, we have decided to do what we do best — innovate.
Our fearless Devs and co-founders (one in the same) have come up with an elegant solution that doubles the rewards for staking, while allowing stakers to earn part of the fees the ElasticSwap protocol generates.
What is currently out there?
The -ve model:
-ve stands for “voter escrowed”, first invented at Curve Finance, and since implemented in a number of other DeFi protocols. In the -ve model, you lock up your TOKEN and it’s converted into veTOKEN which has the governance power of the protocol. The longer you lock your token, the more rewards you get and the more voting power you have. As time goes on, the amount of veTOKEN decays linearly in order to incentivize the holder to re-lock periodically to maximize governance and rewards. The main innovation from this is how this creates weighted votes and weighted rewards. There is no unstaking your TOKEN early like in other protocols.
The limitations here, however, are that because stakers are rewarded based on how long they are willing to lock their tokens, they are prevented from withdrawing and liquidating their original deposit in an emergency situation. It also encourages the forming of cartels who gather the token to be staked, stake it receiving the veToken in return, and then wrap that veToken to make it liquid again, defeating the entire purpose of the locking period.
The -x token model:
The -x token model (see xSushi) provides fee-sharing for holders who stake their tokens in the contract. The staked tokens are fully liquid and can be withdrawn whenever the staker pleases without penalty. It represents a very rudimentary incentive model designed to keep the stakable tokens temporarily illiquid by paying the staker for locking them in the smart contract.
The elasTIC way
With the launch of ElasticSwap and the native token $TIC, there has been a lot of discussion among the team about what the best model would be for our protocol. While the team bootstrapped the initial liquidity pool with a strong bench of DeFi natives, no other tokens were distributed… not to the ElasticDAO pre-seed or the team. Instead, the pre-seed and team were given tokens to stake in the protocol that provide them a portion of $TIC emissions. As would be expected, some of our pre-seed members have claimed and sold their tokens.
While the protocol is still in buidl mode, our fearless Devs and co-founders (one in the same) have come up with an elegant solution that doubles the rewards for staking, while allowing stakers to earn part of the fees the ElasticSwap protocol generates. Put simply, rather than staking $TIC and getting $TIC, stakers earn unrealized $TIC that is paired with generated fees (in the form of USDC.e) in the future… i.e. rewards come in the form of an $ELP token rather than just $TIC. One catch — if you pull your position early, you have full access to your position, but you forego your rewards and those get redistributed to the treasury, meaning an added benefit is that over time, the protocol is also accumulating protocol-owned liquidity.
So what does that mean we have come up with? A model that combines the best of -ve, -x, and protocol owned liquidity, all in one.
Our solution is one that will not only reward stakers even more handsomely, but also provide a strong foundation to the ElasticSwap protocol, giving it a huge advantage, and more importantly, an opportunity for our members to reap double the rewards.
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COME JOIN THE CONVERSATION!
Discord discord.gg/elasticswap
Website https://elasticswap.org
Twitter @elasticswap
Github https://github.com/elasticswap
Audit Report https://code4rena.com/reports/2022-01-elasticswap/
