GIP-27 : Proposed Changes to Membership Vaults for Initial Release

Authors : Jake Huston, Carter Appleton

Summary : The Warbler Labs team proposes simplifying the design of Membership Vaults to

  • (a) make the vaults more user friendly and intuitive to interact with
  • (b) speed time to market so the community can access this new feature

Motivation : In GIP-13, the Warbler Labs team outlined our proposal for Goldfinch Membership, Phase 1 of the broader tokenomics roadmap. As stated in the proposal, the primary motivation for Membership was to create stronger utility for GFI.

In the course of building Membership over the past 3+ months, we have encountered a number of complications in the original proposal that we believe should be simplified for the initial release of Membership Vaults. Specifically we propose:

  • Removing Lock Ups and Lock Up Period weighting
  • Removing the governance multiplier on GFI tokens for initial release
  • With the removal of lock ups, requiring users to hold a Membership Vault position for an entire reward epoch (1 week) to become eligible for rewards

Combined, these changes will enable participants to enter and exit the Membership Vaults at any time, make the Membership Vaults more intuitive and user friendly to interact with, and speed our development time to deliver this feature to the community.

Specifications & Requirements :

Member Rewards Share Calculation: We continue to use the Cobb Douglas formula to calculate a participant’s membership rewards, as it is (a) intuitive, (b) does the best job of encouraging allocations of Capital (FIDU, Backers NFTs, Curve LP tokens) in line with the alpha parameter. To refresh, this is a governance controlled parameter that determines the optimal share of Capital and GFI for maximizing rewards in Membership Vaults. With the removal of lock ups and the governance multiplier, the rewards share function is now simplified. All values are for a given week period.

Remove Lock Ups and Lock Up Period weighting. Lock ups and Lock Up Period weight (a) made it difficult to understand optimal allocations of Capital and GFI, (b) meant that rewards from positions would decay over time, disincentivizing long lock ups, (c) required on chain computations that were impossible due to computational complexity, requiring approximations.

We believe that removing these features, which enable participants to enter and exit Membership more fluidly, will make the Membership program more attractive and therefore be more successful at driving GFI utility.

Removing the governance multiplier for initial release. The added utility of the governance multiplier was closely tied to the Lock Up mechanism. To summarize, the original motivation was that encouraging protocol participants to lock up GFI for long periods of time AND enhancing those participant’s governance power would create long term incentive alignments between the protocol and its participants.

While we still believe this incentive structure to be valid, we believe it’s not strictly necessary for MVP. We are proposing descoping this feature for “v1” of Membership, and we can revisit it later with the community in this forum.

Rewards Epoch. With the removal of the lock up period, we need a basic mechanism to discourage front running of Membership rewards, while also enabling participants to enter and exit vaults fluidly. To achieve this, we add a requirement that users must maintain their Capital + GFI in the Membership Vault for the duration of the rewards epoch to earn rewards. Rewards are then distributed at the end of each rewards epoch.

In the original design, participants could enter Membership Vaults at any time, but could not leave the vault until the end of a reward epoch. This new design ultimately adds more flexibility for users, while still discouraging front running.

Benefits :

  • Enable users to enter and exit Membership Vaults more fluidly, without lock ups
  • Incentivize more participation in Membership Vaults by removing Lock Up Period weighting
  • Make the Membership Vaults program more intuitive and user friendly
  • Speed up our time to market for this feature
  • Reduce technical complexity and smart contract risk

Downside :

  • Membership Participants will no longer receive enhanced voting power for their “vaulted” GFI; however, we can evaluate adding this benefit later

Voting :

Yes: Make the proposed improvements to Membership Vaults design for initial release

No: Preserve the original Membership Vaults design, delaying the release of this feature


I vote “Yes” to this proposal!

It’s unfortunate that the team encountered technical difficulties implementing GIP-13.

I have a simple question. Are there any protocols that use distribution model similar to the one proposed here?

@libratus A number of projects have built more utility into their governance token, but as far as we are away this approach of combining governance tokens + TVL into a shared vault to unlock member rewards is unique

Good proposal TBH. First we let users try out the product then we factor in long-term commitments.

Council has approved the proposal