Key Performance Indicator (KPI) options are synthetic tokens that will pay out more rewards if a project’s KPI reaches predetermined targets before a given expiry date. Every KPI option holder has an incentive to improve that KPI because their option will be worth more. This is intended to align individual token holder interests with the collective interests of the protocol.
PieDAO can use UMA’s Long Short Pair (LSP) contract template and Optimistic Oracle create our own KPI Option tokens. These would be backed by DOUGH and can be valued against the KPI we set, in relation to the target DOUGH staking campaign.
You can learn more about the concept of UMA options here.
Below is an example of a successful use of UMA KPI options, designed to give an idea of its mechanics and effectiveness.
UMA itself adopted the KPI option strategy to grow its own TVL, distributing 1 million of KPI option tokens to governance members of various protocols like Balancer and Sushiswap on 31st of March 2021. The goal of the KPI option was to boost UMA’s TVL, with the ‘north star’ metric set at a bold $2bn. The KPI options were set to expire 3 months later, in June 2021. At expiry, each KPI option was redeemable for a defined amount of $UMA, depending on how much of the set KPI (UMA’s TVL) the community has achieved.
At the time of the initiative start, UMA’s TVL was $72m. Within 2 months of the initiative, the TVL hit over $200m, while spurring the growth of an independent community movement, ‘superUmans’ who drove forward the UMA integrations, partnerships, marketing and more.
Bottom line is that the initiative was broadly successful, and has since been adopted by other projects like Aragon, Badger and others,
With the launch of Staking, the efforts of the PieDAO community are concentrated towards the ‘north star’ metric that has been defined as having at least 30% of DOUGH circulating supply locked in the staking contract. I believe issuing KPI options is a great way to coordinate these efforts and add cryptoeconomic incentives on top.
PieDAO has a large and engaged community of thousands of members, and I believe that a tool like this can help boost the cohesiveness with which we cooperate.
Below is the proposed scope of the KPI Options for DOUGH staking:
Proposed Aidrop date & targets: pro-rata to all veDOUGH holders, at first reward Pie minting
Options expiration date: in 6 months, ie. 31st March 2022
Metric tracked: total amount of DOUGH staked
KPI Option backed by: DOUGH
Proposed total amount of KPI options: 10 million
Maximum option converting value: 0.5 DOUGH per option, if 15m or higher ‘staked DOUGH’ KPI is hit.
Total option payout per KPI hit: growing in a step function, with examples below
For this proposal to go forward, the community would need to express their opinion at the Governance vote to move DOUGH to mint the KPI options.
I believe this initiative would help boost the success of DOUGH staking and attract a larger amount of talented individuals to achieve that. Ultimately, having more DOUGH staked is beneficial for all stakers!
The beauty of the UMA’s KPI option design is that the treasury does not spend funds unless the objective is met - in which case it’s funds well spent!
- Hell yes!