HXRO Proposal 01
Abstract: HXRO has achieved what other crypto projects have historically failed to do; create real, digital asset products that attract users. The protocol offers users a dead simple, few click experience to interact with crypto options to express a view on price, hedge risk and trade digital assets. We believe HXRO can evolve from a project to a protocol, and potentially fuel growth through a few key enhancements including time locked staking, direct incentives for users in the form of dynamic liquidity incentives and several governance changes to decentralize the protocol.
Staking: Allowing HXRO holders to stake, for a portion of network fees is a use case that currently does not exist. These rewards would be funded by network transaction fees, not perpetual inflation, which makes the rewards more valuable as they are network use driven, not printed. We also propose increasing the percent of fees shared on the platform to HXRO holders from 33% to 100% to increase rewards and to decentralize. Of this 100%, we propose 73.33% flowing to stakers, with 16.67% to liquidity providers and 10% to a treasury. Initially staking rewards may be low as they are a function of fee revenue, although they will grow as HXRO’s platform grows.
Those staking will have the option to lock their stake for up to 3 years for a max multiplier of 3x. Naturally those who lock will have a higher weighted stake and thus a higher portion of rewards. This multiplier doubles for governance, where holders can express their view on votes using their weighted stake that gives more power to long term holders. Rewards will vest in an opposite fashion, those who lock for the minimum amount of time will have their rewards vest in 1 year time (max), while those who lock for the max amount (3 years) will have their rewards vest immediately. Between these time periods is a sliding scale. Legacy LPPs will interact with the same UI for simplicity and any existing lockups will be reflected in the same lockup timer booster.
Fees will be distributed to stakers based on their weighted stake on each distribution period (weekly) as a basket of the tokens users used to pay fees on the HXRO platform (stablecoins, HXRO), etc. This allows users to stake HXRO, and earn stablecoins or whichever tokens are deemed valuable and used to pay fees on the platform, keeping HXRO’s fee form dynamic based on what users determine are valuable (HXRO, stablecoins etc), and eventually likely transition to fully HXRO over time as the token gains continued acceptance.
Liquidity Incentives: We propose adding a 75M HXRO (7.5% of supply) liquidity incentives pool to incentivize new and existing users. To insure liquidity incentives are not wasted by granting them arbitrarily, rewards are dependent on the daily gross volume at HXRO in any given day. The number of HXRO granted per day will scale depending on total platform volume in USD and max out at 102,740k HXRO per day if gross volume is over $1B. A sliding scale will cover rewards between these amounts. Users will earn a pro-rata portion of these fees depending on their pro-rata volume on the platform. Rewards will be time-locked for 90 days, and vested linearly for simplicity. A sliding scale of rewards ensures the platform isn’t over rewarding is usage drops or is limited.
Staking and Liquidity Incentives Interaction: These initiatives are long term in nature; liquidity incentives in the form of HXRO are locked for users for 90 days with linear vesting, staking rewards are locked depending on how long users stake for and fee revenue is used to market buy HXRO each day.
Protocol Changes: We propose the following enhancements to bolster HXRO.
- The introduction of a Snapshot.page to vote on governance changes, with a forum to discuss changes. This post will be the first HXRO improvement proposal.
- HXRO to expose its code/API to allow builders to access the projects liquidity and products and to create a virtuous liquidity cycle. HXRO should not compete for users, it should compete for integrations to drive liquidity which offers better product pricing with greater market depth and adds fork defense as protocol controlled value (funds within contracts) can not be forked.
- The introduction of a farming leaderboard to allow users to compete and track their liquidity mining rewards.
- In a future iteration, the ability to borrow against staked HXRO (LP shares) to use within the HXRO ecosystem which will drive additional protocol volume.
Conclusion: HXRO has the potential to leverage tried and true DeFi enhancements to bolster a platform that has real products and users, the time is now.
Disclosures: HXRO is a tokeneconomic client of Delphi Digital and was compensated for their analyst time to help consult the HXRO team. This is not a solicitation to buy or sell any token or security or to make any financial decisions. This proposal may fail, may not produce the desired effects and HXRO is subject to numerous platform and token risks.