[GIP-24] Referral Program for Passive LP side

The KOLs who are ready to create and share the content through the docs you just read - will receive a dedicated referral link to send out along the content pieces. You can use the link separately to increase your referred degens. For more info on content, see:

KOL Program

:moneybag: Cool fact: if you bring in just $10M worth of capital, you can make > $50,000 passively. Meanwhile, your community would also be earning rewards for being LPs! Your rewards don’t come from dumping on retail or eating someone’s pie. It’s real $$.

How to get it? - Only for Approved KOLs

You can get a special unique on-chain identifier for yourself. By using that link with the identifier, all liquidity coming in through it to the protocol - will be noted as referred by you. It’s not anything like web2 companies use in their referrals, because this referral can be seen and tracked on-chain. As a result, gamification is not possible as the referral fee is:

  • only given to real approved KOLs by DAO members;
  • coming from DAO revenues, so it is not eating out of the treasury. As such, you AND your community members can be earning. Your earnings do not come from your fans losing money by gambling. In fact, you can both be earning at the same time.

:bulb: To get a referral link, please ping on Discord. Just let us know somehow. Here.

Regular payout in real assets

Based on that, every few weeks or months a payout can be generated by a specific DAO committee overseeing this program. The payout will be in whatever asset you have earned capital in: that is WETH, WBTC, USDC, DAI, and whatever other liquidity pool Gearbox might have later:

  • check on-chain every few weeks how much $$ has accrued to KOLs;
  • initiate payouts to everyone at once to designated addresses.

:bulb: With Gearbox Protocol, you earn x1.5 as much as Binance. And three times as much as FTX! And you don’t have to force your community members & fans to degenerate gamble: they just provide liquidity in a comfy and passive way - and earn APY.

PS: the sheet is approximate, because on exchanges you get based on your trading volume which can kind of be recycled with the same capital by being active. However, if you do that too much - your tier would then be degraded. So we took averages. Take it with a grain of salt.

*The numbers depend on the pool in question too. It is indeed true that DAO revenues are 50% and they are shared equally, but pools have different utilization metrics. See here.

Please keep in mind that any gamification which can be sufficiently proven - can lead to slashing. This program is aimed at genuine supporting KOls who help Gearbox Protocol grow, and as a way to support their unique content without having to bill their community directly.

:bulb: The program is intended to run for at least 3 months, so until the end of January 2023. Those who refer can thus be sure of at least half-a-year payout. Closer to the date, DAO members can re-evaluate the necessity of continuing the program.

PS: how does the “from DAO revenues” actually work

Similar to Aave and other lending protocols, Gearbox Protocol’s [one of the fees] fee is taken on the lend-borrow spread. See here for details. That value is fluid though - sometimes the utilization can be high, sometimes low. And he optimal utilization parameter r can also be changed by the DAO, as it happened once before in order to harmonize the system.

For the sake of being easy to understand, the calculations are assuming optimal utilization ratio upon which DAO earns +/- 1% of the deposited TVL on the passive earn side. Then that +/-1% is split 50:50 between the KOLs (if there is any referral link in place) and the DAO treasury.

:warning: “What if the KOL was gonna LP anyway, but now LPed via their own link and also their friends in” - first of all, no system is fully bullet-proof. Secondly, the result of those actions would still be Gearbox Protocol growing & earning revenue regardless. Leaking a bit of revenue for the sake of growing the protocol & its usage is a totally justifiable path. Just count it towards an extra LM reward if you want. Do it!

:no_entry: But! If it turns out that some addresses LPed before (or tracked to other addresses) and then withdrew-entered but under a referral code, there will be no reward accrued for such actions. And if the activity is present in large % of the capital brought in, the rewards could be slashed altogether.

Don’t be alarmed - the fee doesn’t actually come from LP capital. Instead, it comes from the borrowers who pay the fees (or rather, the spread). Here it’s just said in such a plain easy way to avoid too many formulas. For formulas, you can always go to the docs:

In cases where utilization is being lower than desired (either the protocol is useless or the market conditions are dogshit, or both) - this referral program could potentially eat into treasury assets, but just a tiny bit. So in any case, the referral program is not actually gameable :sunglasses:

Pools & APY

Gearbox Protocol has other revenue streams, but that’s outside of the scope of this program:

Protocol Fees

This was in the discussion phase for a while. I think as long as strong monitoring of non-gamifying the referral fee is performed - it’s good. Lido and 1inch have taught us that these things can be cool! Yes.