Kwenta State Log

A living document defining the state of Kwenta

Kwenta State Log

Kwenta Improvement Proposals

KIP-110: Fees to stakers and buying SNX

Simple Summary

This KIP proposes a 3 step solution for managing USDC earned on Base, beginning with the establishment of a multisig vault controlled by the Kwenta TreasuryDAO to temporarily hold USDC earned from the Synthetix Perps v3 integration on Base.

It also suggests the development of an automated system for bridging USDC from Base to Optimism and enabling $KWENTA stakers to claim USDC rewards in proportion to their staked balance on Optimism in Staking v2.

Finally, the proposal suggests an upgradable fee split on Base allowing the Kwenta Council to direct a % of fees directly from the contract which receives Kwenta’s USDC, initially set at 20% directed toward the treasury for the purpose of buying and staking SNX.

Abstract

The proposal includes the following key components:

  1. Multisig Vault Setup: A multisig vault will be established and controlled by the Kwenta TreasuryDAO to hold USDC earnings from the Perps v3 integration on Base.
  1. Automated Bridging: Development of an automated system to bridge USDC from Base to Optimism, ensuring efficient and secure transfer of funds.
  1. USDC Rewards for Stakers: Implementation of a mechanism for $KWENTA stakers on Optimism in Staking v2 to claim their share of USDC rewards, proportional to their staked balance.
  1. Allocation of USDC for SNX Purchase: Before bridging to Optimism, 80% of the USDC will be allocated to stakers, and 20% will be used to buy SNX on Base. The purchased SNX will be staked and managed by the treasury for active participation in SNX governance.

Motivation

The motivation behind this proposal is to maximize the benefits of the Synthetix Perps v3 integration for the Kwenta community. By efficiently managing the USDC earnings, the proposal aims to reward $KWENTA stakers and strengthen Kwenta's involvement in SNX governance, thereby aligning with the broader goals of the Synthetix ecosystem.

Specification

  • Step 1: Multisig Vault Setup: The treasury sets up a multisig vault separate from the main treasury wallet to prevent commingling of funds and improve transparency. This vault will be controlled by selected members of the Kwenta TreasuryDAO, and SNX will be provided with the associated address to use with the Kwenta tracking code.
  • Step 2, Weekly USDC Claiming on Optimism: Treasury begins manually bridging USDC weekly for stakers to claim. Initial USDC accumulated during the interim period will be distributed based on historical staked balances.

For example, USDC received in the first epoch that USDC begins accumulating on Base will be distributed proportionally based on a snapshot of staked balances at the end of the first epoch.

  • Step 3, Automated Bridging: Development and implementation of an automated system for bridging USDC from Base to Optimism.
  • SNX Purchase and Management: The treasury will handle the purchase and staking of SNX, including bridging if necessary, ensuring active participation in SNX governance and strategic management of the staked assets.
  • Treasury Staking of $KWENTA: The Kwenta Treasury, owning approximately 40% of the $KWENTA supply, will stake their $KWENTA at the discretion of the treasury to fund DAO operations. This strategic staking will align the treasury's interests with those of the broader Kwenta community.

Technical Specification

  • Initial treasury vault should consist of a gnosis safe on Base.

  • Automated bridging solution should consist of a smart contract on Base which receives USDC and includes a publicly callable function to bridge rewards to Optimism where a rewards distribution contract will distribute all accumulated rewards following each weekly rewards epoch.

  • Epoch rollover times will be fixed to Thursdays at midnight UTC.

Rationale

This proposal is designed to create a sustainable and beneficial rewards system for $KWENTA stakers, leveraging the earnings from the Synthetix Perps v3 integration. By staking $KWENTA held by the treasury, the rewards can be used to sustainable fund DAO operations while allowing stakers to benefit from future growth through reducing the amount of treasury tokens staked or distributing treasury assets.

By allocating a portion of the USDC to purchase and stake SNX, the Kwenta community can actively participate in SNX governance, contributing to the broader Synthetix ecosystem and enhancing the value proposition of the Kwenta platform. Earnings from staking SNX may also be used by the DAO. The technical implementation of an upgradable split between different sources also allows the community to change the split in the future or propose alternative uses of resources beyond SNX staking.

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