Introducing stkIDLE Gauges: a new stakers-centric paradigm for PYTs and LPs
Idle DAO is up to a major upgrade of its staking model and tokenomics, with the implementation of the veToken model and stkIDLE Gauges.
From now on, stkIDLE Gauges will become the new means of governance for LPs rewards, aligning stakeholders’ time horizons with the protocol ones.
The paradigm incentivizes ecosystem participants to lock tokens through boosted rewards and interests redistribution. It also unlocks Voters Extractable Value (VEV) opportunities for IDLE token holders.
With the approval of the initial batch of whitelisted Gauges, Idle liquidity providers will accrue additional IDLE rewards on top of the following Senior Tranches:
stkIDLE holders (aka IDLE stakers) are now able to decide the weekly allocation of IDLE to Gauges and boost returns for their individual liquidity deployment.
Today, stkIDLE reaches its final evolution for the VeTokenomics, which began with the adoption of the locking and fee-sharing mechanism, and now with the implementation of Gauges voting system and LPs boost. This model has been popularized by Curve (veCRV) and FRAX (veFXS), and our adaptation is the first of a kind for this model applied to a yield aggregator and tranching protocol.
During this initial 1-week guarded launch phase, stakeholders within the Idle ecosystem have the chance to get familiar with the new governance tool and start interacting via meta-governance initiatives.
Let’s now see in detail what this improvement means for IDLE token holders, liquidity providers, and protocol partners.
Multi-layer returns powered by DAO2DAO collaborations
We now have 3 layers of yield enhancement:
- D2D Collabs
Boosts. With the veToken model, users can boost their rewards by depositing their tokenized PYTs deposit into the Gauges and accruing IDLE rewards in proportion to the amount of stkIDLE they own, up to +250% boost.
Gauges. By holding stkIDLE tokens, users have also the opportunity to increase the share of IDLE rewards allocated to the pool where they deposit, indirectly increasing their yield stream.
D2D Collabs. The chain of incentives continues, as Idle partnered with DeFi protocols interested to push the adoption of their assets. Thanks to these DAO2DAO relationships, the following PYTs benefit from additional rewards:
🤝 stETH PYT, with LDO
Idle partnered with Lido to provide users with two risk-adjusted financial products for ETH staking. The bootstrap phase started with 40,000 LDO/month in February and continued in March, drawing attentions of both DAO treasuries as well as individual LPs.
Given the consistent traction achieved by this pool, which now manages $25m+ in TVL, the program will be extended for an additional month at a rate of 30,000 LDO/month.
Current LPs will continue to accrue LDO using the current staking contract until April 14th.
On that day, the LDO flow will be redirected to a staking contract on top of Gauges, letting users accrue both IDLE and LDO at the same time.
🤝 mUSDcrv PYT, with MTA
mStable community approved the listing of mUSDcrv PYTs into their Dial, allowing mUSD liquidity providers to also accrue MTA rewards.
🤝 pBTCcrv PYT, with PNT
pNetwork launched a new pBTC pool on Curve and Convex, including the v2 of their BTC-based asset.
With more than $35m in liquidity, the old pool will migrate to the new one. pNetwork and pBTC liquidity providers have the unique opportunity to benefit from the risk-adjusted gateways and add IDLE incentives to foster the migration.For this reason, pNetwork committed the incentivization of the pBTC PYT with extra PNT.
In all the cases mentioned above, the final liquidity providers’ return is composed as follows:
Organic underlying yield + underlying protocol’s gov tokens + IDLE stream + partner’s gov tokens
Unlocking Voter Extractable Value (VEV)
From the DAO perspective, Gauges allows mitigating voting apathy for the governance, by aligning the protocol growth with the interests of token holders and liquidity providers.
The relationship between IDLE holders and LPs becomes symbiotic, with the latter incentivized to retain the protocol ownership to increase their future share of IDLE rewards.
From the IDLE token holder perspective, Gauges represent the chance to interact with LPs and protocols willing to promote the liquidity provision on their asset/pool. Community members can stake their governance token and receive voting power able to route the future emission of IDLE on PYTs.
With Governor Bravo, token holders are entitled to collectively have a say in treasury management, protocol upgrades & operations, and new incentivization campaigns. Gauges empower individuals to solely pick decisions influencing a stream, instilling a new token use case.
As a result, there is now a direct connection between governance tokens’ ownership and liquidity provision — valorizing long-term stakeholders.
DAOs can vote for their own asset/pool, or use VEV to incentivize stakers to select their PYT. Governance token holders can use their voting power to increase the Gauge weight of the DAO/protocol willing to reward them the most.
While stakers add a new yield stream, DAOs save money — receiving more IDLE on their PYT than the rewarded amount.
Timeline and next steps
The Gauges guarded launch will end on April 14th, followed by the activation of the 990 IDLE/day stream.
During this period, the Idle DAO will finalize PYT deployments (mUSDcrv, mUSD, and pBTC).
This is the expected timeline:
- April 5th: Gauges guarded launch
- April 6th: IIP-21 launch to set final IDLE distribution rate
- April 7th to April 14th: Gauges voting phase
- April 11th: IIP-21 execution
- April 14th: production release of Gauges, with DAO-voted Gauges
- April 15th: final IDLE distribution rate (990 IDLE/day) activated
If you are interested to increase your protocol or asset liquidity or understand how to benefit from VEV, come and say hi on our Discord! 👋 Idle Leagues members will introduce you to the Idle ecosystem and assist you on technical and operational aspects.