This proposal details a proposed $500k Token Loan between StakeDAO and the Reserve Protocol Core Team denominated in SDT and RSR (Reserve’s Governance Token) following StakeDAO’s launch of the USDC+ RToken on the Reserve Protocol. The objective is to further entrench the StakeDAO<>Reserve Protocol Partnership and ensure long-term alignment between the projects.
The Reserve Protocol (reserve dot org) is a free, permissionless platform on Ethereum mainnet to build, deploy and govern asset-backed currencies referred to as “RTokens.” RTokens are always 1:1 asset-backed, allowing for permissionless minting and redeeming on-chain by users without the need for any middlemen. Overcollateralization is provided by RSR token stakers. Each RToken can have an entirely different governance system and is governed separately by ecosystem stakers. The Reserve Protocol launched on Ethereum mainnet in Oct 2022 and completed its fifth audit in Feb 2023.
StakeDAO has launched the USDC+ RToken as a community-governed and diversified yield-bearing USDC basket. It aims to optimize yield to holders and mitigate default risk with overcollateralization, enabling holders to grow and preserve their wealth. USDC+ is 1:1 asset backed by a basket of other yield bearing USDC. As with all asset-backed currencies created on the Reserve protocol, USDC+ is overcollateralized and with auditable proof of reserves available on-chain 24/7. The distribution of the yield generated by the basket of USDC+ assets is distributed as follows: 80% to RToken holders, 10% to RSR Stakers, 10% to Liquidity Maintenance with the purpose of being perma-locked as sdCRV.
RSR holders who stake on USDC+ can participate in the governance of the RToken and earn a portion of yield that is directed towards stakers.
Reserve is an active participant in the StakeDAO ecosystem:
- Largest holder of sdCRV with 12,800,594
- Significant amount of SDT locked with 277,327
- Currently buying veBOOST - spent 196,206 SDT to accumulate 2,632,944 veBOOST since 9/15/2023.
The SDT-RSR Token Loan will incentivize long term alignment on the USDC+ RToken. StakeDAO will use RSR to participate in governance for USDC+ and earn yield passively while Reserve will max lock SDT to further increase their StakeDAO voting power and boost rewards for the USDC+ and other RToken Curve pools to increase liquidity.
While Reserve Core Team has been buying veBOOST, It is difficult to get max boost with veBOOST given market liquidity.
Adopting this proposal is expected to provide dual benefits of StakeDAO being able to hold significant governance power over their newly launched USDC+ RToken while Reserve can use its voting power to improve the liquidity of USDC+.
The Loan will be conducted with $500k worth of SDT and RSR respectively via a shared multisig with a trusted third party. Either party has the option to end the Loan with 30 days notice, after which all funds need to be returned. The same amount of SDT and RSR shall be returned that was initially locked up, regardless of any appreciation or depreciation of the assets, but each staker shall receive any yield from staking the asset they receive in the Loan. In the event of a depeg of USDC+ or other RTokens that StakeDAO chooses to stake upon, and some or all of the RSR being staked by StakeDAO is liquidated, StakeDAO is still responsible for returning the amount of RSR that it received in the temporary swap once the swap is terminated. veSDT will be continually relocked for max voting power. StakeDAO and the Reserve Protocol Core Team both agree not to stake more than 20% each of the total staked RSR on USDC+ and will start at 5m worth of RSR each. StakeDAO can stake additional RSR on RTokens for yield while USDC+ is growing, but shall not exceed the 20% staking threshold.
Both Reserve Protocol Core Team and StakeDAO agree not to sue the third party for any reason.
Human resources: Minimal developer time needed
Treasury resources: TBD
Technical Implementation: StakeDAO and Reserve will each create a 3/5 multisig with the following signers:
- StakeDAO Multisig
- StakeDAO Core Team EOA
- Reserve Core Team Multisig
- Reserve Core Team EOA
- Trusted Neutral 3rd Party
Admin: veSDT holders
Community feedback: 2 days minimum
Voting Duration: 5 days