[DIP-08] Base Pre-Launch Campaign Powered by Reserve

1.0 Scope of DIP-08

This proposal outlines the Terms and Conditions (T&Cs) of a Base Pre-launch Campaign for bootstrapping divETH deposits, powered by the Reserve Protocol. This proposal represents the culmination of the Base Pre-launch Campaign outlined in the first RFC and the specific T&Cs regarding DIVA token distributions outlined in the second RFC. These proposals have been well-received by the Diva community and have passed a temp check poll.

The following proposal text advances the T&Cs of the second RFC for a binding DAO vote, while providing broader context around the Base Pre-Launch Campaign, so that this proposal may stand alone.

2.0 Summary

• What: A new Reserve Protocol RToken, called Based ETH (bsdETH) on Base to onboard users to divETH and defining DIVA distribution T&Cs
• Why: Unlock new demographic of Diva pre-launch depositors on Base, kick off L2 expansion
• When: Pre-launch: DIVA rewards accruing 30 days prior to divETH launch

Post-launch: rewards up to 5 months following launch

• Tokens: 1.30-2.50 DIVA/ETH/day, higher for earlier participation
• Capacity: 20,000 ETH

3.0 Background & Motivation

3.1 The Reserve Protocol and RTokens

The Reserve Protocol is a free, permissionless platform to build, deploy and govern asset-backed currencies referred to as “RTokens”. RTokens are always 1:1 asset-backed, allowing for permissionless minting and redemptions onchain.

Backing changes in the number and proportion of assets in RTokens can flexibly be maintained through decentralized governance. RSR is the Reserve Protocol’s governance token which can be staked on RTokens, where it serves dual purposes of 1) overcollateralization in cases of collateral default; and 2) governance rights for proposing changes in RToken configuration, through an 8-day governance process.

Since the first RToken launch in February 2023, RTokens have attracted almost $40M of deposits. RSR enjoys a market cap of $157m.

3.2 Motivation

Motivations for the proposed campaign on Base, and the fit with the Reserve Protocol’s technology for achieving these aims is summarized as follows:

• There exists significant LST liquidity on Base for Diva to capture as part of its L2 expansion goals
• A presence on Base could unlock an entirely new demographic of depositors for Diva, increasing participation through its low barrier to entry, and an opportunity to grow in step with Base
• Reserve Protocol RTokens present an elegant vehicle for Diva’s L2 ambitions. The proposed bsdETH RToken is intended to be an Ethereum-aligned LST index promoting validator decentralization and divETH adoption
• bsdETH will exist as a composable ERC20 token, opening divETH to a plurality of DeFi integrations from the start

It is therefore worthwhile and advantageous for the Diva DAO to consider a DIVA token allocation to the Base Pre-launch Campaign, pursuant to the details below.

4.0 Deployment and Governance

4.1 Deployment

In line with Ethereum’s permissionless ethos, the deployment of bsdETH on Base can be done by anyone. bsdETH will initially comprise an even split of cbETH and wstETH.

Guidance will be provided by Reserve Protocol contributors, who have experience assisting DAO and institutional operators to strategize and deploy RTokens. In line with mainnet bsdETH, this proposal suggests a provisional revenue split of 95% to holders and 5% to stakers. No other fees are charged by the protocol.

4.2 divETH Launch & Basket Change

Upon fulfillment of prerequisite criteria, a governance proposal will be made by bsdETH governors to include divETH in bsdETH. A distribution of 33.3% each of wdivETH, cbETH and rETH is proposed. This distribution respects Diva’s desire for symbiotic growth whilst self-limiting to prevent Ethereum centralization risk.

These prerequisites include:

• divETH launching on Ethereum mainnet and establishing a Base-bridged version of wdivETH
• Attainment of a Base oracle price feed for wdivETH
• RToken collateral plugin development for wdivETH by Reserve contributors

To facilitate the above, a substantial RSR stake and delegation from Reserve Protocol’s treasury to Diva DAO is proposed to secure bsdETH’s decentralized governance and ensure robust overcollateralization.

5.0 Terms and Conditions

5.1 Program Duration

The Base Pre-Launch Campaign spans 6 months (183 days), during which DIVA tokens accrue to bsdETH depositors (the “Incentive Period”). The Incentive Period starts 30 days before divETH’s mainnet launch and continues for 153 days post-launch.

5.2 Eligibility, Transferability and use of bsdETH

In general, possession of, or entitlement to, bsdETH tokens confers eligibility to DIVA incentive accrual during the Incentive Period. This means that bsdETH deployed in various DeFi applications remain eligible for DIVA tokens, and that transfers made for such purposes will not be considered withdrawals for the purposes of calculating users’ accrual tranches (discussed below).

As an illustrative example, users who complete the actions below are all considered equal in terms of DIVA accrual(assuming deposits are made at the same time and within the same tranche):

• Mint 1 bsdETH and hold
• Mint 1 bsdETH and deposit 1 bsdETH / 1 ETH as liquidity on Curve
• Buy 1 bsdETH on Curve and deposit as collateral on Aave/Compound/Moonwell

Borrows of bsdETH on lending markets do not confer eligibility as they denote liabilities rather than assets.

5.3 Redemptions and Subsequent Deposits

5.3.1 Redemptions

Funds in bsdETH can be redeemed in a trustless manner at any time. However, redemptions before the date at which bsdETH performs its first basket migration to include divETH (the “Rebalance Date”) disqualifies users for any DIVA distributions.

For redemptions that occur between the Rebalance Date and the end of the Incentive Period, accrual is determined by the count of full commitment days. To be clear, redemptions between the Rebalance Date and end of the Incentive Period do not affect accrued token allocation (as redemptions before the Rebalance Date do), but do entail forgoing future accruals.

For greater clarity, sales of bsdETH on AMMs, redemptions of bsdETH for underlying LST collateral, and transfers of bsdETH out of a wallet, are all considered redemption events.

5.3.2 Subsequent Deposits

Subsequent deposits permit users to accrue DIVA tokens based on the latest tranche rate and their count of full commitment days, segregated from any prior deposits. That is, users may be accruing DIVA at varying rates based on when deposits are made. Partial withdrawals in such cases are assumed to be from latest deposits (LIFO, unless made before the Rebalance Date).

5.4 Calculation and Distribution of DIVA tokens

According to the general principles for bsdETH participation set out in section 5.2, Diva DAO and Reserve Protocol contributors will collaborate to develop an off-chain formula which captures entitlements during the Incentive Period. Furthermore, Reserve contributors will supply an API endpoint that provides information on accrued DIVA rewards for each participating address.

The formula for the calculation of DIVA token accrual rate is based on tranches with diminishing token amounts (listed below).

DIVA token entitlements are ultimately a function of deposit size, the timing of when deposits were made, and the duration of deposits (subject to the specific considerations discussed herein).

Users must be mindful that DeFi participation in conjunction with the Base Pre-launch Campaign can introduce nuances in the way entitlements may be calculated, for example with AMM pool imbalances, and lending market liquidations. Reserve Protocol and the Diva DAO reserves the right, in their sole discretion, to use methodology for calculating entitlements it deems most appropriate.

5.5 Token Unlocks and Claiming

Post divETH’s mainnet launch, the Diva DAO will vote to enable the transferability of the DIVA token (the “Transfer Date”). Per DCP-03, the Transfer Date will be at latest the date of divETH’s mainnet launch + 153 days. Accrued DIVA tokens will be claimable at or around the Transfer Date according to the following schedule:

Claim 1: bsdETH depositors can claim 50% of DIVA tokens accrued between the start of the Incentive Period (divETH mainnet launch - 30 days) to the Transfer Date as an initial reward for their participation. Recall that withdrawals before the Rebalance Date disqualify users from token allocation.

Claim 2: At the end of the 183 day Incentive Period, participants are eligible for a second claim combining:

• The remaining 50% of tokens from Claim 1 above
• Plus any additional DIVA tokens accrued between the Transfer Date and the end of the Incentive Period (mainnet launch + 153 days)

5.6 DIVA Allocation as % of the Total Supply

This RFC proposes a maximum allocation of approximately 0.65% of the total DIVA supply, if the initiative reaches maximum capacity and 100% of tokens are claimed.

Notably, Reserve Protocol contributors do not request a treasury allocation. The Reserve Protocol provides permissionless machinery for anyone to create asset-backed currencies. The Base Pre-launch Campaign therefore emphasizes the ethos of decentralization espoused by Diva and Ethereum, proposing that representatives of the Diva DAO deploy and govern bsdETH.

5.7 Deposit Cap

The cap on this initiative is 20k ETH. It is anticipated that mainnet users aligned with Diva will bridge ETH/LSTs to Base to participate in accrual tranches no longer available on mainnet.

If the 20,000 ETH cap 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 deposited first withdraw their deposits early.

5.8 Maximum / Minimum Deposit

The minimum deposit is set at 0.05 ETH while the maximum deposit for a single address is 5,000 ETH.

6.0 Closing Remarks

Reserve Protocol contributors extend their gratitude to the Diva community for considering this proposal, which aims to foster mutual growth in the burgeoning Base ecosystem. Our goal is to establish a robust foundation for continued collaboration between the Diva and Reserve Protocol communities. We are thrilled to expand the reach of Diva’s innovative approach to validator decentralization on Base… and beyond!