[PRE-GIP] Allocate GEAR to EXMO Earn program

Gm GEAR gigachads, eager to hear your opinion on the following proposal.

Background
I’m COO at EXMO (https://exmo.com/). We are a regulated crypto exchange founded in 2014. The company is based in the UK, Ukraine, Poland, and Lithuania. The EXMO spot trading platform has more than 6,000 active monthly traders, 166 trading pairs, an exchange token EXMO Coin (EXM) and operates with 4 fiat currencies. The average daily trading volume is ≈$100 million. Apart from standard operations, the exchange offers OTC trading, API, a mobile app, and staking.

Proposal TLDR
Allocate up to $30k in GEAR tokens for June 2023 to incentivize users of EXMO to supply assets to Gearbox passive pools.

Proposal
EXMO launches an earn interface and collects deposits from the users that are interested to participate in the earn program. EXMO clearly states the risks associated with such investment (smart contract risk, oracle risk, etc). EXMO accepts only stablecoins (USDT, USDC & DAI). EXMO commits to aggregate at least $500k to supply to Gearbox passive pools. Otherwise, the proposal will be dismissed.

Accumulating and supplying assets
EXMO adds the front-end ability to supply USDC, DAI and USDT. EXMO pools the assets and keeps records of users’ deposits. The assets will be transferred from EXMO wallet via Ledger Vault or Fireblocks. To entice new users EXMO promises 150% APR for the first 7 days which will be effectively subsidized by GEAR tokens. In case EXMO aggregates $1mln of assets, the 7 days reward amount will be ≈$29k which I’m requesting in GEAR.

Withdrawing assets & distributing rewards
After the 7 days yield farming period is over the users are eligible to withdraw. If a user doesn’t withdraw, the assets remain in the GEAR passive pool, earning a market yield and are available for withdrawal after a “cooldown” period.

Marketing
1/ EXMO will host an AMA with a member of Gearbox DAO & prepare infographics re the risks & benefits of aping into Gearbox passive pools;
2/ EXMO will send emails & push notification to its 1mln+ users re this opportunity.

Value for the Gearbox protocol
1/ Awareness. The normies that trade on EXMO will get to know the Gearbox, and how lending & borrowing works in DeFi;
2/ Increasing Gearbox TVL. Though I can’t promise you a skyhigh increase in supplied assets, I’m eager to help Gearbox grow and support its ecosystem.

Aping further
1/ Adding GEAR/USDT pair on the spot exchange;
2/ Introducing GEAR-ETH liquidity provision to users of EXMO.

Hi boss, thank you for a great idea and pushing it to the DAO.

First of all, I like it overall and think it would be cool to use this engagement as an example for future Gearbox DAO things. It reminds me of a DeFi protocol (was it SNX?) who did this with Argent: an onboarding idea for new users with some capital requirement basically. Fair enough as an idea.

I have a concern with the structure proposed though: the way it is phrased, I would expect pretty much all users to leave after the first week period. If the yield itself is not attractive enough in Gearbox passive side (I agree, currently it’s on the edge of being so-so which is being promptly addressed) - then users would leave. What stops them from taking these extra GEAR and leaving 7 days after? If the assumption is that the majority will simply forget to exit, I don’t think it’s solid enough of an argument.

In essence, alternatively that could have been okay as a campaign - just depends on the costs. It would have been especially good if the other opportunities presented to users are naturally (without extra incentives) are lower than what Gearbox Protocol passive side allows to earn. If that is the case, then even without the extra rewards - users could stay due to inability to get better opportunities. But this isn’t the case, right? So in this case, I am not sure it fits the agenda either.

The amount itself might not be an issue per se, as long as there was a stronger mechanism / natural incentives for users to remain in the passive lending pool. Perhaps 1) saying only currently registered users can participate [that way Gearbox taps into new users, and now just it’s current lenders jumping over for better quick rewards] + 2) requiring some lockup aka 3-6 months for this capital. I know locking in the current environment sounds really unattractive, I am just proposing ideas on how to fix the proposal.

Wdyt? What are other ideas?

Many thanks for the comments, valid concern, I’ll discuss with the team and revert on Wed-Thu. I actually envisioned a lockup, need to assess risks & benefits.

1 Like

I just wanted to share some preliminary thoughts and get your feedback @RV_ivangbi .

Key issue
Users will farm for 7 days and leave.

How to mitigate
1/ Reduce the APR to 100% and increase the mandatory lock-up of deposited funds for users to 22 days. This will be sufficient to keep the requested amount of GEAR rewards up to $30k.

2/ Also, agree on a 3-month lock-up period “subsidized” by EXMO. Any user will be able to withdraw after 22 days, but the exchange commits keeping the funds in the passive pools at $500k using its own assets for 3 months after the start of the campaign. So, the users who will be withdrawing after 22 days, won’t be withdrawing from the passive pools.

3/ Motivate users to keep the deposit: e.g. after 30 days we mint GEAR degen NFT and distribute it to users (e.g. via Kudos). After 60 days, conduct a random giveaway lottery of $3000 in EXM. After 90 days, we do a merch giveaway.

In essence, alternatively that could have been okay as a campaign - just depends on the costs. It would have been especially good if the other opportunities presented to users are naturally (without extra incentives) are lower than what Gearbox Protocol passive side allows to earn. If that is the case, then even without the extra rewards - users could stay due to inability to get better opportunities. But this isn’t the case, right? So in this case, I am not sure it fits the agenda either.

JFYI there are no other yield opportunities on EXMO now, except staking DOT, ATOM, XTZ, and EXM. We do plan to have a full-fledged Earn program this year that will supply assets to various protocols, but as we start this campaign there will only be an opportunity to supply stablecoins to Gearbox’s passive pools.

The amount itself might not be an issue per se, as long as there was a stronger mechanism / natural incentives for users to remain in the passive lending pool. Perhaps 1) saying only currently registered users can participate [that way Gearbox taps into new users, and now just it’s current lenders jumping over for better quick rewards] + 2) requiring some lockup aka 3-6 months for this capital. I know locking in the current environment sounds really unattractive, I am just proposing ideas on how to fix the proposal.

I got your point re the risk that the current lenders on GEAR will withdraw assets and farm yield for a limited time on EXMO. But I’m not sure that their switching costs justify that. I thought to have a deposit cap at $5000 (so that the whales would not carve out all the rewards) which will bring the maximum individual yield for a 22 day period to $301. Not sure that 1) the existing users are going to be seduced by this opportunity 2) moreover, not sure that most of them are ok to be verified to get an account at EXMO. I definitely had in mind the idea of attracting new users to EXMO with this campaign.

Good afternoon. I think I have an idea, too. I wonder how you all look at such a proposal:

  1. Minimum deposit $500 maximum deposit $2000. Keep a minimum of $500,000 for general. So we can get from 250 to 2000 new LP users. I like the idea of increasing the number of participants. Д
  2. Accept deposits in USDT/USDC/DAI - but use only USDC for LP Gearbox. (inside exchange to convert USDT/DAI to USDC), since it seems that the passive APY is higher in USDC than in DAI, while we do not have pool of USDT (but I would give the opportunity to place deposits in this asset, too, with a note on conversion).
  3. mandatory minimum blocking for 1 month from user and blocking support from exchange 3.5 months.
  4. Ready to support this marketing as well, merch is great, as well as EXM raffle. No GEAR NFT Degen, don’t want to give people any extra stuff as we have no motivation for them. Unless it’s a POAP “participant”
1 Like

The 1 week and subsequent unlocking makes it a high risk play. Here’s what I would suggest.

  1. 100% for first week then as per the app(Maybe a smol boost of 1-2% more)

  2. Anybody who withdraws supply before 3 months gives up 80% of GEAR rewards from week 1

  3. The clawed back rewards go to the people who are still in the pools at the end of 3 months

If this works, we can turn it into a cycle

1 Like

Sirs @mugglesect @nikitakle, truly appreciate your input & comments. Here are the updated terms as per your comments. LMK what do u think.

1/ A new registered user can make a deposit of $500 to $2000 in stablecoins (USDC, DAI, USDT). The total limit for all deposits for the promo campaign is $500k which EXMO commits to deposit on Gearbox for 90 days min. So nikitakle comments are taken into account, except for 3.5 months, I’d rather stick to 3 months / 90 days.

2/ The deposit is “locked” for 30 days. If a user withdraws after 30 days, he receives 12% APR, if he keeps the deposit for 90 days, the APR is from 24% to 209%.
24% – if everyone keeps the deposit for 90 days.
209% – if 50 users keep their deposits for 90 days and 450 withdrawn after 30 days (then we will redistribute their reward to those who keep the deposit for 90 days).
The calculations take into account the total amount of $30k in GEAR rewards.

@mugglesect @nikitakle in our opinion, newbies & normies that we’re targeting may be more accustomed to the notion that the longer you deposit, the higher yield you get. So the APR for 1 month is 2x less than the minimum APR for 3 months.

3/ Also, in order to motivate users to keep a deposit for more than 30 days, EXMO issues NFT (as a member badge via POAP) and raffle off $1000 in EXM among those who have kept a deposit for more than 90 days. Again, nikitakle comments are taken into account.

4/ The amount of GEAR rewards is fixed in USDT terms and distributed at the end of 90 days period. So EXMO provides the deposit amount + accrued interest to those who withdraw earlier than 90 days.

@RV_ivangbi Can we move this to the voting next week pls? :pray:

Something like this makes sense, and is genuinely interesting to try. I guess my last issue is the cost of the campaign. I understand rates need to be high enough, but it’s likely enough to have them at 50% and not 150% (just making an example). It’s high enough. Plus, our lovely shitcoin has dropped, so part-ing with it feels extra sad. My suggestion would be to try this on 10K USD aka 1,666,666 GEAR.

@RV_ivangbi If the idea is to test the waters for $10k in GEAR, I’d make it more simple for users to understand and just offer a 30-day deposit for 75% APY. And if we reduce the rewards 3x, let’s reduce the total amount of aggregated deposits accordingly to $166k & reduce the obligatory supply period for EXMO from 3 to 2 months. Can I submit this for voting?