This forum post is to discuss the upcoming Governance proposal for liquidity incentives for Turbo stETH, Turbo swETH and other Sommelier vault tokens as collateral on Sturdy. The governance proposal is set to go to vote on Monday, December 12, 2023.
This proposal is intended to authorize a one-time transfer of 50,000 SOMM from the community pool to the Sturdy team developer address of 0xfE6DE700427cc0f964aa6cE15dF2bB56C7eFDD60. These tokens will be used as matching co-incentives for WETH lending to Sommelier vault shares on Sturdy. The incentives will be distributed over a period of 30 days with any future incentives requiring a separate governance proposal.
Sturdy V2 enables any project to permissionlessly deploy a lending market with any set of tokens. These can be governance tokens, LP tokens like Sommelier’s Turbo STETH, receipt tokens, etc. Users can borrow against these tokens or provide liquidity to earn yield.
A single WETH pool for Sommelier vault shares will be created. Incentivizing lending liquidity in the pools via SOMM would allow Turbo STETH, Turbo SWETH and others to be used as collateral for the first time ever in DeFi. The borrowed assets could be used for additional deposits into the Sommelier vaults or other DeFi activities. Making users and protocols of the market aware of the strength of Sommelier vaults as collateral will hopefully unlock a new growth vector for the protocol and result in additional integrations.
In the future, Sommelier may want to launch similar programs with Sturdy with different parameters - any future program is outside of the scope of this governance action and will require a new proposal. In the event that there are unused funds, those funds will be returned to the community fund.
This proposal, if accepted, will spend 50,000 SOMM from the community pool to the Sturdy team developer address of 0xfE6DE700427cc0f964aa6cE15dF2bB56C7eFDD60 to incentivize WETH lending liquidity to the Sommelier pools.