SWISE Protocol Fee Distribution Discussion

Hey took it upon myself to kickstart this / pull it all together @kiriyha - not able to add / tag anyone else for some reason.

  1. Protocol fee distribution. and revisit the earlier discussion about locking SWISE


  • Locked token not needed for rev distribution. Can simply do the xMPL model
  • veSWISE as vehicle to open potential to ramp up veSWISE emissions for marketing/node operator incentive flywheel (without creating incremental sell pressure). If we are trying to tweak tokenomics to incorporate that flexibility, though it is the cleanest/fairest way to incorporate rev distribution as well
  • Raise awareness about $SWISE and StakeWise
  • Natural impermanent loss hedge for LPs
  • Encourage long-term ownership
  • Protocol fees should first be used to pay for all running costs that there may be, and some for further development. So that the whole system is nicely self-sufficient. What’s left should be paid out to token holders. Regular payouts to token holders would probably increase the price of Swise, which would in turn help to reduce the amount of Swise needed for farming rewards. Which would be a good thing.
  • Stakewise protocol needs to grow its TVL and a good way to attract TVL on top of all the great work the team is doing by building DeFi integrations and support true decentralization. Ensuring that SWISE token becomes a valuable token will bring attention and drive adoption to our protocol by differentiating us from competitors.
  • 1% of fees that go to the DAO Governance Fund, we suggest reviewing a budget in conjunction with the SWISE team, across things that are long-term accretive to the $SWISE community with the goal of elevating StakeWise to be mentioned in the same breath as Rocketpool and Lido.
  • Isolating for simply the buyback mechanism/Treasury spend, it would allow the Treasury to sell 1.8% of circuiting SWISE supply a year (for marketing spend, etc. to increase TVL/deposits which is the #1 goal) without putting incremental sell pressure into the open market (which is currently what happens)


  • The token price may invite a negative dynamic whenever TVL growth * APY growth * ETH price growth < $SWISE supply growth. This is related to the likely establishment of an inverse relationship between the token price and yield from the protocol fees.
  • DAO will be forced to become more selective about where $SWISE is going - its distribution will need to be strongly aligned with the growth of the protocol, which may prove to be a challenging task.
  • The distribution of protocol fees may be considered premature given these funds could be reinvested into the protocol’s growth
  • “Burning” protocol fees is not equal to burning governance tokens. Even if the unclaimed amounts are not meaningful, the sum of all of them could represent a good amount of funding for a future proposal or protocol furthering grant or anything. I think the claw back should come as a subsequent proposal
  • advocate of KISS implementations, especially in smart contract world where bugs can be dramatic… But also concerned by the protocol fees waste such a solution would imply.
  • On the one hand, absolute necessity to incentivize SWISE holding and making it more popular through rETH2 farming but on the other hand the DAO needs funding for important things like proper marketing, team staffing etc. - Especially the marketing part is of concern
  • Holding SWISE seems too easy and lazy to get a portion of the protocol fees and does not necessarily contribute to the protocol.
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Can someone educate me on the xMPL model or point a link to it?

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