Idle and Lido DAO to DAO collaboration showcases potential for Outcome’s KPI options
Tl;dr: A new DAO to DAO (D2D) collaboration between Idle and Lido showcases the plug-and-play potential for Outcome’s KPI options program. Idle will mint KPI options by locking 100K $IDLE tokens until Jan. 1, 2023, and then will distribute these options to Lido. The options will be redeemable for bonus amounts of IDLE tokens if Lido achieves certain TVL milestones in the Idle stETH Perpetual Yield Tranche (PYT) before the vesting date. This implementation of Outcome’s KPI options illustrates how other DAOs and projects can develop their own incentive programs quickly and easily using any TVL metric recorded on DefiLlama, or a metric referenced through a subgraph.
Lido & Idle’s DAO-to-DAO collaboration: background
Lido is a liquid staking solution for ETH backed by industry-leading staking providers. Lido lets users stake their ETH — without locking assets or maintaining infrastructure — whilst participating in on-chain activities, such as lending. Lido attempts to solve the problems associated with initial ETH staking like illiquidity, immovability and accessibility — making staked ETH liquid and allowing for participation with any amount of ETH to improve security of the Ethereum network.
Idle is a suite of DeFi products that provides yield optimization, lending aggregation, and risk tranching. It allows users to access sophisticated strategies, automate tedious tasks, and maximize their capital efficiency. The product suite design is open-ended, which means other protocols can build and innovate on top of it without having to stitch together disparate protocols or spend months integrating and updating yield functionality.
DAO to DAO partnership
In early 2022, Idle and Lido partnered to build stETH Perpetual Yield Tranches (PYTs). PYTs let users segment yields and risks of different underlying strategies. Senior PYTs offer safer access to DeFi yields: holders are backed by Junior PYTs deposits, and shielded from losses resulting from the underlying strategy by forwarding a share of the yield to Junior PYTs. On the other side, Junior PYTs offer a boosted, risk-on access to DeFi yields: holders gain a higher percentage of underlying yields, and in return, offer protection to Senior PYTs when an underlying strategy or protocol fails.
With this powerful stETH tranching product, Idle and Lido see an opportunity to expand the DeFi ecosystem by allowing users to manage their risk exposure.
Where KPI Options fit in
The KPI options segment is one of three initiatives by these two DAOs to mix rewards programs to generate value and partnership across both projects. The details of the three initiatives can be found here.
The integration with Outcome’s KPI options will lock 100,000 $IDLE tokens until January 1, 2023. At the vesting date, the tokens will be redeemable for escalating amounts of $IDLE based on TVL. This will be calculated as the average TVL on stETH-based PYTs over the last three months before expiry of the option duration.
The Lido DAO treasury will be rewarded the following premiums if the TVL thresholds are achieved:
KPI options to spur creativity with performance-based rewards
Idle DAO’s is using KPI options as a tool to structure D2D deals and blend the performance of a synergetic product like stETH PYTs to the scope of the D2D deal. This is a unique use of KPI Options until this time, as it is paying directly into the Lido DAO treasury, and thus it is a DAO-wide incentive.
It’s similar to earnouts in M&As, but with a more liquid, flexible and interconnected structure.
If you want to get started with Outcome’s KPI options, you can learn more about the program and its potential here.
And for more information check out Outcome.Finance and learn more about KPI options via our doc site.
Also join UMA’s Discord and follow along with Outcome on Twitter.
