Staking Options
GUAC Staking Options through Dual Finance is an incentive mechanism that grants participants who lock up their liquid tokens, the right, but not the obligation to trade tokens at a future price.
Last updated
GUAC Staking Options through Dual Finance is an incentive mechanism that grants participants who lock up their liquid tokens, the right, but not the obligation to trade tokens at a future price.
Last updated
THIS HAS BEEN PASSED WITH AVOCADAO GOVERNANCE PROPOSAL #4
The following is not investment advice. Its sole purpose is to explain the complexities of staking options integrations for Guacamole as a community loyalty mechanism.
Staking Options are an incentive mechanism that grant participants who lockup their liquid tokens, the right, but not the obligation to trade tokens at a future price. SOs are considered an incentive mechanism because they are issued for participation in staking or locking up tokens, rather than a financial option which requires a premium payment. In that sense, the payment is the token lockup, rather than a cash premium. Therefore, Staking Options are free options rewarded for taking your liquid token supply off the market or, as we’ll see for participating in other supportive protocol activities.
Please note that Staking Options need to be voted on by the AvocaDAO to supply GUAC and set individual parameters and may not be perpetually available at all times. Staking Options contracts are also first come, first serve - as each available set of contracts only contains a limited number of GUAC.
Guacamole Staking Options will eventually become native to the GUAC Staking page on Guacamole.gg, however, for the time being, the GUAC Staking Options will be accessed here:
Availability: Staking Options will become available in increments dependent on funding from AvocaDAO proposals or available GUAC in the intermediary DAO wallets.
Strike Price: The strike price is calculated by calculating an average market price over an extended period of time to ensure staking options availability and redemption remain fair for everyone.
Term Length: Most staking options will be offered in 1 month periods.
Max Staking Size: The total number of GUAC that can be staked in a Staking Option is calculated with the following formula. (Total Qty in Contract / Lockup Ratio). These parameters are available on the Staking Options page via Dual Finance.
Stake Per User: Dual Finance integrations are first come, first serve. There are no specific maximums or minimums for any user and the total max staking size is calculated with the formula above.
The DAO will announce the launch of each Staking Option ahead of time to prepare the community for a deposit since there are total max deposit limits for each contract and entry for subscriptions is first come, first serve.
Please be advised that Staking Options on Dual Finance may not be available in your jurisdiction. Please abide by all Terms of Service when using this third-party platform.
Staking Options (SOs) are a way for people to support a cryptocurrency project and potentially earn rewards. Our implementation with Dual Finance provides a way to promote ecosystem loyalty with the DAO and end-user both extracting potential maximum value out of the integration.
Acquire The Token: The user acquires GUAC through https://www.guacamole.gg/trade/swap
Stake The Token: The user then "stakes" or locks their tokens in the options contract. Meaning, you might earn more tokens as rewards.
Support The Ecosystem: Several two-sided benefits are then prompted by the community staking GUAC. The end-user receives the potential ability to acquire more GUAC, while the DAO receives the ability to monetize this system in search of our long-term community goals.
Non-Dilutive Rewards: Unlike passive staking programs, tokens are not given for "nothing" and the options exercised also result in revenue generation for the DAO which can then be used to follow community planning goals. All tokens are in public or DAO circulation to begin with, and this program also does not result in the inflation of overall token supply just for the sake of answering "when staking?".
This example is theoretical and does not constitute market or investment advice.
We have added two different forms of explanations for "special" community members.
The AvocaDAO votes to initiate a GUAC Staking Option period with a strike price of 0.00000003 USDC per GUAC and 500 Billion GUAC supplied from treasury.
The user deposits GUAC into the Staking Option contract during the subscription period.
During this time, GUAC experiences secondary market volatility and ends the staking options contract timeframe at a price of 0.00000004 USDC per GUAC.
The staking options holder can exercise their right to purchase a certain amount of GUAC from the DAO at 0.00000003 USDC per GUAC or forego the potential loyalty rewards.
USDC Revenue generated from holders exercising their options rights is deposited back into the DAO treasury along with any GUAC that remains left over in the contract.
If the price of GUAC were to decrease under the Staking Options strike price during this time, then the holder of the staking option holds no obligation to acquire GUAC at the contractual price.
New and established projects may find they can only offer viable Call SOs since the main asset the treasury has is its own tokens. From the perspective of public token sales, issuing Call SOs is a useful way to capitalize a treasury with above current market sales. While issuance of SOs is free, the exercise of them is not. Holders need to actually pay stablecoins in the amount of the Strike Price * Quantity of SOs to realize any profit on the incentive. Therefore, if the token appreciates and the project uses SOs as a main incentive mechanism, a treasury over time will naturally accrue and diversify itself into stablecoins. Later in a project’s life cycle, once it has significant stablecoin reserves, it may make sense to begin offering Put SOs to network participants. Again participants will stake their tokens, possibly with a higher LR than Call SOs as means to protect their downside risk. If the long term value of the project is well justified, then from a treasury perspective this is not an issue. The treasury will soak up its own excess tokens at a discount to current prices in the event of assignment. Ultimately, Put SOs offered by well capitalized treasuries bestow confidence in their token holders that any investment in the token is safe and if not it will be bought back. Crypto markets are prone to high volatility, but by offering Call and Put SOs a treasury can bring price stability to its token market and deeper liquidity for its holders.
Staking Options (SOs) can help stabilize the price of a token and make it easier to buy and sell (increase liquidity). When a project gives out SOs as rewards, it's like they're betting on the token price being stable. The project benefits if the market doesn't have big price swings, while the people holding the SOs can benefit when the market is more unpredictable.
The AvocaDAO's main goal is to bolster its GUAC treasury through product and feature revenue generation, however, the DAO also finds it necessary to reward platform usage and loyalty. Staking options integrations provide a beneficial compromise for all parties.
When a Staking Option holder exercises their option, the USDC received in return will be deposited back into the DAO treasury, which will then diversify the underlying treasury.
Swap USDC to SOL
Build DAO-owned GUAC/SOL liquidity position on 3rd party AMM (Raydium, Orca, Meteora)
Promote more liquidity while building fee generation from secondary market volume
Recycle fee generation back into both liquidity position and DAO treasury
Migrate built GUAC/SOL liquidity to Guacamole AMM to bootstrap liquidity on launch
Assess the situation to promote the best community-oriented outcomes
The DAO will continue to bolster its GUAC position through all other means of revenue. This solution also allows the DAO to build a GUAC/SOL liquidity position without directly initiating irresponsible network volatility.
