[Proposal] Creation of an eDough to veDough bridge

A proposal similar to the one below was recently posted to the forum; I wasn’t certain if it was best to create a space for a “competing” proposal, or “hijack” the existing one. Regardless its nothing that a mod can’t resolve with a little copy+paste. Any and all feedback is welcome, I will make changes to the original post as suggestions are made.


Summary

We propose that a bridge be created to swap eDOUGH to veDOUGH with a non-configurable time lock of 3 years. Additionally we propose that unclaimed rewards be made optionally claimable as 100% veDOUGH with the same 3 year time lock.


Background

Treasury farming will soon be launching for PieDao, this means those who hold DOUGH (distinct from the token eDOUGH) will be able to stake for a yield payed out in the new SLICE pie. DOUGH is the governance token for PieDao while eDough is an escrowed version of the token payed out to those who support the dao by providing liquidity. The proposal that implemented this change did not discuss what would occur with eDOUGH.


Motivation

Currently we are faced with a handful of issues, in no particular order:

  1. eDough is ineligible for its previous only function - voting.
    This may be desirable for those who purchased Dough on the open market as excluding those who have previously committed capital to the Dao would give them an advantage in % of those staking, however I think the cost of this (alienating those previously assisting the Dao, possibly of sell pressure) outweighs the APR gain.Those who hold mostly eDough will have the majority of their funds excluded from first (several?) month of rewards already.

  2. eDough positions will begin unlocking in November which may begin a sell off in the market
    For obvious reasons it is always desirable to alleviate sell pressure.

  3. As a PieDao LP you will soon need to perform 3 actions to fully take advantage of rewards
    Claim eDough Rewards -> swap to Dough -> stake for veDough. All at mainnet prices and, for our American friends, with complicated tax implications.


Specification

We propose to solve the above issues a bridge be constructed to swap eDough to 3-year locked veDough with no option to configure the time lock. Preventing time lock configuration means the most benefit for the DAO as it guarantees long term commitment to the protocol while also maximizing the reward for the individual. Those who are very close to the end of their escrow period and do not wish to stake (or swap to veDough) can exit their position and the normal time. In doing this we relieve a great deal of sell pressure, allow holders of eDough to enter into a staked position with only 1 transaction, realign all community interests, and effectively re-enable eDough holders voting rights.

Additionally, we propose that all claimable rewards be made claimable as 100% 3-year staked veDough versus the existing 20% Dough 80% eDough scheme. This resolve issues LPs run into in the number of mainnet transactions required to full utilize their rewards and increases time lock in the protocol, further decreases sell pressure, and encourages investment in the protocol.

These two above solutions may launch at separate times due to complexity differences in implementation or other issues.


Not Discussed

Items purposefully not discussed in this proposal

  • Possible alterations the dopamine rewards rate
  • Alterations to LP withdraw fees

General Approval
  • I mostly approve of the above proposal
  • I have major issues with the proposal

0 voters

Update: per Gabo on discord “the new-governance through veDOUGH should anyhow get implemented at a “later” stage (e.g. Early November) to avoid getting stuck in transition. Until then, snapshot votes would be triggered as is (therefore having eDOUGH counted), keeping as reference a snapshot prior to Staking commencement.” This vote is no longer relevant.

Update 2: The firm date is now the 18th to enable veDough voting. We will want to vote on this before then.

Bring this proposal to a vote while eDough/LP holders are still eligible
  • Yes, include the eDough/LP holders
  • No, wait until the veDough launch

0 voters

3 Likes

I think we should keep a 1 year lockup time, or provide configurable lockup terms like Curve does (maybe 6 months to 4 years). I don’t like forcing existing LPs into a 3 year lockup vs. the partial 1 year lockup currently.

I do agree that we should make LP rewards 100% vesting veDOUGH. It makes sense to save the gas; and sure, tax implications too. If we do that, we should also remove the 0.5% withdrawal fee: there’s no need to have that disincentive when LP rewards are completely illiquid.

1 Like

I think the issue with allowing eDough to have a variable lockup time would be not providing sufficient incentive to those that hold only/mostly Dough. Without a lengthy time commitment folks who already migrated to veDough have no real motivation to welcome more folks in, the 3 year lock-up that is built-in is effectively the penalty for being able to stake the Dough early.

on the other hand you run the risk that LP dries up,
in my case i wonder if i would be better off pulling my LP and use the assets on veDOUGH instead of LP … and wait till my eDOUGH unlocks, but i can use my LP position.

To clarify, what you are saying here is that you might be tempted to liquidate your LP position for dough that you then stake for less than 3 years? I don’t think this proposal would impact those considering such a thing regardless, i.e. if you are considering that with the passage of the above then you are probably considering it now.

1 Like

if my eDOUGH wont get to veDOUGH i am considering right now to cut the losses and to liquidate my LP positions and use the AMM DOUGH from there for veDOUGH.
veDOUGH doesnt have the Impermanent Loss Risk
… and the farmed eDOUGH didnt even remotely made up for the losses

from a TA perspective


DOUGH has the near perfect dump pattern of a farming coin, so the danger is real that unlocked eDOUGH get dumped right away, the chart itself shows no structure.

Inititally i thought why would anybody sell at such a low price, but good traders usually cut their losses unless you can offer them something … so the choice to go for veDOUGH extension might help.

Would they go a 3 year extension for soemthing with a chart pattern like that… i kinda doubt. At least for the persons which are not involved in PieDAO and just used it for Farming

thou… not much historical data on Sushi, MarketCap we stayed almost the same for a year… so we lost out big on all the L2 money … which imho is still the most pressing issue…

3 Likes

@adam thanks for bringing this up with the appropriate context.

The proposal of creating a bridge from eDOUGH to veDOUGH with a non-configurable time lock of 3 years was my initial thought as well.

I think it’s worth clarifying one thing since I feel here the escrow definition is sometimes misused.
Those tokens belong to the final user only when a specified condition has been fulfilled, in this case, that 52 weeks have passed.

That means until that happens, the user is entitled to zero tokens, even if 6 months have passed the user is entitled to zero tokens and not to a proportional share like some people seem to think.

This means that if a solution like the one proposed was implemented, many people would effectively skip the line where others didn’t, something I would take into consideration.
I would not consider it unreasonable in order to make it fairer to the eDOUGH holders that a minimum of 3 months of the escrow has to be passed before using such a bridge.

Realistically the vast majority of eDOUGH will unlock in a few months, sometimes > 10, and trading those for active voting and yield accruing veDOUGH would be a great trade-off for them. It would also save them gas in the process and some tax benefits.

Basically, it would be something like:

a) if you want to skip the line you trade eDOUGH for veDOUGH 1:1, aka max lock.
b) if you want to decide how long to lock for just waiting for the escrow to finish.

Other solutions could include:

c) If you have a vesting entry with a time left major or equal to 6 months of escrow, you can migrate to veDOUGH using as lock time what’s remain, they can then boost at will. (1000 eDOUGH with 9 months left would convert to 153.29 veDOUGH).

d) A KPI option is done only targetting eDOUGH with the goal to convice them to bridge them over with max lock when the time comes.

3 Likes

A&B sound like what is currently proposed. If anyone else chimes in with support for a timed conversion (i.e. your “wait 3 months in escrow” idea) then I’ll consider adding it to the proposal. Your option D sounds fun, I know you like UMA KPI stuff, but I think it does add complexity in understanding versus the much easier to understand current proposal.

Edit: I forgot to comment on option C. I agree with much of what @oilreg said, I’m not sure if many people know how long they’ve had any of their entries in escrow for. If we did have that info easily available then we still introduce the issue of needing to Stake once for some short (ish) duration and then turn around and re-stake again for the “real” amount of time you want to stake for. I would rather encourage a proposal that minimizes the number of maintain translations.

@adam any comment on option c)?

c) is hard to comment on… cause people in general dont know at which date their vesting entries end, our Farms tell us only the amount of vesting entries we have… not when they unlock

also … on c) will the remaining eDough (the ones which didnt fullfill the time requirement) be turned to veDough once the remaining time is suffcient…
c) is the most intransparent which will confuse the most people :smiley:

From the perspective of a diversified staker @adam’s statement is right on:

I would rather encourage a proposal that minimizes the number of maintain translations.

Please :slight_smile:

Responding to @oilgeg: “…dont know at which date their vesting entries end”:
What I do know is I claimed the eDOUGH periodically thus it’ll become available periodically, I do not look forward to periodically doing the 3-step process to stake a bit more veDOUGH. Selling would be easier, and cheaper in fees.

If the solution to this conundrum requires little effort by reducing future actions, it’ll be attractive.

2 Likes

Maybe with a dedicated interface this would appear way clearer and transparent?

1 Like

eDOUGH feels like it’s an extremely strange place right now, sort of a bridge solution as team worked towards veDOUGH.

As a locked up token, users who staked in DOUGHpamine already signaled a long term belief in the PieDAO team and product. My belief is that held eDOUGH should be replaced with veDOUGH.

eDOUGH’s functionality was removed, the v(oting) aspect was moved to veDOUGH and it has no ability to earn shares in the treasury. I struggle to understand why eDOUGH has any place in the PieDAO ecosystem at this point.

3 Likes

I’m not attempting a definitive answer, but just to give input: currently all eDough is good for is avoiding any longer than a 1 year lockup on dough, after which it can be sold. I think in a separate proposal we could discuss sun-setting eDough, or making other changes. If this proposal were to go to vote and pass now, then sun-setting eDough would mean just preventing rewards claims as eDough and (maybe) allowing an adjustable timelock on the veDough rewards. Regardless of that being the solution, or something else, any sunset of eDough would mean we’d need a bridge and way to claim rewards as veDough, both of which this proposal does cover.

So long as no further feedback comes in I plan to take this to a vote by mid week (either the 13th of 14th).

4 Likes

Hey all, during the last days I’ve been mulling this issue and I came up with a variation on @adam’s bridge idea.

Let’s first reiterate the cloud level goal: we, as DAO members, want DOUGH holders to continue & increase their participation by staking their eDOUGH as it vests.

The problem is eDOUGH will be trickling into the market. Gas is expensive, staking is a pain, and a lot of holders will probably just wait until the next vesting. That’s not what we want. Shit happens, minds change… we want holders to take action.

This idea is similar to the Oven product but it’s a custom version so I’ll call it the Funnel. The intention is to consolidate all the little transactions into periodic big bundles.

At sea level, aka the user level, assuming an LP claimed on a regular basis, an amount of eDOUGH will vest on a regular basis. If desired, the holder can put the eDOUGH in the Funnel. With one transaction. The Funnel is a contract so the user sends the eDOUGH to the contract.

Then, like the Oven, when specific conditions are met (elapsed time, gas price…) the baking Funnel’s ball lifts and the eDOUGH drops. It gets converted to DOUGH (1 tx) and the DOUGH gets staked (1 tx), for a default 3 years. The Funnel contract receives an equal amount of veDOUGH back and, perhaps using Disperse, distributes the veDOUGH to the owners.

So a holder sends eDOUGH to the Funnel and after awhile the staked veDOUGH appears in the same wallet. The user made one (1) tx.

What does this achieve? eDOUGH holders are incentivized to stake because it’s a much cheaper and easier path. Also the holders must wait until the eDOUGH vests so it’s fair to all.

In fact I don’t think we even need a UI for this. We just make the Funnel contract address known, holders send their vested eDOUGH to the contract, and if they wish they can check that it arrived on Etherscan.

To expand on this, here’s a technical question: can unvested eDOUGH be moved? I don’t have the technical chops to analyze the contract. But if the answer is yes, it CAN be moved, then there’s an extrapolation of this idea that increases efficiency by an order of magnitude. It also pumps up the verified numbers for PieDAO’s staking commitments because holders will be able to do a ‘fore-stake’. I’d give that contract a different name though: the Colander. I’ll explain why if it’s possible…

2 Likes

This sounds near-identical to the second paragraph of “specification”, I propose that we allow eDough to be made claimable as veDough (with a 3 year time lock). This would be only 1 txn, rather than what you’ve described (2 txns for the user, maybe 1 for the dao).

I think keeping it simple with just options A & B is the way to go.

With option A available, I think it may actually increase liquidity in the pools as it would reward liquidity providers with a nice SLICE if they choose max lock and to stake their DOUGH, which is now also a KPI. Some of us have been considering breaking our LPs to stake DOUGH instead, but with this option, it makes sense to continue providing liquidity and then converting eDOUGH to veDOUGH.

So gonna throw a curve ball to this.

eDOUGH isn’t “owned” yet, with unlockings beginning in november.
eDOUGH holders would preferably maintain the ability to vote, and are expecting unlocks this year.

Maybe a balance is provide option to migrate veDOUGH w/ 6 month lock.
This gives access to voting but at a lower weight than 3 year, retains the year of unlock, and gains access to fee revenue which wasn’t available before, while not diluting liquid DOUGH 1 to 1 on the veDOUGH end.

Another possible unexplored opportunity for LPs considering pulling liquidity to stake is allow staked LPs though that may add complexity in calculating vote weight, I’d be curious how possible that is.

DAO owned liquidity is quite popular. Perhaps staked LPs could be useful on this front. There have been several experiments with LPs as voting tokens that seem interesting to me

1 Like

@adam If the idea is essentially the same then it’s a moot idea. I thought there’d be a cost advantage to bundling the transactions. But from the holder’s PoV, if the bridge is essentially a swap of eDOUGH to veDOUGH then we’d have the path of least resistance that we want.

Lockup still TBD…

1 Like