Diva Staking

⚠️ Important: while the tempcheck vote indicated support for the initial RFC, it’s vital to acknowledge that DIP-02 introduces significant changes to the original RFC. Therefore, we strongly advise a thorough reading of this document.

DIP-02 has been curated by Moss, Ainsley To and Mona El Isa, all representing Avantgarde Treasury. They form part of the Avantgarde group which spans Asset Management, DeFi Development (eg. for protocols like Enzyme) and DAO Governance.

As per governance DAO guidelines, the proposal is brought by toast.eth who represents 1M+ delegated DIVA tokens and therefore meets the criteria to submit a binding DAO proposal.

Diva Primary Objectives

In response to inputs from the Diva community, the governance initiatives shall include various incentives for three distinct target audiences:

1. Pre-launch for Early Stakers commitments. This is the one described by this DIP-02.

2. Pre-launch for Operators commitments

3. Post-launch for DEX Liquidity Pools for (w)divETH/ETH

Scope of DIP-02

In order to keep the several discussions segregated, the scope of DIP-02 is exclusively the TVL incentive for Early Stakers, while for the other objectives, new and separate discussions will be open, starting with a new RFC for LPs incentives.

TL;DR

• What: T&Cs that apply for the DIVA token distribution to early stakers only

• Why: Build sufficient TVL to plan for operator capacity and facilitate network effects

• When: Before & After Diva Mainnet Launch (30 day prior & until 5 months after)

• Where: On 2 Enzyme vaults, denominated in ETH and stETH.

• Incentives: 1.30-2.50 DIVA/ETH/day, higher for earlier participants

• Capacity: 100,000 ETH

Motivation for DIP-02

Introducing a Pre-Launch Total Value Locked (TVL) for Early Stakers holds the potential to ignite a chain reaction of network effects for a novel protocol like Diva.

Notably, these instances underscore these advantages:

• Stakers gain confidence that the protocol and its LST are widely adopted.

• Stakers get DIVA distributions, which gives them a voice in governance.

• Operators benefit from being able to plan sufficient capacity ahead of time.

• Integrations with other DeFi primitives are more likely if there is significant TVL committed. This includes lending, other uses as collateral, bridging to Layer 2s, etc.

• The Ethereum ecosystem benefits by promoting diversity to its LST ecosystem.

RFC - Tempcheck Status

You can find the RFC on Commonwealth here, which was published on July 28th 2023.

The non-binding Tempcheck vote on the T&Cs has been closed out with 83% YES and 17% NO.

⚠️ Important: the tempcheck vote signalled support for the initial RFC. However, following additional feedback from the community, DIP-02 adds significant changes to the original RFC.

Pre-launch incentives - T&Cs

Who’s eligible / non eligible?

No KYC is enforced but due to legal uncertainties surrounding staking operations, any person or entity who resides in, is citizen of, is incorporated in or has a registered office in the United States or any other blacklisted or sanctioned countries, will not be eligible for the initiative. These eligibility criteria are the same ones that were used to carry out the initial token distribution. In order to enforce this criteria we plan to include a self declaration on the Enzyme UI that depositors will need to sign with their wallets.

Who is in custody of the assets?

The Enzyme vaults employed by this strategy are fully non-custodial. Upon deposit, Early Stakers receive Enzyme vault shares (ERC-20 tokens) that represent their pro-rata ownership on the underlying assets held in the vault. Depositors have full control of their funds and can proceed to withdraw at any time. The only caveat is that there is a default 24-hour lock-up period on the vault settings.

Are Enzyme vault shares transferable?

Vault shares will not be transferable to third parties and cannot be sent to another address. In other words, only mint & redeem functions are enabled.

When will the vaults be open for deposits?

The initiative will start on the date when the vaults allow for deposits, which will be clearly announced and communicated across several channels.

When will the incentive start to accrue?

🆕 The initial months of the initiative will play a role in establishing a ranking of the depositors based on a first-come, first-served principle. This ranking will be used to determine future token distribution, with those depositing earlier enjoying higher reward rates. However, the actual accrual of DIVA tokens will start at a later stage (30 days before Mainnet Launch), in accordance with the specifics explained in the subsequent paragraphs. This modification is based on community feedback and is designed to shorten the period of incentives before the actual protocol goes live.

What are the key dates to keep in mind?

The Mainnet Launch Date is key in determining token accrual, future claiming rights and the treatment of early redemptions.

⚠️ Important: The Mainnet Launch Date is the defining moment the Diva staking protocol has gone through sufficient number of audits (i.e. at least 2) and becomes fully operational and is live on the mainnet. Mainnet Launch Date will be publicly announced in order to formalise this key milestone for the incentive initiative.

When will the DIVA accrual effectively start?

For the reasons explained above, the exact day when DIVA tokens start to accrue cannot be determined in advance. It will be determined in retrospect and calculated as a 30-day lookback since the formal Mainnet Launch Date.

What’s the duration of the Pre-Launch initiative?

🆕 The duration of the initiative is reduced to 6 months – precisely 183 days (vs 365 days proposed originally) – which will be calculated starting from the first date of the token accrual = [Mainnet Launch Date - 30 days]. So the actual period will be from [Mainnet Launch Date - 30 days] until [Mainnet Launch Date + 153 days].

Is there a Max Cap on TVL?

DIVA tokens will be given only to those who deposit the initial 100,000 (st)ETH and have them converted to divETH after the Mainnet Launch Date. This cap applies to the combined value of both vaults, which was approved in DCP-01. Once the 100,000 ETH target is hit, deposits can still be made, but they’ll be considered as being on a “waitlist.” These waitlisted deposits will only be eligible for DIVA distributions if those who got in first withdraw their deposits early.

What’s the Minimum Deposit per Single Depositor?

The minimum deposit amount is 0.1 ETH or stETH.

What’s the Maximum Deposit per Single Depositor?

This restriction stems from community suggestions following the initial RFC release. For various considerations, capping the individual’s reach is preferred. To uphold a non-KYC approach, we suggest a cap of 10,000 (st)ETH per single deposit. This cap will be implemented among the vault settings. We understand that the initiative may not be entirely immune to Sybil attacks, but introducing this measure does aid in attaining our objective of widespread distribution. It’s worth noting that significant ETH holders often answer to their reputation and the larger community which should be sufficient to avoid blatant opportunistic behaviours.

What’s the Redemption/Withdrawal Policy?

You’re free to withdraw your funds at any point (except for the 24-hour lock-up mentioned earlier). The main rule to remember: if you redeem before the full conversion to divETH is completed, you won’t qualify for any DIVA distributions. For redemptions that take place between the complete divETH conversion and the 183-day deadline, accrual is determined by the count of full commitment days.

⚠️ Important: once (st)ETH is fully converted to divETH, Early Stakers can redeem their assets “in-kind” as divETH in a trustless manner, i.e. without relying on Avantgarde Treasury.

What are the key considerations regarding Enzyme’s security?

Security is a top priority for the Enzyme. Here’s some key considerations:

• The protocol has been live on mainnet for about 5 years.

• Every adapter/integration is audited by Chain Security, one of the top security firms in the space.

• Enzyme has a large bug bounty on Immunefi.

• In terms of protocol upgrades, Enzyme does not force users to upgrade to a new version. Users can review the upgrade features and can decide not to opt-in on a new version of the protocol.

For any other consideration regarding the use of Enzyme, here are the detailed Terms & Conditions.

Calculation of future Distributions

The calculation will be based on an off-chain formula that determines the distribution for each single address. The final distribution will be based on the on-chain data gathered via Enzyme API. The formula for the calculation of DIVA tokens is based on tranches with diminishing incentives.

The distribution of DIVA tokens will be calculated as follows, DIVA accrual = ETH deposited * Days in vault during DIVA accrual period * DIVA/ETH/Day for each tranche. It will be therefore a function of:

• Size: amount of ETH or stETH deposited (deemed 1:1 with ETH). The more you deposit, the better.

• Timing: based on the cumulative TVL tranches and the associated bracket where the deposit falls into. The earlier you deposit, the better. Deposits that take place before [Mainnet Launch Date - 30 days] will fill the TVL tranches and will have first come - first served treatment during the subsequent token accrual period.

• Duration: number of full 24hr days starting from [Mainnet Launch Date - 30 days]. The longer you stay, the better.

DIVA Tokens Transferability

Peding the approval of DIP-03 proposal, DIVA tokens would become available for transfer before the end of the initiative - at latest.

Pre-Launch Initiative: DIVA Allocation as a % of total supply

A series of initiatives whose objective is to a) bootstrap the TVL to the ambitious target of 100k ETH, b) create a critical mass of operators that can match the stakers’ TVL and c) incentivize the provision of liquidity on DEXs for the LSTs should be generous in its token allocation.

A global max allocation of between 5% - 10% of the total DIVA supply seems appropriate for the 3 initiatives combined. As a benchmark, the Diva DAO offered an Initial Token Distribution to the wider Ethereum community of 10% of its total supply.

🆕 After shortening the duration of the initiative to 183 days (previously proposed to be 365 days) the max potential size of the allocation for this DIP-02 now represents approximately 3.5% of the total supply - IF a) the initiative is maxed out from the start AND b) for the whole duration (183 days) AND c) 100% of tokens are eventually claimed.

A holistic table with estimations for the several initiatives can be found here.

Note that the above estimated allocation also includes the allocation to Avantgarde Treasury, whose allocation is approximately 0.25%. More details about the rationale in the paragraphs below.

Avantgarde Treasury’s role and distribution

Idea and early support

Since the inception of community discussions, we’ve been engaged and enthusiastic about the concepts outlined here. Crafting these proposals, gathering input, and refining them for mutual agreement has been an intensive process.

Simultaneously, owing to the unique use case and strategic alignment, the Enzyme Council has decided to waive the 25-basis point protocol fees associated with employing Enzyme vaults. This translates to a substantial benefit, potentially amounting to 250 ETH if the initiative attains its maximum potential.

Initial Set up and Facilitation

Our role as facilitators for this initiative encompasses a range of responsibilities. This spans from establishing the Enzyme vaults (as outlined in DCP-01) to managing the process of transitioning from (st)ETH to divETH, and ultimately ensuring the accurate calculation of token distribution for each participant. These aspects carry substantial weight and entail a notable degree of public responsibility. The successful execution of these tasks directly contributes to the initiative’s success.

Software development & audits

It is imperative to acknowledge that our integration efforts necessitate a significant amount of time and a comprehensive audit process. This undertaking encompasses various key aspects:

• firstly, the integration of the native Diva Staking protocol to facilitate the minting and redemption of divETH;

• secondly, the essential inclusion of Lido Staking, which ensures a seamless 1:1 conversion from stETH to divETH.

• Technical supervision of the process of stETH un-staking prior to the subsequent divETH staking.

• The outcomes of these manpower efforts and service costs yield tangible benefits that warrant thoughtful consideration, particularly within the context of the distribution allocated to Avantgarde Treasury.

Partnership Mindset vs “Make-or-Buy”

The relationship between Diva and Avantgarde Treasury should not be regarded solely as a “make-or-buy” determination, but rather as a strategic partnership with the potential to trigger a cascade of supplementary advantages. As the initiative progresses, opportunities will appear for us to contribute further value, including endorsing the allocation of ETH to Diva Staking in various DAO treasury proposals conducted within the DAO domain.

Monitoring

Enzyme vaults have public Ethereum addresses. All deposits & withdrawals will be tracked on-chain. In parallel, Enzyme has an API (and subgraphs) that allows an easy extraction of the necessary data (address, deposit/withdrawal, date).

Distribution for Avantgarde Treasury

For the Pre-Launch Initiative the accrual will be:

• 10% of the tokens actually accrued by stakers from 0 to 50K ETH

• 5% for the tokens actually accrued by stakers from 50K to 100K ETH.

⚠️ Important: while the max potential DIVA distribution can be easily estimated with a mathematical equation, the actual accrual depends on several factors such as timing of deposits, when tranches are filled, early redemptions which may lead to write offs, size of the waitlist etc. etc. The distribution to Avantgarde Treasury is not based on the a-priori theoretical max allocation but on the actual a-posteriori accrual, which is much harder to estimate in advance but also a more accurate measure of the success of this initiative.

Valuation

It’s important to note that DIVA tokens hold no intrinsic value other than their utility, which can be converted into governance power through a delegation system. Therefore, it is not possible to calculate an Annual Percentage Yield (APY%) for these tokens nor to estimate a fair market valuation prior to establishing product-market fit.

Extra Vesting

Avantgarde Treasury will be subject to a self-imposed extra 6-month vesting period. This decision is aimed at addressing the DAO’s potential concerns about early DIVA token sales. By having this vesting period, we aim to instil confidence in the community and avoid any form of speculation around our future behaviour.

Gradual unlocking and claiming of DIVA tokens

For the Pre-Launch Initiative the claiming will take place in two-phases:

1. After the 30-day cooldown period from the Mainnet Launch Date, stakers can claim 50% of their accrued DIVA tokens as an initial reward for their participation. That is 50% of the tokens accrued during the 30 days from [Mainnet Launch - 30 days] until [Mainnet Launch + 30 days], which is approximately 16% of the max potential accrual.

2. . At the end of the 183 days, if the depositor hasn’t withdrawn their funds, they’re eligible for a second claim combining:

• the remaining 50% of the tokens from step 1 above

• plus any additional DIVA tokens accrued in the period from [Mainnet Launch Date + 30 days] until [Mainnet Launch + 183 days]

This represents the remaining 84% of the max potential accrual for each single staker.

Description of the proposed action & implementation

As also previously described in DCP-01, the following course of action is proposed:

1. Avantgarde Treasury multisig (“vault owner”) creates the 2 vaults on behalf of the DAO

2. Among initial vault settings, AVG’s multisig (“vault owner”) assigns delegation to Avantgarde Treasury (“vault delegated manager”)

3. Among initial vault settings, Multisig prevents deposits until the official kickoff date.

4. Enzyme DAO to waive 25 bps protocol fees on the new vaults. See explanation on how this will be done here).

5. Avantgarde Treasury & Diva DAO announce the official kickoff date across several channels (Commonwealth, Discord, etc.)

6. Upon official kickoff date, Avantgarde Treasury’s Multisig enables deposits on Enzyme vaults.

7. Once the un-staking of stETH is successfully completed, Avantgarde Treasury proposes the transfer of ownership from its Multisig to the Diva DAO Governor contract.

8. During the course of the initiative, Avantgarde Treasury maintains the assets idle and will implement the needed work described in the earlier paragraphs.

Notable changes from the original RFC

1. Shorter duration (183 days instead of 365 days)

2. Later start of token accruals, i.e. closer to Mainnet Launch Date (30 days), which is supposed to avoid unnecessary token spending.

3. Reduced max. token allocation to 3.5% of total supply (and consequently proportional 50% reduction of tokens distributed to Avantgarde Treasury)

4. The date of transfer of ownership of the vaults has been modified. This is when the ownership of the vaults is moved from Avantgarde Treasury Multisig to the DAO Governor contract. This change is needed in order to ensure a smooth technical process of stETH un-staking and subsequent divETH staking. This change supersedes the earlier deliberation of DCP-01.

⚠️ Important: If any adjustments to the stETH vault configuration are deemed necessary to facilitate a seamless transition, it will be imperative to conduct a dedicated DAO vote. This implies that Avantgarde Treasury will not possess the authority to modify vault settings without the proper endorsement of a formal DAO vote.

Notable exclusions

1. Specific proposal to incentivize liquidity providers, that is defined in a separate proposal in order to avoid excessive complexity for this DIP.

2. Specific proposal to incentivize operators, that can be defined in a separate future proposal in order to avoid excessive complexity for this DIP.

Classification

As per Diva DAO community guidelines, this is a Low-Impact Diva Improvement Proposal (DIP), requiring 50% positive votes to be enacted. Low impact DIPs are intended to distribute governance power among communities and/or seal strategic partnerships, without any modification of a configurable feature of the Diva Staking protocol or update of core infrastructure that may require some code implementation.

Copyright waiver

Avantgarde Treasury, as the owner or rights holder of certain creative works, hereby waives specific rights under copyright law in favour of Diva Staking DAO. This waiver pertains to the works described as governance proposals, and includes the rights of reproduction, distribution, public display, and creation of derivative works. This waiver is granted for the purpose of this governance process. Proper attribution to us shall be provided by the recipient whenever the works are used or displayed. This waiver does not extend beyond the rights explicitly stated.