Title:
[RFC] Transfer Vault Rewards from staking to Merkl and enable tokenisation of Vault Shares
1. Summary:
In order to help grow the TVL, I believe we should enable the tokenisation of the Lazy Vault Shares so that they can be used as collateral in supported Borrow/Lend markets and then when profitable, users can yield loop them.
In order to be able to tokenise the vaults, and keep vault rewards for users, we will need to move the current vault rewards away from the fleet staking manager and use something that allows rewards when vault shares are depositing into other protocols, such a Merkl.
2. Context & Motivation:
Following on from @samehueasyou RFC - the only way out is up (here) - this proposal would allow for faster TVL growth by following the path of many others protocols by making the vault shares usable within other borrow and lend protocols with the ability to yield loop them to maximise potential returns.
What’s more, this was originally thought about in the design, and all existing vaults can have tokenisation enabled through a governance vote, so there is no secondary vaults that need deploying and users will not need to move over. They may have to sign a transcation to unstake and mint their vault share tokens though.
For context, I think it was the right approach at the start, with the protocol being new, that the shares were not tokenised so that it could be a softer launch to ensure everything worked as expected. But now with the TVL over $100M and growing, along with user numbers, we can make the Lazy Summer Protocol even more attractive to DeFi Natives, and this also allows us to open the door to a new Vault product type called Lazy Loops (subject to this being passed).
As mentioned in the summary, in order for the SUMR rewards to be earned by users depositing into 3rd party protocols, we will need to move away from the current vault staking rewards and move to a new system. One such as Merkl, which is used by many top projects, and will give us the same flexibility and functionality with rewards as now. As this is an RFC, this isn’t a final decision - and it should be open to other proposals.
In preparation should this RFC and subsequent vote pass, Summer.fi is actively looking into suitable protocols and risk curators to support the Vault Share tokens where liquidity would already be available.
3. Proposal:
- Move away from current Fleet Staking Rewards Manager
– This will involve a vote to set the current rewards to 0 on each Vault. - Enable another type of rewards distribution mechnism (such as Merkl)
– If no objections, Summer.fi, as the Labs Co and acting under direction of the foundation, will work with Merkl (or another if directed to by the community) to setup the new rewards program. Governance will have the option to change the reward amounts at this stage.
– A vote to transfer relevant tokens from Summer Treasury to Merkl contracts. - Enable the tokenisation existing Vaults
– This will again be a governance vote, and can happen at the same time or after the transfer of rewards.
4. Open Questions:
- Does the Summer community agree with moving to MERKL for the rewards distribution or would like to propose another solution?
- Should all Vaults be tokenised from the start?
- Assuming the community wants to move forward, should the current SUMR reward levels remain or be reset again to another level?
5. Next Steps:
- Gather community feedback
- Promote to SIP (either one or two depending on the discussion and if Rewards and Tokenisation should be split)
- Push to vote
–
Thank you all for the consideration for this RFC.
Tagging @Recognized_Delegates for their input