Implementation of Locked VSP, On-Chain Governance, and Increased VSP Utility

[green-jeff]

VIP-26: Implementation of Locked VSP, On-Chain Governance, and Increased VSP Utility

Summary

Implementation of Locked VSP (esVSP). Increase utility for the VSP token within the Vesper ecosystem. Implementation of on-chain DAO governance.

Abstract

This proposal outlines the specific details for the implementation of esVSP as previously approved 1 by Vesper DAO Voters, such as duration of time lock, early unlock fees, and the winding down of the vVSP pool. It also proposes increased utility for the VSP token within the Vesper ecosystem by making boosted VSP incentives on Vesper products only available to esVSP holders. Lastly, this proposes moving future Vesper DAO governance to an on-chain model.

vVSP to esVSP Transition:

The transition from vVSP to esVSP will take place over a 9 week period, with revenue share migrating from vVSP to esVSP during that time. This will allow users to move from vVSP to esVSP during lower gas periods, and also offers a small gamification component (being an early esVSP holder, or late to leave vVSP).

Week 1 to 3: 25% revenue to esVSP, 75% revenue to vVSP

Week 4 to 6: 50% revenue to esVSP, 50% revenue to vVSP

Week 7 to 9: 75% revenue to esVSP, 25% revenue to vVSP

Week 10+: 100% revenue to esVSP

vVSP holders aren't forced to withdraw/migrate, and will be able to withdraw their VSP tokens from the vVSP pool indefinitely. After the 9 week transition period completes, the vVSP pool APY will be 0%

Duration of Time Lock:

VSP holders will be able to lock their VSP for a minimum of 1 week, to a maximum of 3 years. Users will be able to select any amount of time between these minimum/maximum limits using a sliding bar inside the Vesper app.

Early Unlock Fee:

esVSP holders will be able to unlock their VSP prior to completion of their lock period for a penalty paid in VSP. The size of the penalty decays linearly from the lock time to the expiration time, with the initial penalty starting at 50%. All penalty fees are returned to the Vesper DAO Treasury.

On-chain Governance:

Vesper DAO governance will move to an on-chain model, utilizing a forked version of the Compound Governance code with Tally.xyz as the user interface.

esVSP will act as the governance token, and holders on a weighted basis will be able to propose and vote upon changes to the Vesper protocol.

esVSP weighting will be based on the number of VSP tokens a user has locked, and the duration of the locking.

When a user locks VSP, their 'boosted' amount is calculated. The maximum boost is 4x, and represents voting weight. Voting power is based on the 'boosted' amount.

Calculate the boosted amount using locked amount, lock period, MAXIMUM_BOOST, and MAXIMUM_LOCK_PERIOD
set boostedAmount to (_lockedAmount * lockPeriod * MAXIMUM_BOOST) / MAXIMUM_LOCK_PERIOD
Add the calculated boosted amount to the total boosted amount
increment totalBoosted by boostedAmount

On-chain governance will initially be beta tested upon a single Vesper Grow Pool, dependent on TVL. Initial functionality will be limited in beta, and expanded over time.

Expectations

Using the transition to this methodology it is expected that the VSP token and market will be more predictable.

It is anticipated that users who participate in esVSP will receive a greater amount of revenue share than they currently do in the vVSP pool.

The early unlock will help support the Vesper DAO treasury over time.

Increasing Utility of the VSP token will strengthen the Vesper ecosystem.

On-chain governance will increase Vesper's decentralization and increase community participation in governance.

Specifications

Initiate esVSP contract with following parameters:

• 50% Early unlock fee, decays linearly
• Time locking available for 1 week to 3 years
• esVSP holders able to participate in on chain DAO governance
• esVSP holders to receive revenue share based on their esVSP weight

Migrate vVSP to esVSP as follows:

• Week 1 to 3: 25% revenue to esVSP, 75% revenue to vVSP
• Week 4 to 6: 50% revenue to esVSP, 50% revenue to vVSP
• Week 7 to 9: 75% revenue to esVSP, 25% revenue to vVSP
• Week 10+: 100% revenue to esVSP

Implement on-chain governance:

• Launched forked version of Compound Governance Model
• Launch Tally.xyz as user interface for governance
• Select a single Vesper pool for beta testing with limited on-chain controls to be expanded over time as testing is deemed successful.