Retroactive Backer Distribution w/Numbers

Proposals
1

Backers are integral to The Goldfinch Protocol. Under the tutorship of the Goldfinch Foundation, Backers are learning to find great borrowers, set high-quality norms and to hold borrowers accountable. Early Backers have carried the highest risk -and- the highest cost:

  • Highest Risk

    • Providing first loss capital to the protocol.
    • Opportunity risk from locking their capital for 3 years
    • Smart contract risk from interacting with the newest contracts on the protocol.
    • Due to the high gas cost of depositing capital in a borrower pool, it is not feasible for smaller backers to diversify across many pools.

  • Highest Cost

    • Early Backers were required to mint a UID. This cost ~90,000 gas
    • depositWithPermit is a very gas intensive function. Depositing USDC in a backer pool cost around ~380,000 gas.
    • Since the borrower pools filled relatively quickly, Backers were not able to wait for optimal gas price conditions.

I propose rewarding early Backers for their contributions to the protocol. This will acknowledge the time and knowledge they poured into their due diligence, their courage for providing first-loss capital, and their long-term vision, locking their capital for 3 years. The rewards will encourage them, and other community members, to continue their mission-critical activities in the protocol.


2.0% of the initial token supply is reserved for Backer Pool Liquidity Mining. I propose the following distribution:

  • 1.5% Retroactive Backer Distribution. These tokens will be distributed to all Backers that provided liquidity to any of the Borrower Pools prior to 31.Dec.2021. Note that this snapshot includes all current Borrower pools - including Almavest#5. Similar to the retroactive senior pool distributions, the backer rewards will be allocated in two parts. The vesting will also follow the same rules as the retroactive senior pool distributions.

    • 0.75% Half of the retroactive Backer Distribution will be distributed to all Backers proportional to their total contribution (capped at a contribution of $1,000). By capping the contribution amount, we acknowledge and reward smaller Backers. Smaller Backers needed to do the same amount of research and due diligence as larger Backers. They also carried the same cost as larger backers.

      • Clarification: Backers that contributed more than $1,000 will still be rewarded from this part. However, their “contribution” used for calculating rewards will be capped at $1,000.

    • 0.75% The other half of the retroactive Backer Distribution will be distributed to all Backers directly proportional to their total contribution (no cap). This part is not capped, and will reward those who provided much needed first-loss capital to the Borrower pools.


  • 0.5% Borrower pool liquidity mining. These rewards will be distributed to current and future Backers that provide capital in the Borrower pools. They will be distributed as defined in BackerRewards.sol. By rewarding backers proportional to the interest they receive, we reward Backers who do their due diligence and provide capital to Borrowers that are able to pay back their loans.
7 Likes
2

I agree with this proposal. Thankyou for being so clear on behalf of ALL backers

2 Likes
4

I support the proposal in general but I disagree with the numbers. More specifically regarding the capped contribution. I believe we need to decrease the capped amount from $5,000 to $1,000-$2,000 at most similarly to Senior pool retroactive distribution. The reasoning is that backers with the 1-2k deposits had to pay upwards of 30% (assuming $300 gas expenditure) of their total deposit to take part in the Backer’s pool. Whereas at 5k this number equals roughly 6%. I believe by reducing the cap we can be more inclusive for regular members of the community and reward those who risked the most by contributing to the pools.

2 Likes
5

Hi. Thank you.
Yes, I would love to see the the capped amount decreased from $5,000 to $1,000. Considering many Backers contributed a large amount, I was not sure if I would get support for a proposal with a lower cap.

Considering you and others seem to be in favor of lowering the cap, I have modified my original post.

4 Likes
6

i agree, if not whales will take over

2 Likes
7

This example serves to

  • Clarify the concept of a “capped” vs “uncapped” reward pool.
  • Visualize how the inclusion of a “capped” reward pool leads to a better distribution of the Retroactive Backer rewards.

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  • In green you see the current Backers and the total GFI to be distributed. (For simplicity, 200GFI is used in this example)

  • In blue, you find my suggestion

    • Half of the rewards are added to pool A. When calculating the rewards for pool A, the amount contributed by each backer is “capped” at 1,000$. This pool favors smaller backers. Including Alexey and Peter, even though they contributed more than the “cap”.
    • The other half of the rewards are added to pool B. These rewards are distributed to all Backers, proportional to the capital they provided to the Borrower pools.

  • In Red, you can see how the distribution would look if all rewards were proportional to the amount supplied to the Borrower pool

Note: Notice that everyone but Anna receives higher rewards by dividing the rewards between a “capped” and “uncapped” reward pool. I believe this method of distribution will benefit smaller backers (<30,000$). Acknowledging the work they’ve put into the protocol, and encouraging further contributions - not only as Backers, but also as participants in the decentralized governance of Goldfinch Protocol.

2 Likes