Introducing the Reliquary Prime

Published in

Optimism Prime

8 min readJun 3, 2023

In our endless quest to rebuild Cybertron, we are introducing the Reliquary Prime as our new home base. This will provide us with an efficient way to reward our faithful Autobots.

Join us at https://www.optimismprime.io/earn and contribute to our fight against the Decepticons!

Our Story So Far

The year 2022 was difficult due to rampant Decepticon attacks in the DeFi space, hitting Terra Luna, Celsius, Voyager Digital, Three Arrows Capital, and finally, causing FTX to implode.

Despite all the chaos, Optimism has provided a safe haven for DeFi by offering decentralized alternatives to our Autobots. As they continue to fight, our mission remains the same: to rebuild Cybertron before the next bull market.

Our treasury has grown, and it’s time to share the benefits with our most loyal soldiers, in order to sustain the war effort until we succeed.

Our Treasury

The Optimism Prime treasury is a multi-sig Gnosis Safe that can be tracked on DeBank: https://debank.com/profile/0x1481BffbB3a825AC994DBdDCEf1eC2082fE35a3D.

In addition, we maintain a spreadsheet to log all moves, forecast strategies, or just experiment with numbers: https://docs.google.com/spreadsheets/d/1OJm1oJXrmcZ3535Gfv5MUsxzK6tpwZm9GT5__TTDhxQ/edit?usp=sharing

Our treasury is mostly filled with veVELO. This position has grown in value thanks to the ve(3,3) season and Optimism hype. It is our main yield source and should be used wisely to keep growing the treasury, diversify our yield sources, fund future developments, and reward our holders.

Our Velodrome Voting Strategy

A challenge we face is that Optimism Prime has a low amount of Protocol Owned Liquidity (POL). As a result, voting for our $OPP liquidity pool is not an effective strategy for increasing our veVELO growth and sustaining our farming APR. To avoid losing money to mercenary farmers, we have instead focused on bribe chasing. Specifically, we have mostly voted for the ETH/USDC pool.

This pool offers consistent high trading fees and provides real yield in the form of two solid tokens that can be accumulated during bear markets. Additionally, the pool is bribed with OP rewards. You can track the total APR of this pool at https://dune.com/0xkhmer/velodrome-historical-voting-apr, which remains competitive with other highly bribed pools.

Our primary objective: revenue sharing

Redistribution is essential for growth, which is why sharing yield with our ecosystem participants was always part of the plan.

To provide more rewards for long-term participants, I proposed a strategy that includes our token OPP, Velodrome’s LP tokens related to OPP (OPP/ETH, OPP/OP, OPP/fBOMB, etc.) and Tarot’s lending tokens related to OPP.

In our Discord server, I discussed a lock system with NFTs similar to what Solidly’s forks offer. While this system is good for rewarding long-term deposits, the lock tends to discourage people, even though the position can be exited through NFT marketplaces.

One of our community members, Gattordo, mentioned maBEET from Beethoven DEX as a better alternative. It uses a maturity system to increase rewards as time passes without locking users’ assets. Withdrawing results in losing maturity, which is enough to incentivize long-term staking.

As I delved into maBEET documentation and articles, I realized it was an implementation of the Reliquary system from Byte Masons collective. This system was also recently implemented by Chronos exchange to incentivize long-term LPing on their ve(3,3) DEX.

It seems like a good DeFi primitive to build upon, so I decided to investigate whether I could use it for Optimism Prime.

The Reliquary from Byte Masons

The Reliquary offers a multi-pool staking system, where users deposit their assets in NFTs called Relics. The Reliquary distributes reward tokens to the pools according to an emission rate and individual pool allocations. Each pool then distributes rewards to stakers according to a maturity curve, which can be customized to increase rewards over time. Each Relic tracks its own maturity and level.

This system provides several advantages:

Participants who stake for longer periods receive more rewards without locking up their assets.
The reward strategy, pool allocations, and curve of each pool can be fully customized.
Relic NFTs allow for the transfer of a position, so it can be sold without unstaking from the protocol. Relics with high maturity also have additional value.

Resources explaining the Reliquary can be found online (see References at the end), but reading the code is necessary to fully understand the system: https://github.com/Byte-Masons/Reliquary

I plan to write a technical report about what I’ve learned while using and extending the Reliquary.

The Reliquary Prime

Motivation

Although the Reliquary is useful to fill our needs, it does not benefit from our native farming place, Velodrome.

Initially, I thought of offering users the opportunity to stake their LP tokens in our system, and then re-stake them on Velodrome. This would enable our treasury to use them for farming and compensate for the lack of POL required to grow our VELO position. It would also reward long-term sticky liquidity. From the user’s perspective, it’s like giving up VELO yield to receive another yield instead.

To implement this feature, I extended the Reliquary code so that our version stakes deposited LP tokens on Velodrome. We can claim earned VELO from the treasury multi-sig and lock it to increase our future yields. Stakers earn real yield, while we earn and lock VELO. It’s a win-win for our Autobots. Additionally, our small protocol can reduce sell pressure on VELO.

You can find our fork of the Reliquary here: https://gitlab.com/optimism-prime/reliquary/. The Reliquary Prime has already been deployed, and you can stake your assets on https://www.optimismprime.io/earn to earn OP rewards.

However, please note that this code is un-audited, so use it at your own risk.

OP Rewards

OP has been chosen for several reasons:

We earn OP through bribes by voting for ETH/USDC and can directly redistribute it without dumping.
Optimism is our home, and it is our duty to protect OP.
Autobots can choose to compound their yield by pairing their OP rewards with OPP, which increases our liquidity and farming potential.

Pools and allocations

We currently have 3 LP token pools and 2 single asset pools with an allocation that offers more rewards to market participants. We reserve the right to add new pools in the future and change allocations based on our needs and partnerships.

The LP token pools are:

OPP/ETH: allocation 100
OPP/OP: allocation 100
OPP/fBOMB: allocation 100

fBOMB is a famous meme token that has been making waves in the DeFi space, being listed on almost every solidly fork on every chain. This project is managed by Millennium Club DAO (MCLB), and its leader Fierydev is also an active community member of Optimism Prime and a signer of our multi-sig.

The single asset pools are:

Tarot’s lended OPP: allocation 100
OPP: allocation 50

Tarot’s lended OPP is the token you receive when you lend OPP on our OPP/ETH leverage farming pool on Tarot. Enjoy both supply APR and treasury rewards without suffering from impermanent loss!

Maturity levels and allocations

For all pools, we use the following allocation settings for the maturity curve:

Level 1: allocation of 10 for maturity less than 1 week
Level 2: allocation of 25 for maturity between 1 and 2 weeks
Level 3: allocation of 30 for maturity between 2 weeks and 1 month
Level 4: allocation of 60 for maturity greater than 1 month

When you reach a new maturity threshold for your Relic, you need to level it up on the UI. Claiming your reward will also trigger the level up.

Withdrawing and depositing both reduce the maturity according to the amount. For example, if you have a Relic holding $1 worth of assets and you deposit $100, the maturity will be strongly reduced. Conversely, if your Relic holds $100 and you deposit $1, the maturity will not change much. The same rule applies to withdrawing. If you withdraw a small portion of your bag, the maturity will be reduced less than if you withdraw a larger portion.

You should be aware that your Relic can level down if the maturity is reduced too much. Therefore, it might be better to create a new Relic for a large deposit and merge them later when they are at maximum level.

Future work

Reliquary Prime V2

In the DeFi world, it is not uncommon to announce a V2 just a month after the release of V1. Therefore, we are teasing a V2 now. Our current Reliquary Prime is considered an initial experiment of the system that will last at least the entire summer. After that, we will determine what is required to improve the system and global liquidity depth of the market. This may involve changing pool allocations or maturity curves, or introducing new features in the code.

We would like to add a governance layer on top of it, where each Relic would provide voting power for the governance of Optimism Prime.

Implementing a gamification layer, similar to what Beethoven did, could be a fun addition. We could use a unique visual representation for each maturity level and pool. Relics may also have a use case in our future GameFi applications.

Autobribes for Autobots

The Reliquary Prime started a discussion on our Discord server about a new project: the Autobribes protocol. This protocol would naturally extend the idea presented here of acquiring ve(3,3) governance through deposited LPs and redistributing bribing rewards to depositors, while also incentivizing long-term liquidity provision.

Our upcoming article will introduce Autobribes, its roadmap, and the beta test that we’ve already deployed for Velodrome and Equalizer. This beta test is being experimented using Optimism Prime treasury funds.

References

About the ve(3,3) model:

The secret history of Solidly — YouTube ⏳ 6:13
ve(3,3) — The Future of Tokenomics? | Mettalex ⏳ 11m
Andre’s ve(3,3) SOLIDLY Explainer video — YouTube ⏳ 10:20
ve(3,3), the logical next step after veCRV? | TokenBrice — Blog ⏳ 9m

About the Reliquary and its applications: