Running a quick temp check about setting aside a portion of the USH token supply for the unshETH Ecosystem Fund. This is done to gauge community feedback before putting together formal proposals to the DAO regarding token allocations and distributions from the community / incentives budget.
This is a discussion topic, not a proposal; aspects of this discussion will be included in future formal proposals to the DAO.
unshETH wants to grow the Liquid Staking and LSDFi ecosystem. There are many promising projects building on unshETH where it’s a win-win proposition to provide grants or make DAO-led strategic investments to help grow the ecosystem, unshETH TVL, and accrue value to the DAO. Want to gauge community sentiment on earmarking a portion of the token supply for this purpose.
A portion of the USH token supply would be set aside for the Ecosystem Fund. These tokens would be set aside and would not enter circulating supply as liquidity incentives, farm rewards, treasury management, etc. All Ecosystem Fund token disbursements would be subject to specific DAO votes, or disbursed with pre-allocated budgets (with DAO votes) to a pre-selected Ecosystem Fund committee.
- 10% of the total supply (14.35M USH) towards Ecosystem Fund
- Up to 5% earmarked for grants to protocols whose LSTs are whitelisted into unshETH
- Rest earmarked for LSDFi projects building on or adjacent to unshETH
unshETH DAO wants to motivate LST protocols to participate in governance, provide co-incentives to vdUSH stakers, and get whitelisted to be part of unshETH. By providing grants to Liquid Staking protocols, they’d be motivated to be early participants in governance and get a lasting benefit by acquiring vdUSH voting power that will be used to increase their target weights. This is a similar model to NFT grants from Solidly forks to new projects to bootstrap governance process, but in unshETH’s case would apply only to protocols that participate in the co-incentivized whitelisting process.
- Protocols that are whitelisted into unshETH are eligible for Ecosystem Fund grants
- Grants should be proportional to the initial 3-6 months of bootstrapping co-incentives provided by LST protocols as part of the whitelisting process
- Grants should be granted in the form of 1Y vdUSH
- Dollar value of USH grants should not exceed the dollar value of co-incentives provided during the whitelisting period
The exact market-driven mechanism of setting target weights for whitelisted LST protocols based on vdUSH balances will be announced in the coming weeks. unshETH DAO is collaborating with the leading governance incentives marketplace (Hidden Hand) to design a custom protocol for continuous target weight setting via vdUSH governance. Early LST protocol participants in the co-incentivized whitelisting process will be able to acquire lasting voting power from Ecosystem Fund grants.
The second major category of Ecosystem Fund allocations is for protocols building on or adjacent to unshETH. These allocations can come in the form of unlocked USH incentives, locked USH grants, treasury swaps for governance tokens, angel investments, etc. Each individual project decision would ideally be decided on with a DAO vote.
Ecosystem Fund consideration should be given for new / innovative projects, or initiatives unshETH DAO would like to pursue but doesn’t have capacity to. Liquidity incentives to incumbent protocols integrating unshETH (e.g. lending protocols, dex, etc) would not be part of the Ecosystem Fund budget.
Examples of projects that could be eligible include:
- Omnichain ETH earn vaults staking into unshETH
- “Convex of USH” - Protocols “black-holing” USH to gain vdUSH governance power
- Protocols developing stablecoins backed or minted against unshETH
- Applications that enable unshETHium
- Consumers of unsh-X suite of protocols
- Perps protocols using unshETH as collateral
- How does the community feel about ecosystem fund grants to LST protocols… Good / bad idea? Does the overall allocation level sound right?
- Are there any big categories missing that should be generally included?
- How much should unshETH DAO engage in treasury swaps vs grants?
- Would it be preferable to run each decision through a DAO vote, or empower a pre-selected committee to make decisions?