Idle DAO (stkIDLE holders)

The following is an extract of the proposal posted on the Idle governance forum and focuses specifically on one of the proposals listed.

Summary

A proposal to pause the staking reward program for stkIDLE holders.

Proposal

1. Pause the staking reward program for stkIDLE holders

Currently, stakers are rewarded with a mechanism that distributes half of the fees generated (in IDLE) by the Senior Best Yield strategy. This mechanism has given a value-capturing feature to IDLE tokens, but on the other hand, it has fallen short of sustaining the token price through the buyback mechanism setup.

Since January 2021, Idle is distributing $IDLE rewards to stakers with IIP-10. Based on @8bitporkchop’s work on $IDLE staking, the protocol fees have been split as follows

• 50% to Idle’s stakers
• 30% to the Idle’s Rebalancer
• 10% to the Fee Treasury
• 10% to the Smart Treasury

With IIP-18 of January 2022, Idle DAO voted to deprecate Idle Smart Treasury and increase the percentage of fees flowing to the Fee Treasury. The January 2022 split currently in place is

• 50% to Idle’s stakers
• 30% to Idle’s Rebalancer
• 20% to the DAO Treasury

We should also note that the fee-sharing contract is immutable and based on Sushiswap v2, which has no liquidity, hence buying IDLE there, is sub-optimal due to high slippage costs.

Additionally, due to regulatory uncertainty, the current staking rewards do not align with the not-for-profit structure of the soon-to-be Idle DAO LLC, thereby increasing the complexity.

For the above reasons, Leagues suggest pausing the current staking rewards and instead, introducing new use cases for IDLE stakers.