GIP-13 Tokenomics Update Phase 1: Membership Vaults

[blakewest]

GIP-13 Tokenomics Update Phase 1: Goldfinch Membership

Authors: @mikesall, @blakewest, and @alvinh

Summary

In this phase of the broader Tokenomics V2, we propose the Goldfinch Membership system whereby members can receive a share of protocol fees (“member rewards”) and greater voting power in governance. To participate, members must lock up both GFI tokens and invested capital (either in the Senior Pool or Borrower Pools) in member vaults. Member rewards will be distributed as FIDU, the Senior Pool USDC yield bearing token.

1. When paired with locked up capital supply, GFI locked in a member vault will earn a share of protocol fees, aka “member rewards”.
2. Capital supply and GFI can be locked for a maximum of 4 years. Longer lockup periods will earn more governance voting power and a greater share of member rewards.
3. The percent of protocol fees allocated to member rewards will be managed by DAO governance voting

This proposal helps strengthen Goldfinch’s decentralization. By encoding voting power to be aligned with long-term members, it solidifies the protocol’s ability to continue operating in a fully decentralized manner.

Motivation

We recognize that governance is the primary reason for people to hold GFI today, and the community has been vocal about their desire for GFI to have stronger utility. It is important for the GFI token to have value, because it is what we will use to reward and penalize participants as the protocol continues to grow and become more open and permissionless. A stronger GFI results in a more robust protocol, a more decentralized and happier community, and rewards all those who contribute to the growth and resilience of Goldfinch.

We propose this Phase 1 as the highest priority and highest value way to add utility to GFI. This proposal neatly aligns a few objectives:

• Add clear utility and value to GFI
• Encourage the single biggest lever for growth, which is increased TVL
• Move decentralized voting power to the most long term aligned and active participants, and away from short term oriented, or inactive holders who don’t actually participate in the protocol.

Specifications

Lockup periods

GFI

Members can choose to lock their GFI tokens for a maximum of 4 years, with no minimum. The longer that GFI is locked, the greater its weight in the calculation of both member rewards and governance voting power. Members can elect to extend their lockup period at any time to maintain or increase their weight. Any locked GFI will be truly locked — there will be no ability to withdraw.

If you lock GFI, but do not lock capital supply, you will still get increased voting power, but will not receive member rewards.

Capital supply

Members can choose to lock up their capital supply with the same lockup mechanisms as GFI. Any form of capital — whether in the Senior Pool or Borrower Pools — will count the same.

If you lock up capital supply but do not lock up GFI, there is effectively no change. You will continue to earn investor rewards [1], but you will not get member rewards or increased voting power.

Lockup period weighting

Based on the length of the lockup period selected, a linear scaling factor is applied to a member’s locked GFI or capital supply to calculate its weighted share. This is similar to how vote weighting works in Curve governance (CurveDAO Whitepaper). A max 4 year lockup period will have a scaling factor of 1.00 applied, and the scaling factor decreases linearly over time. There is also a minimum scaling factor of 1 / (52*4) = ~0.0048, so that there is no minimum lockup (ie. doing no lockup or a 1-week lockup will have identical weight).

This means a member who locks 1,000 GFI for 4 years will have the same weighted share as a member who locks up 208,570 GFI for 1 week. Similarly, a member who locks up $10,000 in capital supply for 4 years will have the same weighted share as a member who locks up $2.08M for 1 week. As these examples illustrate, lockup period weighting greatly encourages long-term participation in the protocol. A true believer in Goldfinch with a small amount of GFI and/or capital supply can increase their scaled weight to match short-term oriented whales. Members will have full control over their lockup periods and can extend their lockup periods at any time.

How are member rewards distributed?

Member rewards will be distributed in FIDU, which is the ERC20 token that represents USDC supplied in the Goldfinch Senior Pool (read more here). This means that Goldfinch will take the protocol fees (which are denominated in USDC), supply the percentage of them allocated toward member rewards into the Senior Pool in exchange for FIDU, and then distribute that FIDU to members who have contributed capital supply.

Distributing in FIDU is advantageous because it means that members will earn additional yield while continuing to support the protocol. The price of FIDU increases against USDC over time from interest payments, so these member rewards are automatically put to work for them. Additionally, Senior Pool capital will naturally grow over time, which further aligns incentives between participants and the protocol. Members will be able to claim their accumulated FIDU member rewards any time with no lock up.

Why require capital supplies?

Going back to the goals outlined above, it’s important to design reward incentives in a way that directly delivers value to the protocol and participants. We believe the best way to do that is to require members who wish to receive member rewards to actually supply some capital in the protocol. The share of rewards that each member receives relates directly to (a) the amount of GFI they have locked and (b) the amount of Goldfinch capital supply locked. This ensures that the protocol rewards members of the community who have strongly aligned incentives with Goldfinch.

Mechanism

1. Member invests into the Senior Pool as an LP and/or in Borrower Pools as a Backer
2. Member locks their FIDU and/or Backer position in a member vault and chooses a lockup period
3. Member locks GFI in a member vault and chooses a lockup period
4. Goldfinch periodically supplies a portion of USDC protocol fees into the Senior Pool in exchange for FIDU
5. Goldfinch sends this FIDU to a shared member reward pool
6. A Goldfinch Rewards Contract calculates what proportion of the member reward pool each member should have claims to based on their weighted amounts of GFI locked up and capital supply locked up
7. Members can claim their accumulated FIDU member rewards at any time with no lockup

Member reward share calculation

A member’s precise share of member rewards is calculated by utilizing the Cobb-Douglas function, which is an equation commonly used in economic analysis to ensure stable relationships between two or more distinct inputs that generate an output. Crypto protocols such as 0x and The Graph have successfully utilized the Cobb-Douglas equation in the design of their fee share systems (see here). In order to ensure that all rewards are given out, we also suggest dividing each person’s Cobb-Douglas score by the sum of everyone’s Cobb-Douglas score.
It’s worth noting the overall incentives here. The Cobbs Douglas equation will encourage you to have each side (capital and GFI) proportional to it’s alpha param. Eg. if you have 1.2% of capital, you get the most rewards when you also have 1.2% of GFI. So you could have a lot of capital locked up and basically no GFI (or vice versa), but that wouldn’t be economically optimal. Intuitively, you can see this is true because you multiply the two proportions together. So if you have zero of one side, it doesn’t matter how much of the other you have, you will get zero rewards. And if you have a lot of one, and a really small amount of the other, you’ll still end up with a really small amount of rewards.

The calculation for fee sharing would thus look like this:

Where, over a set period of time:

Γ = Goldfinch total protocol fees

μ = Share of protocol fees sent to shared member rewards pool

Τ = Member’s locked capital supply weighted share

Φ = Member’s locked GFI weighted share

α = Capital supply amplification weight

Proposed values

The two variables in the fee share equation that are determined by governance are:

• μ = Share of protocol fees sent to shared member rewards pool.
  • You can think of this as “What percentage of total Goldfinch protocol fees should be allocated to members?”
  • Proposed initialization value of μ = 50%
• α = Capital supply amplification weight.
  • You can think of this as “How much should we weight locked capital supply, versus locked GFI for fee shares?”
  • Proposed initialization value of α = 0.50

The μ and α values can be changed by governance vote. We believe μ = 50% allows the protocol to build sufficient stablecoin reserves for future needs like community grants, and α = 0.50 is a good starting point to observe how dynamics play out between the balances of capital supply and GFI.

Example scenario

As an example:

• Goldfinch earned $3M in total protocol fees over a year
• Alice has a 0.00267% share of total weighted capital supply
  • Alice locked up $500 in capital for 4 years, which is $500 total weighted capital supply
  • A total of $150M capital was locked up, with an average lock up of 6 months (12.5% weighting), for $18.75M total weighted capital
  • Alice’s share of weighted capital supply is $500 / $18.75M = 0.00267%
• Alice has a 0.04% weighted share of total locked GFI
  • Alice has locked 100 GFI for 4 years, which is 100 total weighted GFI
  • A total of 1,000,000 GFI was locked up, with an average lock up of 1 year (25% weighting), for a 250,000 total weighted GFI
  • Alice’s share of weighted GFI is 100 / 250,000 = 0.04%
• Additionally, the Goldfinch community has decided through governance that
  • μ = 50% of all protocol fees will be sent to the shared member rewards pool
  • α = 0.50 capital supply amplification weight

So the variables in our equation would look as follows:

Γ = $3,000,000 in fees generated by protocol

μ = 50% of protocol fees allocated to members

Τ = 0.00267% member’s share of contributed capital supply

Φ = 0.04% member’s weighted share of locked GFI

α = 0.50 TVL amplification weight

Therefore over that year, Alice would earn:

$3M * 0.50 * .0000267^0.5 * .0004^0.5 = $155 in claimable FIDU

Therefore, if Alice had planned to supply $500 in capital for 4 years, she would earn an additional 31% automatically compounding APY on her USDC by locking 100 GFI as well. Alice can claim her FIDU reward as it’s being accrued and exchange FIDU for USDC, or do nothing and it will auto-compound.

You can play with this spreadsheet to get a feel for different reward amounts for different investments, and lockup periods.

How does locked GFI factor into governance?

With the introduction of Goldfinch Membership, GFI locked in membership vaults will have extra weight towards voting power in protocol governance. Weighted voting power will use the same linear scaling factor based on the lockup period, as described earlier. This is similar to how vote weighting works in Curve governance (CurveDAO Whitepaper). Locked capital supply will not factor into voting power in protocol governance – only locked GFI.

Benefits and Downsides

Benefits

• Encourages holders of Senior Pool & Backer positions to become hodlers of GFI and vice versa, creating extra strong alignment
• Gives clear utility to holding the GFI token that also clearly benefits the protocol.
• Does not involve any GFI inflation or subsidy, so incentives are driven by fundamental protocol growth and sustainable sources rather than self-referential token prices

Downsides

• Uses a significant amount of protocol fees on a continuing basis.
• Locking up your GFI would mean that it can’t easily be used as a collateral asset elsewhere in the DeFi ecosystem.

Voting

“Yes” - Implement this Tokenomics Phase 1: Goldfinch Membership

“No” - Do nothing.

Resources

Goldfinch docs: Senior Pool – FIDU

Fee sharing in 0x Protocol

Spreadsheet playground for understanding fee share amounts

Footnotes

1 - Investor Rewards is the new term for “Senior Pool Liquidity Mining”, (which as also sometimes called “FIDU Staking”)

[nisa]

Thank you Mike, Blake and Alvin for the proposal. Kudos !

2 questions -
1.
Is there a minimum amount of GFI required to lockup along with capital ? can this be gamed by locking very minimal GFI (1 or 10) and earn the rewards for capital locked ? I understand it will be reduced rewards but want to understand if this becomes an eligible scenario to earn member rewards.

Lets assume I supply capital in Alma pool with full repayment expected in 2 years.
I lockup the capital (backer pool NFT) for member rewards for 4 years along with my GFI. How will this scenario playout after 2 years repayment and at end of lock up period at 4 years.

Thank you !

[blakewest]

Great questions @nisa …

1. Is there a minimum? → No, no minimum. But the formula guards against the gaming scenario you described. The way the math works out, it encourages you to have equal proportions of each input. That is if you have 1.2% of capital, you’ll get maximum rewards when you have 1.2% of GFI. Of course, if you have 1.2% and even 1 GFI you will get some rewards. But you’d get very very little because the two percentages are multiplied together. So if you have 0 of the other you actually get zero, and if you have an extremely tiny amount, you will get an extremely tiny amount. I’ll add a note about this effect in the post.

2. Yeah in that scenario, you could indeed lockup for 4 years along with GFI. You would not be able to withdraw your principal though, so you would just kinda be shooting yourself in the foot. We would expect most people therefore to not do this. But if they do, that’s up to them. We didn’t want to complicate the system by having different rules for different types of investments. It’s much simpler to just have the same rules across, even if the Backer Positions have some slightly weird edge cases.

[rennick_stratos]

This is great! I am excited about this proposal for a few reasons:

• gov token staking actually incentivizes the core function of the protocol (this is rare if non-existent elsewhere);
• ve -esque lockup incentivizes long term behavior and voting while also taking GFI out of float
• the actual staking rewards are paid in FIDU, as opposed to GFI, which provides a yield bearing asset to stakers while also not requiring more GFI to be minted/potentially hit the market (which would offset some of the price benefit of staking to begin with)

I have a few questions:

*will the variables be visible to all users - as in the capital supply and GFI supply totals?

*it seems there is no distinction between backer capital supplied and senior capital supplied. Its additional complexity but I think it would make sense to incentivize backer capital and senior capital contributions differently (more later). Especially since to Nisa’s point backer capital is already locked up (for now) for a predefined period.
*given that it appears the bottleneck for outstanding loan growth is capital, would it make sense to increase the alpha variable? My working hypothesis would be that large GFI holders are also most likely to have capital available to move the needle significantly for the senior pool. Having a separate variable in the C-D function will allow for an even higher alpha for backer capital.
*should the proposal include the creation of a convex pool(s) to help offset the downsides of non-fungible GFI (and FIDU for that matter).
*how should someone seeking to understand the fundamental value of GFI think about the mu variable’s impact on GFI earnings? On the one hand it takes away 50% (in this case) of the protocol revenues from non-staked GFI holders, but then staked GFI holders receive a boosted share of that. So fungible liquid GFI value actually should be cut in half, all else equal. Could this explain some of the price action of CRV as well?

[mans9841]

As an engaged community member, I can validate that some community members have been vocal about the stronger utility of GFI. Thanks, @blakewest, and co for addressing this concern with very robust incentive mechanism and importantly without GFI inflation. It’s yet to see how sustainable it will be, but I believe it will. Agree with the initialization values of μ and α at 50%.

Some queries:

If I locked both GFI and capital for 4 years term, does the weighted value remains constant throughout the term or decays over time? For example, 100 weighted GFI to 87.5 weighted GFI after 6 months or remaining constant at 100 weighted GFI until the 4-year term ends.

@blakewest

encourages you to have equal proportions of each input

I am a little confused here. Even though one enters the equal proportions of each input, the weighted share of each input may not be the same, no. And perhaps some optimization is possible when entering input.

[alvinh]

@mans9841 to answer your questions:

• The weighted value decays, because the scaling factor decreases linearly over time
• The Cobb-Douglas equation encourages participants to have equal weighted proportions of each input. So the inputs that optimize your returns may have different dollar amounts for GFI and capital

@rennick_stratos – on your comments

• Yes, making the variables readily visible to all users would make sense
• We did think about potentially weighting backer capital and senior capital differently. Would you think backer capital should be weighted more or less? We felt there were tradeoffs to having different weights, e.g. weighting it more (potentially incentivizes poorer underwriting) and weighting it less (disincentivizing Backers vs LPs) and ultimately decided to leave it the same
• We thought it would be valuable to propose setting α = 0.50 at first in order to see how the system works and how participants would behave. But 100% agree that increasing α is a good lever for attracting more supplied capital (and precisely why it’s a community governed variable)
• Are you talking about a way to swap “locked” GFI / capital for “unlocked” GFI capital? Not sure if this would be done through Convex (can be any AMM as long as there is a “locked” ERC20 version of each of these) but it’s an interesting idea
• Interesting question! Don’t know that I have a definitive answer on this, but I actually think this system should increase the value of fungible liquid GFI. Reason being: fungible liquid GFI never had an explicit claim on protocol revenues before, and now there is a quantifiable embedded optionality of converting it into staked GFI that does have an explicit claim on protocol revenues. IMO the deviations of the price action of CRV from the rest of DeFi are due to its emissions schedule and the rise and fall (after UST crashed) of the Curve wars narrative.

[JeremyKim]

@blakewest

Alice can claim her FIDU reward as it’s being accrued and exchange FIDU for USDC, or do nothing and it will auto-compound.

Would Alice be able to also claim the interest accrued portions of their Capital Supply?

Also, what does this mean for FIDU/backer GFI rewards? If the FIDU/backer is locked in Capital Supply, does that mean the GFI rewards are also locked for the entire duration?

Overall, I think this is a great move, especially with the potentially shortening duration of FIDU from GFI reward release schedules being eliminated. Perhaps the next stage would be to offer a 1 year or 2 year Capital Supply lock-up as well. Regardless, these sort of locking mechanisms will help in establishing a proper yield curve in DeFi to continue to smooth the pathways for integration with the real world yield curve (and therefore real world borrowing and lending).

[alvinh]

Would Alice be able to also claim the interest accrued portions of their Capital Supply?

This is an implementation decision that we’ll need to assess during scoping. It’s certainly a good idea, but would increase complexity.

Also, what does this mean for FIDU/backer GFI rewards? If the FIDU/backer is locked in Capital Supply, does that mean the GFI rewards are also locked for the entire duration?

This is also an implementation decision that we’ll need to assess, but it feels like making GFI rewards available for staked FIDU/Backer positions might be higher priority.

[brucey0x]

Great proposal team and have appreciated reading the community discourse.

veLocking mechanic
Generally in favour of increasing GFI utility but haven’t been a proponent of veLocking mechanisms, instead have found GMX’ multiplier points more attractive. It has never seemed prudent to trade liquidity based on an estimation of a crypto project’s performance 4 years into the future. These markets are too volatile, fast paced and unpredictable for that. Is this a mechanic that you have considered, or any other alternatives?

Another scenario I’m concerned about, that I’d love some clarification on, is whether if a smaller holder stakes GFI for a max 4 years, there are scenarios where said person can’t optimize their share of rewards because they don’t have the necessary capital to achieve the optimal participation in the Senior Pool. The current configuration seems to only optimize for people who want to both hold GFI and lend, however some may not be in the position to do so, yet still have conviction in GFI and want to hold (and potentially lock) the token.

veGFI liquidity
Have you considered options to create liquidity for $veGFI, such as partnering with liquid lockers (Convex, Hidden Hand, StakeDAO)?

Alternatively you could consider the veNFT mechanism proposed by Andre Cronje for Solidly and more recently implemented by Velodrome. I doubt that would be possible since the GFI contract’s already in circulation, but it’s an interesting way to facilitate liquidity for these tokens. Personally think staking derivatives are more accessible for the avg user than purchasing on NFT marketplaces however.

Rewards in FIDU
If rewards will be distributed as FIDU, what mechanism do you intend to employ to make the deposits into the Senior Pool and to avoid any frontrunning or arbitrage by bots?

FIDU liquidity
What considerations have you given around increasing FIDU liquidity? It strikes me that many lenders, including myself, are reluctant to deposit large amounts of liquidity if it isn’t clear how quickly you’d be able to withdraw the funds. This is not withstanding those with the conviction to lock for multiple years, but just thinking about the avg Senior Pool backer. Is there anything that can be done 1) to clarify on the UI the degree of available cash and pace of repayments, 2) grow FIDU pool depth on Curve?

Thanks.

[blakewest]

Great questions @brucey0x …

locking vs. GMX Multiplier points
I hadn’t considered GMX multiplier specifically, but if I’m understanding it correctly, it is a system with no lock, but you are instead rewarded over time for keeping your position “staked” (but not locked). We had thought about that general idea of having a “long term holder reward” that increases over time instead of locking and your power decreasing over time. But in my view, the point of the locking is it aligns incentives for the future when you vote. If you have been a long term holder int the past, but are free to withdraw at any moment, it doesn’t really align you with decisions that need to be made about the future of the protocol. So GMX multipliers are fine for rewards, but don’t warrant granting additional voting power. Please correct me if I’m misunderstanding something about the differences.

You also asked about smaller holders who only have GFI but don’t have capital to lend. I would say two things. 1.) Anyone who holds GFI could in theory split their position into a GFI stake and a lending stake. The point of the proposal is that members are people who invest in both sides, to show you are a true participant, and have skin in the game for the future. 2.) It would be possible to build a smart contract on top of this system which allows for single sided staking, by letting multiple users pool the side that they have. For example, the small holder you described could stake into this contract, and then later some other similar small holder of FIDU (not GFI) could come and stake into that same contract, and the two people could split the membership rewards.

veGFI liquidity -
We have considered this. I don’t really like the idea of having liquidity on veGFI though because it undermines the reasons I gave above for granting additional voting power in the first place. You are only truly aligned if you can’t exit your position easily. This is why, however, no lockup is required at all. Or you can simply choose a lockup period that suits you. Both let you participate and earn member rewards. You just won’t get as much voting power as someone who does lockup.

Rewards in FIDU
Investing in the senior pool does not pose any arbitrage or front-running opportunity since it does not affect the share price. So this is a non-issue.
If you are interested more generally in front-running with Goldfinch, I would point you to our dev docs on Frontrunning, where the opportunities and mitigations have been discussed thoroughly. The headline is that we have taken precautions such that, as far as we know, no front-running is currently profitable (or likely ever will be).

FIDU liquidity
This is a general question that goes beyond the scope of this proposal. But as it relates to this proposal, we would think that it should help the liquidity situation. That’s because your effectively incentivizing long term oriented FIDU holders to lockup their position, which implicitly reduces the protocol’s liabilities. So in times of stress, there are literally fewer units of FIDU that could possibly get withdrawn, meaning more liquidity for everyone else.
Your other suggestions are good ones to discuss, and I would encourage you to post them in the forums or discuss them in Discord!

Good questions. Keep it coming!

[brucey0x]

Thanks for the response @blakewest.

Locking mechanics
In GMX’ design, stakers are incentivized to remain staked because of 1) accrual of multiplier points over time and 2) you cannot vest escrowedGMX unless you have the underlying GMX staked that was used to generate those escrowed rewards. If you thus unstake your original GMX position, it would both result in a burning of multiplier points and inability to vest your esGMX tokens. One would then keep those esGMX tokens staked so they at least continue to earn rewards. I like this design since the incentives are greatly in favour of keeping GMX staked, while still affording people liquidity in case they must unstake, which happens at terms that are clearly beneficial to the protocol since the Multiplier Points aren’t dilutive to circulating GMX supply and the esGMX of “weak hands” can’t enter circulation either.

I don’t agree with the perspective that someone who locks for a longer period of time (say 4 years) necessarily should have a higher vote weight. In my experience, the most savvy DeFi and crypto users are rarely the ones that lock for 4 years, instead taking a more rational and mercenary view that prioritizes flexibility and liquidity.

Small holder that wants more exposure to GFI, not Senior Pool
Thanks for that clarification.

I think this is a restrictive design and can imagine that many people would rather concentrate their exposure in the “equity” of Goldfinch via GFI rather than also be a lender. The latter is typically less capital efficient and similarly to traditional financial markets, there are scenarios where someone would want exposure to Wells Fargo equity without lending to their mortgage book.

If you think about GFI’s attractiveness to crypto hedge funds, the same argument holds true. They may have a mandate to hold private and/or liquid tokens, but not a mandate to provide credit. I think this decision severely limits GFI’s attractiveness to a broad set of mkt participants.

Rewards in FIDU
Thanks for clarifying the FIDU share price doesn’t change with deposits. I thought it did. Share price is only affected by net repayments/haircuts then, while FIDU is minted/burned upon SP deposit/withdrawal?

FIDU liquidity
Clear - you lock up Senior Pool capital, creating a predictable maturity ladder and reducing % that can potentially withdraw at any time.

[Porter_Smith]

Hey everyone, Porter here with a16z.

It’s great to see a path to direct economic and utility functionality to the GFI token that aligns the lending stack through token ownership. When all actors in an ecosystem, from the borrower to the lender to the lending platform itself, collectively share in the same type of risk, it helps to create a system of enduring accountability. As we’ve seen with recent events in the market, this is an important piece of the puzzle for lending platforms.

The proposal also adds an innovative incentive structure for GFI holders to supply USDC and for USDC providers to buy and lock up GFI, which melds the importance of holding GFI and supplying USDC to the protocol, making “owners” become active participants and vice versa. I think this is a powerful mechanism that helps bridge the divide we often see between passive token holders and active members of a community.

I know a lot of thought went into this, so just a few quick additional questions:

• Further description of the actual mechanism to vote with staked GFI. Will there be a corresponding amount of “ve” tokens issued against the staked GFI that is actually used to vote, or will it still just be GFI voting? This could have an impact on the ability of institutional token holders to vote from custody if they participate.
• Is there a limit on the proportion of protocol fees that could be distributed as member rewards?
• FIDU redemptions for USDC. Is there a way to ensure USDC is available in the Senior Pool to offer FIDU holders exit liquidity when their capital supply lock-up expires?

Looking forward to seeing the discussion progress, thanks so much!

[blakewest]

Hey @Porter_Smith ,
Great questions.

1. I don’t think so. It would still be GFI voting (remember that unlocked GFI can still vote, just without any multiplier). And since we currently use Snapshot, my assumption is we would just have a strategy that looks at both your “raw” balance as well as what “virtual” balance the membership vault contract has for your address, and we’d sum those up.
2. We’re setting that limit at 50% to start. But governance could change this over time.
3. No, guaranteed liquidity isn’t baked in. That would significantly complicate the design and also make it so it’s not really FIDU, since it wouldn’t be fungible with the other FIDU that does not have guaranteed liquidity. Ultimately we figured the advantage of easily earning yield on the rewards vastly outweighs the potential liquidity issue. I also think that in the future, we could theoretically build the option for an investor to choose. But for now, we think this is the right default.

[blakewest]

Hey @brucey0x

Locking mechanics
Perhaps we’ll just have to agree to disagree here. But having one’s stake locked into the future is one of the most tried and true metrics for alignment in the book. Both logic and history show this to be effective. It’s why it’s so standard for investors and team have vesting and lockups, and not just get tokens up front. Also, I want to reiterate, you would be able to lock for as much or as little time as you like (including no lock at all).

Savvy crypto users may take a mercenary approach to maximize profit for themselves individually, but “mercenary” is not really the attitude you want for people making long term decisions for the health of a protocol.

Small holders
Want to also reiterate here, it’s not really a restriction because it’s very easy to build a smart contract on top of this that could allow for each side to effectively share their respective half, and then the problem is solved. The GFI only person can share with a FIDU only person, and voila, they can collectively share in member rewards without taking on any exposure to the other side.

But fundamentally the protocol wants both of these things, so the protocol should ask for both reward having both.

Rewards in FIDU
Yes, only affected by net repayments / haircuts, and yes FIDU is minted/burned upon SP deposit/withdrawal.

[parallacs]

Council has approved the proposal GIP-13 Tokenomics Update Phase 1: Goldfinch Membership!

https://snapshot.org/#/goldfinch.eth/proposal/0x044dcf9c5391723a11d85d9ae2195343a3472d6664b0c566939c20a933174683

[narayanprusty]

What’s the process of changing the value of alpha? How are you planning to recalculate the sum of all users scores and updated each member score when alpha changes?

Looping through all users in smart contract is not gas efficient. So do you have an process in place?

[Breezy]

I vote YES, it is a really great update for GIP-13

[Giorno]

I vote YES, it’s awesome and very well thought out.

[Tianum]

I vote YES, it’s awesome and very well thought out. Suport