We think a major value add is that Interest Protocol would accept OP as collateral, which should improve the utility of the OP token. To date, we are only aware of one small protocol that has onboarded OP as collateral. Note that Interest Protocol does not lend out collateral, so unlike a Compound or Aave fork, OP on the platform could not result in short-selling pressure in times of market stress.
Additionally, Interest Protocol is built to allow users to continue to utilize their tokens for governance. On Ethereum, for instance, users who place UNI in their vaults are still able to delegate the voting power and participate in Uniswap governance. This means OP holders can realize both financing against their tokens and participation in Optimism governance. This should result in a healthier governance ecosystem where small players do not abandon governance simply because the financial rewards of collateralizing their tokens are significant.
Again, appreciate your feedback! We’ll try to highlight the value add to Optimism more prominently
Like with other DeFi protocols it would perhaps make sense to make the proposal after you have deployed in optimism and do the usual OP incentivization request along with matching co-incentives from your side.
That said, I think the request is quite small and minimal and I personally don’t shy away from giving funding for development. I also like that you would like to accept OP as collaterall and even retain voting rights at deposit.
To Optimism? Quickly, but we don’t have the ability to promise a target date.
If this proposal passes, we would expect it to be deployed within weeks, but that is ultimately up to IP token holders and delegates over on mainnet and constrained by developer hours if they’ve already been booked for a given time period.
That is correct, the Committees will issue a recommendation UP to 3 days after voting has started (I think the ideal is to happen before).
Regarding the mechanic as a value proposition for Optimism, I would lend OP to Interest Protocol and mint USDi, but I will keep my delegation power.
Will you also partner with a DEX to incentivize USDi/TOKEN liquidity? I am assuming USDi is a composable ERC20 token.
That would be up to IP governance. USDi can be freely converted to USDC held in IP’s reserves, so even if liquidity for USDi itself is limited, it can still be swapped – similar to Maker allowing DAI to be swapped permissionlessly for USDC and USDP.
We went through the whitepaper a while ago and liked a couple of innovative ideas:
Different ICO sale strategy
Efficiency (Potentially able to quickly scale with higher utilization rate)
Possibility of voting/delegation
The project is at the earliest stage with the ongoing ICO which likely takes longer than the originally envisioned 32 days with currently 124 holders & few daily purchases and we’d like to see the protocol risk (management - especially liquidity risk) play out a bit.
Re: The proposal
Benefits for Op could be very strong: Op as Collateral, Op can still be used for governance, (Co-)Incentives can lead to strong initial & potentially sustained growth with IP efficiency
Risk: Similar to onboarding toxic assets in a lending protocol, Optimism should be cautious of incentivizing projects that potentially add significant risk to users in the ecosystem. We are a bit worried about the fractional reserve model which may lead to locked up user funds (+ bad debt in case of toxic assets, liquidation failures, other protocol bugs).
The size of this dev grant is small and a no-brainer. Despite not being fans of funding development, we’d support the 31,764 OP tokens for deployment.
The size of the other, main grant proposal (240K Op) is also reasonable for a new, value-adding project though we’d prefer to see the initial sale finish, more certainty around the date of deployment & Op distribution as well as protocol risk management before incentivizing growth with Op tokens.
(Not sure why there are 2 proposals on the forum.)
Deployment to Optimism would likely not be prioritized to the same extent over other work (such as collateral onboardings) if the smaller proposal is not approved. Interest Protocol has decentralized token governance, so that’s obviously just a guess since any token holder with enough IPT or delegated votes could put forth a proposal to prioritize an Optimism deployment over other work.
These were broken into separate proposals to give governance the option to vote on each piece separately, since one is to defray deployment expenses and is quite small, while this proposal is targeted at more traditional co-incentivization and larger in size.
For what it’s worth, I do appreciate the option to consider individual asks separately like this. And I think funding development to move migration further up a project’s roadmap is absolutely the kind of thing we should be doing if our objective is to facilitate growth.
(Not sure why there are 2 proposals on the forum.)
You answered your own question. It’s an opportunity to get the ball rolling with a marginal ask. @GFXlabs reasons: doesn’t hurt to ask for incentives today. But if not having deployed is a nonstarter, the thinking is that splitting up the proposals helps devs get migration across the finish line faster.
Aside from the broader merits of the lending protocol, which we’re still discussing, we view this proposed grant as a low-cost means of delivering a clear value-add to OP governance: allowing collateral to be delegated.
We believe that deploying this capability will grant users more flexibility with their OP tokens while filling gaps in governance participation. We also commend @GFXlabs for splitting their initial proposal into two staged ones and suggest that other projects consider doing the same, depending on their asks.