[Consultation] Setting a conversion rate for SPIN to GYFI

Background/motivation

The SPIN points system has proven to be a very effective way to drive users to the system, with 54% of GYD holders and 21% of LPs choosing to opt for SPIN rather than for liquid rewards.

However, it could be clearer to the Community if and how SPIN will convert to Gyroscope’s GYFI token. Knowing this would make it easier for community members to compute:

• Their eventual GYFI stake in the project community members if SPIN converts to GYFI
• For different FDV levels at a possible future token launch, the APR that the SPIN would imply.

This decision should be made exclusively by the Gyroscope Protocol’s governance community.

Background information on GYFI

Gyroscope’s governance token is called GYFI. The initial total supply of GYFI is set at 13.7m tokens. Additional distribution properties of the token were ratified here.

Summary of proposal

This proposal is to fix the conversion rate of SPIN to GYFI at 1,065 SPIN/GYFI.

What that means in GYFI

At a conversion rate of 1065 SPIN/GYFI, the % of the total GYFI supply that will go to SPIN holders will depend on the final amount of SPIN that is distributed.

See below for what that means in terms of the number of GYFI and the % of GYFI supply.

What that means in APRs

Realized APRs will depend on the market valuation of GYFI after the liquid market for GYFI exists (which would require a separate decision by governance). The following table illustrates the APRs that would be implied by a range of possible network valuations for a user at SPIN’s Tier 1 boost rate.

A user who has reached higher Tier boost rates will earn at accordingly higher rates (e.g., 1.5x the rate for Tier 5).

Note: this proposal does not cover the conditions for liquid distribution of GYFI. The Gyroscope DAO is envisioned to consider the timings and conditions of liquid distributions in subsequent proposals. For example, governance may decide to distribute non-transferable GYFI tokens or make the distribution subject to additional restrictions such as lockups or release schedules. Any distribution would take place at a time determined by governance.

Comparable yield rates

The conversion rate suggested in this proposal comes after a study of comparable liquid yield rates required to incentivize capital for new stablecoins in DeFi. The following table summarizes some comparable yield rates. Note that these comparison yield rates are in liquid token rewards whereas SPIN rewards are not liquid.

As specified in the Governance Process docs, since this proposal concerns an off-chain topic, the next step following this Consultation would be to create a [GIP] on Snapshot.

If the proposal passes on Snapshot, it is proposed that the team maintaining the frontend reflect the decision on the SPIN/GYFI conversion rate and make it easy for users to understand what it means for them.

Risk assessment

To the best of the proposer’s knowledge, no specific risks are associated with this change.

This allocation don’t seem fair and very meaningful to me to be honest. These are people who provided LP for more than 7 months now. They are actual users, and one of the most important participants of the protocol.

Currently LPs have the least amount of voting power at 1110.59 total across all LP vaults. It’s even less than any other single vault which is currently active (even if we would give them all GYFI vault voting power). So unfortunately LPs won’t really have much power in the actual vote.

3.42% max allocation seems low, especially considering that 65% of the total supply is allocated to the community and also duration of this campaign is way longer than some other campaigns (we started on 19th of March 2024).

We’ve seen other protocols with way lower community allocation distributing 10%+ of the total supply, and their campaigns took less than 3 months. We’ve got 65% to distribute to community, we have plenty to distribute later on as well…

We are speculating here about FDV, and the implied APR. I think that anything $50m+ is very optimistic given the current metrics.

I would suggest to allocate 10% of the total supply, as was initially hinted in the tweet x.com

EDIT: To make this clear, this 10% would be pro rata distributed to SPIN holders.

We’ve already brough this up in the delegates chat before, and such low numbers were never suggested by any delegate, so what is the reason for such low allocation suggested by the team?

Thanks, I look forward to discussing this further.

Fully agree, it’s extremely greedy for such a long-term event. Giving less than 10% is just inappropriate

Totally agree with PanCake. That would be a huge disappointment. Never give up on your first supporters. Since we have a discussion here - I would support mr PanCake on his take.

I’d like to see a better SPIN to GYFI conversion for the first campaign (accumulated SPIN until now) and the suggested SPIN to GYFI conversion for the continuing program

65% is allocated to the community, wouldn’t be fair to allocate just 2% GYFI to the already distributed SPINs for a 7 month period with several (unknown) risk components to early users.

Agreeing with Pancake on this, albeit 10% might be too much. Halving the SPIN/GYFI ratio would honestly already be fair

It is unfair, this proposal means more money more power for the whales. can think of better methods and proportions

If you’re truly considering fairness and keeping early, genuine users satisfied, then the rewards for early supporters should be calculated separately, entirely independent of the spin.

Someone who’s been with the project from the start is absolutely not the same as someone who is just wealthy.

The latter only believes in money, but an early user believed in the project itself.

Fully agree with PanCake.
Some Liquidity Providers have given up their potential earnings for more spins for quite a long time and 3.42% seems very low and feels almost disrespectful.

Agree with your take here. 10% is in line with the initial airdrop distribution for most other projects. And as you pointed out, those projects tend to have a much shorter duration for the initial pre-TGE farming period than the SPIN campaign has.

Also to note, users who participate in this initial pre-TGE period take on the most risk given the uncertainty of the protocol in it’s early days compared to more established blue chip protocols. Which is why the initial distribution should be generous enough to help offset that risk.

Allocating 10% still leaves a substantial runway of 55% of the earmarked 65% GYFI to the community for post-TGE campaigns, and for GFF (Gyroscope Founding Frog) members.

Lastly, I agree that the most fair distribution method is pro-rata (linear), which also prevents sybil abuse.

Looks fair enough.
I want to mention that setting a maximum allocation seems essential to prevent an uneven distribution of governance tokens to whales.

Please consider this in the distribution plan.

I tend to agree with the author’s points. LPs play a crucial role in DeFi protocols by providing liquidity, and they should be incentivized accordingly. While community engagement is important, LPs directly contribute to the functionality of the protocol. A higher allocation and voting power for LPs could be a fairer approach.
finally I agree with PanCake user

Agree with PanCake.

I noticed there’s a lot of discussion around how much GYFI NFT holders should get versus Spin holders. Perhaps there should be a holistic plan on how to distribute the initial amount of GYFI so that everyone can have the full picture? Discussions can be more constructive that way as well.

Imho, the LPs are bringing the most value to the project right now and they also bear the most risk. Hence they should be compensated equitably. 10% seems fair.

This proposal is well-structured, but I can’t fully support it at this stage!
I believe it’s essential to consider and accept all components of the governance system as a cohesive whole, rather than in separate parts.
The idea of addressing other elements (such as LPs, NFT holders etc) later on doesn’t provide enough assurance as there’s no guarantee the future direction will align with my current expectations.

I suggest a more complete proposal that covers all governance elements. For example, it’s still unclear to me whether NFTs are excluded due to their impact on spins or if they will have their own share? among other questions

Gm @ftl-labs, thanks for the proactive approach toward the SPIN <> GYFI conversion.

I believe taking the APR-based approach and working from there is a fair and reasonable strategy.

I see two limitations in the current proposal that I believe can quickly be addressed.

1. The current conversation rate utilizes implied APR using the current supply of GYD and the current % of locks. I believe we should push to grow the total GYD and percentage of GYD earning SPIN.

As such, I propose slightly increasing the GYFI distributed by ±25%, with the goal of growing the SPIN-earning GYD supply by the same percentage by the end of the initial SPIN program. This setup would also reward those who stacked SPIN early on, as they will proportionally have earned more SPIN per GYD.

2. I believe it’s crucial current GYD holders have some perspective on what to do with their GYD after the initial SPIN campaign. I suggest we lock in one or multiple GYFI reward programs or follow-up programs to be approved ahead of the end of SPIN and initial distribution of GYFI.

Curios what the topic KPIs for Gyroscope post-GYFI launch are? As those KPIs should be the foundation for any follow-up programs!

Hi, thanks for the proposal. I would consider the allocation of 10% of the $GYFI supply with a vesting period of 12 months. In current market conditions, and seeing Gyroscope TVL stable for months , i would’nt be very optimistic for FDV at the beginning… looking forward to see Gyroscope growing

Before creating a token we should consider what do we want to accomplish. We want:
i) to retain current liquidity;
ii) to draw attention to the project;
iii) to attract fresh liquidity.

I suggest starting with very low FDV ($10-20m) + very high rewards for LPs (15-20%) + very high rewards for new LPs for a next year (30-40%).
Because of low FDV especially comparing to other projects and VCs round Gyroscope will be considered undervalued. Therefore LPs will see this as an opportunity as they will be able to farm a fair chunk of the project’s governance token. I’d assume higher than usual % of them would consider holding instead of selling or continue providing liquidity (depends on how successful the team would be with finding PMF).
Gyroscope’s features, pros and cons will be discussed and spread as well driving extra recognition and awareness.

And lastly about some ways to retain fresh and old liquidity.
-staking GYFI to boost your SPIN rate (i.e. GYFI rate);
-70% penalty for claiming the airdrop right now instead of staking for N months, where max N = 12;
-LPs may unlock the airdrop faster by providing extra liquidity for certain period of time (e.g. user that has 1k liquidity provides 1k liquidity more to unlock airdrop 2x faster)
-the longer your liquidity stays untouched the higher the boost.

Obviously, the team will not consider this proposal as they would prefer to store that GYFI for the future that probably will never come or come too late when liquidity or attention to the project dries up.

Some good points there. I like your thinking, and it makes sense.

I just can’t agree with the rewards for LPs for next year/future. I don’t like that we would give more rewards to LPs who joined later, rather than LPs who were providing liquidity since the beginning. That doesn’t seem fair to me to be honest. But again, this would go through governance, and if that’s what governance wants, then that would happen.

I completely agree with you. Having a comprehensive plan that covers all possible allocations would be ideal, allowing every member with potential eligibility to join in, discuss their own interests, and weigh the trade-offs. This approach not only helps everyone understand their own rights more clearly but also lets us assess the value of each part of governance more thoroughly.

lets do this . am totaly agree with thw whole conversation

I think this approach effectively rewards people who have backed their commitment with their money, while also ensuring that shares are not diluted in a way that could lead to dumping on the protocol or significantly reduce the voting power of the established community.

From the discussion it’s clear that the community does not think that the current proposal goes far enough to reward the community. These concerns must be taken into account.

Below is a totally overhauled proposal which we believe fully addresses the concerns raised, while providing the conditions for the long term growth and viability of the protocol.

1. As requested by the community, firstly we propose introducing a rewarded time-locking mechanism. Users will be faced with a choice:

   1. Option 1: Lock GYFI for 24 months and receive twice as much as the base allocation. Tokens would be subject to a release/vesting schedule, where they start to become liquid after month 9 and unlock until month 24.
   2. Option 2: Claim all GYFI upfront, but incurring a 50% penalty compared with Option 1. Tokens would be subject to a release/vesting schedule, unlocking over a 9 month period.

2. Secondly, addressing the community concerns that the total GYFI allocation to SPIN holders does not meet 10%, significantly improve the SPIN to GYFI rate for users:

   1. For Option 1, make the rate much better than the initial proposal, at 400 SPIN/GYFI (rather than the original 1065). So, everyone who chooses Option 1 would now receive 2.5 GYFI rather than 0.94 GYFI for every 1000 SPIN. (Remember, the lower the SPIN/GYFI rate the better for users as this means more GYFI per SPIN).
   2. For Option 2 - where a user opts for a 50% overall cut to have access to instant liquidity - the SPIN to GYFI rate would again be improved compared with the initial proposal, to 800 SPIN/GYFI (rather than the original 1065). So that means for every 1000 SPIN a user would now get 1.25 GYFI rather than 0.94 GYFI.

3. Subject to a separate detailed DAO proposal and vote, make a total of up to 130,000 additional GYFI available to reward Gyroscope protocol OGs, independently of the SPIN discussion.

Altogether, these changes mean that if, at the time of any future airdrop, 500m SPIN has been distributed and users choose Option 1, a little over 10% of the GYFI supply would be distributed to the community.

APRs for each option at different FDVs
(implied APR at 10x SPIN rate)

24 month???

Hey guys. Nice to see this being discussed here in detail, and thank you for taking into account community feedback. Given the discussion so far, heres how Im thinking about it.

1. CORE OBJECTIVES: I think we all can agree on this. We want to:
   • Maximize protocol sustainability
   • Reward risk-taking fairly
   • Create long-term alignment
   • Prevent asymmetric value extraction
   • Enable effective governance
2. RISK-ADJUSTED VALUE CONTRIBUTION: Previous proposal could’ve better priced:
   • Time value of capital
   • Opportunity cost during SPIN accumulation
   • Market risk exposure
   • Protocol risk exposure
   • Network effect contributions

ALTERNATE PROPOSAL (these are just a collection of ideas. We can take what works and there is consensus for):

DYNAMIC CONVERSION RATE: Instead of fixed tiers, what if we make it dynamic? something like this?

base_rate = 500 SPIN/GYFI
final_rate = base_rate * risk_multiplier * time_multiplier * size_multiplier

where:

• risk_multiplier = 1 + (months_before_proposal * 0.05)# 5% per month of early risk
• time_multiplier = 1 + (lock_months * 0.03)# 3% per month of lock commitment
• size_multiplier = 1 - (wallet_allocation / total_supply)^0.5# Square root decay for whale prevention

VESTING MECHANICS:
- Base: 6-month cliff + 6-month linear vest
- Boost: Every 3 months of historical SPIN earning reduces cliff by 1 month
- Cap: Minimum 3-month cliff

LP VALUE CAPTURE:

• Implement something like a “LP Proof of Time” concept: lp_boost = min(1.5, 1 + (continuous_lp_months * 0.05))

• Historical LP positions tracked via snapshots

• Boost applies to both conversion rate and vesting acceleration

GOVERNANCE BOOTSTRAPPING:

• Initial 3 months post-conversion:
• Quadratic voting weight for converted SPIN positions
• Prevents whale capture during critical early governance
• Graduated return to linear voting over 6 months

ANTI-EXTRACTION MECHANICS:

• Implement “Loyalty Rebate”:
• 30% of converted GYFI held in smart contract
• Released based on continued protocol participation
• Participation measured via governance voting, LP provision, or GYFI staking
• Full release possible in 3-6 months based on activity

GM,

Thank you, FTL Labs, for moving the discussion to The forum instead of private channels, where everyone can have a voice in shaping the future of the DAO.

First, I’d like to point out that calling the SPIN program a “success” is debatable, especially when we compare its metrics to those of recent competitors like Ethena, Elixir, and Usual. After seven months, we’ve reached nearly $3M in TVL worth of $GYD—a result that may not meet everyone’s expectations. Additionally, it may not be fair to compare the yields of an established, battle-tested DeFi product like Curve or Convex with those of a newly launched stablecoin like Gyroscope, where there are higher associated risks and rewards are locked.

In my view, here are some issues that have made the program less appealing to the general market:

• Unclear timeline and duration of the incentive program
• Low APR, especially compared to other market opportunities
• Poor UX for retail users, who struggle to find the best strategy (e.g., whether to earn bribes and yields or earn SPINs)
• Uncertainty around incentives for OGs, Gyroscope founding members, or NFT holders, as highlighted by @Mrfti
• Lack of transparency about Gyroscope’s valuation and total funding raised to assess FDV at TGE
• Unknown timing of TGE and locked rewards
• No integration with leveraging tools like Pendle to increase TVL metrics
• Late-stage launch of Web3 campaigns on Galxe during the SPIN program

In my opinion, regardless of how much $GYFI we allocate to the current LPs, without a successful incentive program, we will struggle to achieve a strong valuation. As @PanCake highlighted, a $30M valuation seems optimistic given the current state and may fall short of the expectations of early users and OGs who have supported Gyroscope since 2021.

My Suggestions:

1. Design a new incentive program by the DAO and FTL Labs, inspired by other successful programs, that addresses the issues listed above. This program should include a clear TGE timeline and unlocked rewards to boost TVL and battle-test Gyroscope’s designs and mechanisms. Most importantly, it should aim to grow the community.
2. To prevent dilution by new users in the incentive program, we should reach a consensus on this proposal and reward early $GYD adopters. I will share my thoughts on this proposal in another comment.
3. Simultaneously, propose rewards for NFT holders and OGs as outlined by FTL Labs, to ensure they’re adequately acknowledged and incentivized.

I’m glad that team is addressing the feedback from the community, and I believe this is going in the RIGHT direction, but some parts of the proposal are still not quite there yet.

Two most important aspects of this proposal should be that it’s FAIR and MEANINGFUL.

To address each part of the proposal:

1. I believe that 2 different LOCKUPs and VESTINGs are fair, but their specifics like duration might not be in this case. In comparison to other protocols with POINTS systems, these lockups are substantially higher, but the allocation isn’t. We need more information here, there is 35% of the GYFI supply for the team and some part of it is for investors, what unlock schedule is there? What about vesting? What will be initial circulating supply? It should be at least 15%+, to avoid low float compared to FDV. If it’s not, I don’t see a reason for lockups.
   I could agree with these lockup durations IF investors and other parties, would have HIGHER lockups, to ensure fairness, especially as we are distributing around 10% here, and other allocation is 35%.

2. To address the second point, I believe that distributing over 10% here is MEANINGFUL. Also FIXED RATE is FAIR as everyone will be rewarded at the same rate for their capital, which is extremely important .So, I would vote YES for this part.
   BUT there is still an issue. Team is still proposing different distributions based on SPIN distributed, which I don’t like, and I would vote NO here. This creates uncertainty, we DON’T know how much will actually be distributed until it happens. If we distribute at 500m SPIN, we are looking at another 6+ MONTHS of campaign, which is a dealbreaker for a lot of people based on the feedback. Also, and most importantly, campaign could END WAY SOONER, if TVL of 100m is reached, that would mean that significantly LESS would be allocated for SPINs. Or there could even be another proposal to end the campaign early, with less SPIN distributed. I still believe that 10% should be pro rata distributed to SPIN holders, regardless of how much (but 500m MAX) is reached. That way it’s clear how much will be distributed, and there is still a deadline.

3. I agree that there has to be allocation for OGs, I would discuss specifics for this in a separate proposal for that.

Thanks, I look forward to discussing this further.

I am totally against vesting token for community. Because the community has been waiting for 4 years and it is not fair for them to wait for months to receive a reward. Vesting should only be for the team and investors. As we see in other projects.
Also, how much airdrop are you going to give to the community? It is not more than 10%, right?
If 10% airdrop is given, it will be about 1,370,000 tokens. This is not a large number of tokens, so they should all be free in tge time
Also, GFF owners have been with the project for years and this bonus of 130,000 tokens is a joke.

Considering these things, this is my suggestion:

If it is going to be 10% airdrop>>
7% spin holders
3% GFF holders

so

  13700000 x 0.07 = 959000 GYFI for spin holders
        rate; ~521 spin/GYFI

  13700000 x 0.03 = 411000 GYFI for ogs

all token unlocked at TGE + some another share like liqudity and exchane

so circulation supply < 15%

its normal plan

Great to see the discussion being steered in the right directions. Just wanted to be transparent here that I am a LP and have been farming SPIN since the start of the program. I am not sure if I am considered an OG, but I have interacted with the protocol since Dec 2023.

On point 1, I certainly think the current proposed vesting schedule is too long. The SPIN program started since March this year and we are just roughly halfway to 500M SPIN. Assuming the emission rate is constant, this means we still have another 8 months to hit 500M SPIN. By then, the program would have dragged on for well over a year and do we really still expect the community to have their airdrop locked up?

Furthermore, since we are trying to match the yields of other similar protocols in the market (which have yields/rewards that are liquid from the start), wouldn’t it be fair to have the rewards fully unlocked at TGE?

If there is a strong reason to lock the tokens, I think the vesting mechanism suggested by @emzod is much more palatable. I also share the same view as @PanCake that there should be better transparency on the vesting schedule for early investors. Ideally, the community vesting should be shorter than early investors.

Finally, I think we can perhaps frame the vesting mechanism in a positive manner such that we are rewarding lockers instead of punishing those who doesn’t want to lock .

On point 2, I once again agree with @PanCake that there should be a fixed amount of $GYFI allocated for SPIN holders instead of coming up with a conversion rate. I think it is useful to have clarity on how much $GYFI will be allocated to the SPIN program so that the DAO can better plan for future community incentives.

On point 3, I have no strong views on the amount to be allocated to OGs. However, the current proposed amount do seem tad too low .

To sum it up, my proposal is as such:

• 8% of initial total $GYFI supply to be allocated to SPIN program.
• 2% of initial total $GYFI supply to be allocated to OGs (definitions and other specifics to be discussed in a separate proposal).
• Vesting mechanism: No lockup by default but users can choose to lock for an arbitrary period (max 24 months) for up to 50% boost to their airdrop. Locked $GYFI to be vested linearly.
• The boost should not dilute the 8% allocation to the SPIN program and the extra $GYFI would be coming from the remaining amount reserved for community incentives.
• In the unlikely scenario that every user chose to lock for 24 months, it will just be an additional 4% of the total supply of $GFYI for a 2 years program.

Also thought I’d make my personal thoughts purely from intuition clear. Todays election results made it more clear for me. (the earlier response was from the perspective of fitting into the implicit requirement set from the initial proposal:

I think the focus should be less around returns (on an APR basis) because this creates complexity around how you value Gyro today, and we instead should focus on rewarding LPs and active users who stuck around, handsomely. I’d say give a meaningful % of the float, multiples more than proposed. More skin in the game to loyal LPs and users means more they are more likely to stick around (especially when they consider the impending positive regulatory overall and better market structure as a consequence). I hate to use this phrase, but i think it up best: increasing community networth (when you have a solid product which i strongly believe gyro does), is simply the best way of doing it at this moment (emphasis on the regulatory shift and easing macro liqudity conditions).
IF on the other hand, even if there is heavy sell pressure (which i think is now less likely given the positive future DeFi has), this will end up creating a wider distribution base which is also much better longer term, as the cost basis for participants is lower. At least in this scenario, the market is valuing GYFI, not coming from top down planning (more likely to create unhappy participants and resentment). I think now is the best time to do such a thing, and easiest to get mindshare as a solid stablecoin. I think this game becomes far harder as more players enter into a market with better liquidity conditions.

With regards to vesting: I’m not sure what the value proposition at this moment is, because most people have already committed capital for a meaningful period of time. I think any morale loss here has a higher -EV than any +EV gained from the reduced sell pressure and in terms of community growth and attracting future LPs. We ideally should set strong precedence for rewarding LPs. Most protocols/projects that have rationed their token distribution (using strict APRs etc) after extended periods of time are worse off today than they would’ve been if they just let the floodgates open. eg: Scroll, Namada, Blast.

Thank you again for opening up the discussion to a wider audience here. Super excited for the future for GYD and GYFI.

I agree with your points @culgin.eth and @emzod .

To the proposed % distributed, I don’t believe we have to restrict this proposal to MAX 10% total, it could definitely be higher, 10% for me was just minimum, which would be meaningful.

I also don’t believe that it should be 10% TOTAL. OGs allocation should come on top of that, so another 2-3%, so 13% in total for example.

I want to emphasize again, that we have allocated 65% of total supply for community, which is significantly higher than most other protocols.

We can do better with the total % allocated.

I believe that we should consider user token locks once we understand the lock duration for early investors. Additionally, I think locking should be optional rather than mandatory, serving as a bonus for those who choose it.
For this to be effective, we need to create real incentives—users should have a reason to opt in. To that end, I suggest considering ongoing Spin rewards for lockers (assuming we have a Season 2 Spin) or other enticing benefits.

As @Mehdi pointed out, the timeline and duration of the incentive program remain unclear; it would be beneficial to have an overview of upcoming events, such as whether there will be airdrop szn2? Important to emphasize that, regardless of the $GYFI allocation, building strong valuation will be difficult without an effective incentive program.

Regarding the OG share, I’m unclear on how OGs are defined and how many there are, but the current allocation of 130k seems quite low—especially if the OG criteria were like voting power distribution!

as a Gyroscope supporter since '21, GFF holder and delegate I agree with a relative simple but effective solution like @culgin.eth has proposed

• X% of supply is backward facing and should count for the accumulated SPINs until now
• X% of supply for OG’s (GFF holders?)
• 1065 SPIN/GYFI convert rate can continue for the rest of the program as this is market conform and competitive to other similar projects
• No lockup by default, maybe for half of GYFI accumulated by ‘whales’
• A varying loyalty boost for locking GYFI for 3 to 24 months in 1) extra GYFI and 2) a multiplier to accumulate more SPIN/ GYFI like the GFF gave

Thanks for reconsidering the options. But this lockups are too harsh. I have not seen such lockups in other projects. Also considering Gyroscope started in 2021, it is been 4 years. SPIN program has been running for more than 7 months. Considering all this:

• NO mandatory lockup for majority. Only for large whales maybe.
• Optional lockup with reward incentives.
• Minimum 7% to SPIN holders. Fixed, does not matter on total SPIN supply.
• 3% to OGs. They got large governance powers but having few tokens does not make sense. They are here since 2021.
• The initial circulating supply min 15%
  Also, the main goal here should be to reward early supporter and active protocol users.

We see eye to eye bro. The points that you mentioned about this proposal are right.

Completely agree with Mrfti. A holistic governance system that empowers all stakeholders, from token holders to NFT holders, is crucial for GYFI’s success.

I propose:

• Including a clear outline of each group’s role and contribution to the governance process within this proposal.
• Providing a specific timeline for determining rights and responsibilities for other stakeholders, such as NFT holders.

This approach will create transparency and trust for the entire GYFI community.

Few important comments.
-Lock and penalty terms were not proposed by the community but solely by me. Single person ideas do not equal community approval;
-24m is absurd. for someone to chose 24m lock you should propose at least 700-1000% in fully guaranteed rewards; because price will go down -80-90% by the time they get their unlock. Also it overlaps with VC and team vesting schedules. So, considering SPIN campaign is only half-way through I’d reduce MAX VESTING to 3-6m or NO VESTING at all instead of initially proposed 12;
-forget about rigid terms. user should be able to unlock whenever they want with TIME-DECAY PENALTY. this practice gives flexibility but also excludes concentrated selling in a short timeframe;
-penalties should not go to the “community treasury” but should be distributed among those who would decide to continue their vesting. those penalties should come as a bonus to the high APR provided initially for those who vest/stake (or staking/vesting should provide powerful boost for the second campaign);
-you have not addressed future SPIN/GYFI incentivisation. it is crucial for the current LPs/users to evaluate the possibility of their future contribution, how it is tied to the initial distribution and how well future users will be incentivized.

I HEAVILY OPPOSE to rigid and long or even medium term locks.
I SUPPORT insanely generous rewards for the current and future LPs because there is no benefit in holding GYFI in the treasury for the future that could never come (i.e. your project could be forgotten and not used). You need to act aggressively now to compete and win.

I believe this counterproposal strikes the best balance between fair rewards for early contributors and upside for those who lock/stake for the long run.

Here is a final proposal for any remaining community feedback. The intention is to move this to a Snapshot vote next week.

TL;DR

• We propose to set the SPIN-to-GYFI conversion rate at 1066 SPIN per GYFI. We propose that SPIN holders can boost their conversion rate by up to 150% by choosing to lock up their tokens.
• Currently, around 300m SPIN are allocated. At the above proposed conversion rates, this corresponds to 2.05% – 5.14% of GYFI total supply allocated to SPIN holders (where the range depends on the lockup option chosen by users).
• We propose to increase the cap on SPIN from 500m to 700m. If all 700m SPIN are allocated and at the proposed conversion rates, this corresponds to 4.79% – 11.98% of GYFI total supply (again, where the range depends on the lockup option chosen by users).

Background/motivation

This contains two related topics:

1. What the base conversion rate from SPIN to GYFI (Gyroscope’s Governance token) should be
2. What the claiming options for GYFI should be

These decisions should be made by the Gyroscope Protocol’s governance community.

The initial total supply of GYFI is set at 13.7m tokens. Additional distribution properties of the token were ratified here.

Out-of-scope are other important topics such as an airdrop to Founding Member NFT holders, methods the DAO will use to bootstrap liquidity and other key topics. These will be covered in future proposals in the coming weeks before January.

First token distribution is anticipated to be in January 2025, but the precise date will be the subject of a future proposal.

Summary of proposal

1. A rewarded time-locking mechanism. At the moment of any future airdrop, every user will be faced with a choice:

   Option 1: fully-liquid GYFI tokens. Any user will be able to convert their SPIN to GYFI at a rate of 1066 SPIN per GYFI. A table of APRs implied by different FDVs is provided below for reference. There will be no vesting of tokens up to a cap. The cap will be set high so that it only affects the very largest SPIN holders. This is standard in most projects.
   Option 2: lock up GYFI for 9 months and receive 40% more GYFI than Option 1. The locked tokens will start to unlock immediately over the course of 9 months linearly.
   Option 3: lock up GYFI for 18 months and get 150% more GYFI than Option 1. There will be a 9 month cliff, so that users receive no liquid tokens before month 9 and then tokens linearly unlock from month 10 onwards.

2. Users will be able to choose a combination of options 1-3: of their initial GYFI allocation, they can choose just one option or split their allocation across multiple options. For example, a user may choose to receive 20% of their GYFI immediately (without an additional boost) and 80% according to Option 3.

3. SPIN holders above a large threshold will be subject to an additional linear lock-up of 6 months on top of the three options presented above: these holders can choose, for the part of their token that lies above the threshold, the modified options 1 (6 months linear unlock), 2 (15 months linear unlock + 40% more GYFI), and 3 (9 months cliff + 15 months linear unlock + 150% more GYFI). This means that holdings above the threshold are always subject to a mandatory lockup, and holders can choose to lock their tokens up for a further amount of time to receive additional tokens. The threshold will be chosen such that only few, very large SPIN allocations are affected.

4. In addition, a ‘surge’ SPIN scheme will be set up, to run a campaign for 3 weeks targeting even higher APRs.

5. Define an extra 200m SPIN to be held in reserve above the 500m prior cap. This SPIN is to be used in the event the 500m SPIN cap is met as a measure to keep incentives fluid into and beyond the token launch until any replacement incentive programs should take over. With more clarity now on the token distribution timeline and many scaling factors now coming into play for GYD and E-CLPs, this is a prudent backup measure to ensure growth remains fluid. Note that, since this proposal fixes the SPIN/GYFI conversion rate, emission of more SPIN would not dilute existing SPIN holders in terms of GYFI received. Governance could later vote to further extend the SPIN program beyond the 200m SPIN boost if it deems it beneficial.

If this proposal passes on Snapshot, it is proposed that the team maintaining the frontend reflect the decision on the SPIN/GYFI conversion rate and make it easy for users to understand what it means for them.

What this means in APRs for different FDVs

Assuming no tier boost and SPIN earned via a 10x rate:

Users who have earned SPIN tier boosts receive APRs that are significantly above the baseline with no tier boost. For example, assuming a tier boost of 1.5x (Tier 5) and SPIN earned via a 10x rate:

Feedback from Step 1

This proposal has evolved significantly following two distinct rounds of feedback from the Community, both here on the forum and feedback received via Discord.

The main community concerns were:

• Both vested and unvested options were discussed, and many community members felt that there needs to be fully liquid option. The new proposal provides both liquid and vested options. Users who want to commit to a longer term position in the project can get very generous allocations while users who prefer immediate liquidity can choose rewards that remain above comparable rates on their TVL (based on the 10x SPIN rate or the combination of SPIN and BAL rewards that was prevalent before the 10x rate was introduced).
• Uncertainty about the timeline for distributing GYFI to SPIN holders. Guidance is given in this proposal that the target of first token distribution is January 2025 with precise date the subject of a future proposal. Timelines will be able to be much clearer from here on out.
• A lack of information about the team and investor unlocks. All of this information will now be collated and shared with the community in the next 2-3 weeks.
• There was concern that SPIN holders were not being rewarded for the length of time they have provided liquidity. It should be remembered that since SPIN is earned on a $-hour basis, the length of time commitment is already directly rewarded in the SPIN total. The SPIN tier bonus rates also add an effect on top of this: users who use the system longer get tier boosts to their SPIN earnings. Gyroscope OGs, such as founding members, also receive a free tier boost.
• There was concern about governance capture. It should be noted that the Gyroscope Governance system is specifically and fundamentally designed to avoid this issue in its multi-stakeholder design. See the docs here.
• There was concern about what the GYFI distribution might be for other groups (like Founding Member). As said above, these matters will be addressed in a follow-up proposal. As a reminder, founding members receive a free SPIN tier boost, and so already receive large bonus potential within SPIN itself.
• It was raised that there should be a plan in place for future SPIN/GYFI incentivization past the token launch. We have added a plan here for a reserve amount of new SPIN to fill any gaps in incentive programs and that could be phased out when other incentive programs take shape.

• Amount distributed is too low.
  To distribute at least 11.98% you guys are suggesting that the SPIN cap would increase by 40% (to 700m) and everyone would have to lock-up their allocation for 9 months cliff + 9 months linear, on top of already participating for 9+months, which is insane in my opinion.

Again, I don’t believe that implied APR means anything at this stage, the only meaningful measure is % of supply, which gets distributed. 10% should be base case for distribution with no lock-ups.

People have been earning SPINs for more than 9 months now, so I believe that even in this form, this proposal will be passed unfortunately, as people just want to finally get something back for their SPIN.

I will not be voting for this proposal, as I believe that people deserve better.

• On your point of increase of SPIN cap.(I don’t necessarily disagree with you, just want to state my opinion on that.)

I honestly like the way SPIN is going to go forward. How many governance coins has the crypto space seen that are used to stake and secure the networks? Invest into the protocol to make sure the coin is liquid, be rewarded.

I will be voting yes on this though with 200m extra SPINS there is a lot of room for incentive programs. This whole program I feel is in-line with the long term growth that I want to see.

How foolish I was thinking gyroscope will create a better DAO and governance in this space while they making people to pass a proposal with their terms in first attempt.

While the proposal aims to clarify the value proposition of SPIN and provide a clearer pathway for token holders, there are some potential weaknesses to consider:

1. Lack of Clarity on GYFI Distribution:
The proposal outlines the potential distribution of GYFI to SPIN holders based on different SPIN amounts. However, it lacks specific details on the timing and conditions of this distribution. This uncertainty could lead to confusion among token holders and impact their decision-making.

2. Reliance on Future GYFI Valuation:
The implied APRs for SPIN holders are heavily dependent on the future market valuation of GYFI. This introduces significant uncertainty, as the token’s value will be influenced by market dynamics, project performance, and broader market conditions.

what is this extra 200 m spin? we couldnt passed 500 after 10 month then you want increase cap to 700 mil??? p;ease explain more? and if you can be online in discord server to clearfy some question

Overall, I feel this proposal is in line with feedback and expectations. There are two final points I would love to get more clarity on:

1. At the current SPIN distribution rate, I don’t believe we’ll reach 700M SPIN by January. Does this mean we aim to accelerate the distribution rate of SPIN in the coming weeks/months?

I believe it’s critical to grow GYD supply and the Gyro brand in the period before the first Token Distribution. I would favor accelerating the pace of SPIN distribution and adding more campaigns.

2. It would be good to understand if other airdrops are taking place at launch besides the proposed 700M SPIN conversion. It would make sense to convert any early contribution elements such as OGs, NFTs, or other elements into the SPIN reward mechanism by, for example, issuing 50-100M SPIN to these stakeholders. This would greatly simplify the valuation of the SPIN conversion rate and avoid uncertainty around GYFI distributions.

1. Could you clarify the large threshold exactly? How much spin is considered large?
2. More info about the “Surge” campaign, if possible

Hey @LuukDAO.

To clarify, 200m SPIN is to be held as a reserve to be used depending on how capital in the system grows. In this proposal, there is no required minimum amount of SPIN that needs to be distributed by January before any GYFI distribution event (not 500m as a minimum, not 700m etc).

Relatedly, the idea of the ‘surge’ program is indeed to accelerate the distribution rate of SPIN to bring in more capital to the project.

On your second point about Gyroscope Founding Frogs etc, yes, these are to be handled separately. A new consultation about these topics will follow next week.

1. Not at the moment but purely because the numerical analysis hasn’t been done. The intention would be to make the threshold very high only affecting the very largest SPIN holders. Parallel to other projects, the purpose is to protect everyone in the ecosystem from huge supply fluctuations.
2. More information to come soon

This is a misunderstanding. See the answers above. The idea is to provide a reserve amount of SPIN to grow the system further

I am happy to see so much discussion has gone into this conversion topic and I support the resulting revised proposal from FTL. The ability for users to lock up their GYFI and commit to their long term support and involvement of the ecosystem speaks directly to why they should deserve more governance power, in the form of tokens. At the risk of any current SPIN holders planning to sell their allocation instantly, this is a fair deterrent mechanism to benefit those who believe in Gyroscope longer term, this is after all just the starting phase of the project with many more decisions to come.

Regardless of proposed FDV at launch, every option is a fair result for users from my perspective; and the expectation should be for the demand for GYFI to increase due to the surge period and bootstrapping as more products and features of governance roll out. Additional information around how these incentives will be placed, if by a committee or data driven process would be helpful, but again can come at a later date assuming the budgeting of this proposal passes. I look forward to hearing the finalized distribution information and team/investor unlocks, but for the sake of this proposal I do not see it as a blocker before proceeding.

Props to the team for navigating this topic so well, as it is never easy for any project.

Agreed, the minimum of 4.79% of the supply for the no lockup option feels quite low.

A similar project Usual Money is dropping 8.5% of their supply with no lockups in the coming days. And as most are aware, HyperLiquid dropped 31% (fully liquid) of their supply to early users the other day, and their token has been up-only since TGE.

Enriching early users helps create a cult like community who will want to return the favor by continuing to use the protocol and promoting it to others. On the flip-side, if users feel short changed by a meager airdrop, they will be more likely to abandon the protocol.

I’d urge @ftl-labs to re-consider the proposed allocation to make it more generous.

In my opinion all the details are great & logical beside Conversion rate!!
With all do respect, take me as an example (since many others are in a similar situation). After completing challenging and hard tasks and staying committed to the project for more than 3 years, including participating in pools since beginning, I’ve ranked among the top 10% of users in Spin Rank. Yet, with the current conversion rate, I can’t even earn 40 tokens! The interesting part is that 90% of the community will gets even less than this amount!”

image875×543 20.4 KB

image269×150 8.24 KB

This proposal is well.
I suggest a more complet proposal that covers all governance elements