This forum post is to discuss the upcoming Governance proposal for renewing liquidity incentives on the Fraxima Cellar.
This proposal is intended to authorize a one-time transfer of 75,000 SOMM from the community pool to the CellarStaking contract, which is used to incentivize cellar depositors on Ethereum Mainnet. This program will distribute the authorized amount of tokens over a period of 30 days, starting at the date this proposal passes and is enacted. The total amount of tokens for the proposed program represents 0.056% of the tokens in the community pool.
These funds will be used to incentivize participation in the Fraximal Cellar. Since launching on July 5th, the Fraximal vault has reached a high of ~$3M TVL and is the 4th largest lender on the Fraxlend protocol. The purpose of extending this program is to retain existing depositors and provide a modest incentive to attract additional deposits. 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 their Fraximal share tokens in Sommelier’s staking contract. The CellarStaking smart contract (cellar-staking/CellarStaking.sol at main · PeggyJV/cellar-staking · GitHub 1) governs the bonding of Fraximal shares 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 Fraximal 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 5 days, a 30% boost for locking for 10 days, and a 50% boost for locking for 14 days.
This smart contract, which has yet to be created on 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 0x290a42E913083Edf5AEFb241f8A12B306C19f8f9 and operated by Sommelier contributors, has administrative powers to govern the parameters of the program under a 4-of-7 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 yieldETH 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:
This proposal, if accepted, will spend 75,000 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.
CellarStaking Contract: cellar-staking/CellarStaking.sol at main · PeggyJV/cellar-staking · GitHub 1
CellarStaking deployment: 0x290a42E913083Edf5AEFb241f8A12B306C19f8f9
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