CVP token holders can stake their tokens, participate in governance, and earn protocol fees
After a few months of work and waiting for audits, xCVP is finally live! PowerPool protocol fees used to sit in the treasury and basically do nothing. Now, CVP holders can stake their tokens and receive revenue from the entire line of Power Universe products.
What is xCVP?
xCVP is a set of smart contracts implementing strategies for converting PowerPool treasury holdings into CVP for rewarding CVP stakers.
Stake your CVP and earn protocol fees: https://powerindex.io/#/mainnet/xcvp
xCVP automatically exchanges PowerPool treasury holdings to CVP, and adds this CVP to the xCVP pool. It means that CVP stakers receive their part of protocol fees over time and directly benefit from the success of the PowerPool DAO. When xCVP is redeemed, the user receives more CVP that was initially deposited. As an added benefit, xCVP is an option for staking CVP without risks of impermanent loss.
xCVP was approved by the CVP community. It was also audited by Pessimistic.
PowerPool DAO treasury and protocol fees
The legacy name of the PowerPool DAO Treasury is Permanent Voting Power Treasury. This name was given by Delphi Digital back in 2020 and reflects the fact that the PowerPool treasury is composed mainly of DeFi governance tokens. The community uses both names interchangeably.
The PowerPool DAO charges fees from the products it offers. Currently, a 0.1% fee is applied both when entering and exiting an index, in addition to a 0.1% swap fee for legacy pools.
Fees can be changed via governance proposals.
The treasury now consists of 36 different ERC20 tokens, including Defi protocol tokens, PowerPool product tokens such as PIPT, YETI, ASSY, YLA, and Yearn Vaults LP tokens. The xCVP contracts have strategies for converting all 36 of these tokens to CVP. The bigger the TVL and usage of the protocol, the more protocol fees can be collected.
PowerPool DAO treasury has approximately $600,000 of value belonging to CVP holders (DAO members).
More detailed information is available on the PowerPool Dune Analytics page. Note that only a limited amount of tokens is included in the statistics there.
xCVP and the Future of PowerPool DAO
The PowerPool protocol’s revenue will be significantly overhauled in the next few months as the Power Universe is rolled out. With the more structured and complex products in the pipeline, the fees should reflect their higher value and uniqueness. We expect to charge up to 2% yearly management fee for particularly complex pools, and have zero performance fees since products are managed by the DAO members.
In the New Vision, xCVP is a critical component since it’s the overarching pool into which all value from all other products flows. It also creates a meaningful value capture mechanism for the CVP token by generating automated buying pressure.
Subject to DAO governance, the PowerPool DAO Treasury may enter into positions that could affect the redemption value of xCVP, but not of other fund tokens. Staking CVP effectively would become similar to owning part of a hedge fund or a venture fund.
The internal logic of how xCVP operates
Every preset amount of time T, the xCVP contracts are called by Power Agent. The contract exchanges some amount of treasury holdings to CVP and adds these CVP tokens to xCVP pool.
Note: currently xCVP is available for staking, but Power Agent isn’t activated yet for CVP purchases. It will be done in 24 hrs.
xCVP contract address: https://etherscan.io/address/0x9ae236653325b29d5ab4a2c8cb285e8059c2c204
CVPMaker: https://etherscan.io/address/0x8c22e596e66b98ec1d2ea45b40d879c705e5e047
The amount of CVP bought from the open market is a variable that can be changed via governance voting. Initially, it is set at 3000 CVP every 72 hours (3 days). The CVP community can decide on the size of this variable via governance. We advise DAO members to set it up according to the treasury growth rate. If the necessary amount of CVP is already inside the treasury contract, it will deposit CVP to xCVP.
Every xCVP parameter is governed by CVP token holders, including the amount of CVP purchased, exit fee, and lock-ups.
Amount of CVP bought and deposited to xCVP: 3000 per 72 hrs or 365,000 CVP per year. This means that the APY for 1m of staked CVP will be 36.5%.
Exit fee: currently there is no exit fee for xCVP, but it can be set up by the DAO voting.
Lock-up: there is no withdrawal lock-up now, but it can be set up by the DAO voting.
Next steps:
- Treasury migration — transferring tokens from the old treasury to the main one.
- Enabling the Power Agent for CVP purchases.
- Stake your CVP and earn rewards! xCVP era begins.
We are looking forward to proposals from the community regarding the CVP purchase rate.
