[SIPS-052] Liquidity Mining Incentives Proposal for DeFi Stars

Considering the the current incentives for DeFi Stars will end on June 8, 2023, we want to discuss in this forum post the upcoming Governance proposal for liquidity incentives on the DeFi Stars cellar, which will go up for vote on the week of June 5, 2023.

This proposal is intended to authorize a one-time transfer of 25,000 SOMM from the community pool to the CellarStaking contract, which is used to incentivize vault participants on Ethereum Mainnet. This program will distribute the authorized amount of tokens over a period of 60 days, starting at the date this proposal passes and is enacted.

These funds will be used to encourage participation in the DeFi Stars vault. In the future, Sommelier may want to launch similar incentive programs with different parameters - any future incentive program is outside of the scope of this governance action and will require a new proposal.
The tokens prescribed by the program will be distributed pro rata to users on Ethereum Mainnet who elect to bond STARS in Sommelier’s staking contract. The CellarStaking smart contract (cellar-staking/CellarStaking.sol at main · PeggyJV/cellar-staking · GitHub) governs the bonding of STARS and the distribution of the tokens reserved for SOMM rewards. Pro rata allocation is determined based on share of the pool, where that share is equal to the amount of the user’s STARS tokens deposited, multiplied by a “boost” determined by the amount of time those cellar shares are locked for. Shares receive a 10% boost by locking for 10 days, a 20% boost for locking for 14 days, and a 25% boost for locking for 20 days.

This smart contract, deployed at address 0x03df2A53Cbed19B824347D6a45d09016C2D1676a Ethereum mainnet, is based on canonical staking conventions used across the Ethereum Virtual Machine, principally the Synthetix staking rewards contract, originally developed in 2018. Variations of this code have secured billions of dollars of rewards across various EVM-compatible blockchains. The CellarStaking smart contract has been audited by Macro, with the audit available here: cellar-contracts/Macro_Cellar_CellarStaking_07_2022.pdf at main · PeggyJV/cellar-contracts · GitHub
A multisig on Ethereum Mainnet, at address 0x7340d1fecd4b64a4ac34f826b21c945d44d7407f and operated by Sommelier contributors, has administrative powers to govern the parameters of the program under a 2-of-4 signing scheme. The staking program must be funded with SOMM tokens directly from the Gravity Bridge; the multisig will not control any tokens reserved for the program.

The multisig is able to perform the following actions:
• Schedule a certain amount of tokens owned by the contract for distribution (via notifyRewardAmount)
• Set the duration of future rewards programs (via setRewardsDuration)
• Set the minimum deposit in STARS tokens in order to participate in the rewards program (via setMinimumDeposit)
• Pause and unpause bonding operations in emergency scenarios (via setPaused)
• Trigger a one-time emergency shutdown on the contract, which stops new reward accumulation and allows all depositors to withdraw their assets immediately, disregarding unbonding times (via emergencyStop).

The multisig is currently composed of a mix of early developers on the Sommelier Chain and protocol, Ethereum smart contract developers, and cellar strategists:
• Zaki Manian
• Jack Zampolin
• Kevin Kennis
• Joseph Terrigno

This proposal, if accepted, will spend 25,000 SOMM from the community pool in order to fund the CellarStaking contract according to the parameters of this proposal. The multisig shall be responsible for enacting the program according to the parameters of this proposal once the requisite SOMM tokens are funded by the validators.

Reference Links:
CellarStaking Contract: cellar-staking/CellarStaking.sol at main · PeggyJV/cellar-staking · GitHub

CellarStaking deployment:

Ethereum Mainnet multisig: Safe

Macro Audit: cellar-contracts/Macro_Cellar_CellarStaking_07_2022.pdf at main · PeggyJV/cellar-contracts · GitHub

Synthetix Staking Rewards Contract: synthetix/StakingRewards.sol at v2.63.1-alpha · Synthetixio/synthetix · GitHub 1