Improving ANGLE Token Utility

Now that the ANGLE token is live, the question of the utility of the token becomes even more pressing. In this post, I will share some considerations and thoughts about how we could improve the governance model and the ANGLE token.

First evolutions of the token

The ANGLE token is the governance token of the protocol: for the moment it allows to participate in governance votes deciding the structure of the parameters of the protocol, or what to do with the surplus of the protocol.
In order to give more power to this token we have reduced the quorum necessary to make governance votes active. Now it is 5m. The consequence is that it’s easier to participate and make governance votes even with a very low circulating supply.

To increase usage of it, soon, Snapshot votes are going to be used to decide how to allocate Liquidity Mining Rewards each week across different pools. The Core Team has a multisig that can implement liquidity mining weights but the idea is that just like Convex does, what’s implemented will be the results of the votes

Some Problems

This token is majoritarily distributed through liquidity mining. This allowed the protocol to grow fast ($100m TVL in 3 days) but a lot of the capital right now is mercenary capital from people here for the rewards dumping the token. The main reason for this is that there is nothing incentivizing them to hold the token.

One reason for this is that there is no hard coded way of how revenue is distributed to governance token owners. In our tokenomics articles, we mentioned the fact that the governance token gives right to decide what to do with the surplus but this remains quite vague and nothing concrete has been implemented. We believe it’s one of the reasons why people see no utility in the token and sell it although the protocol has made (and mostly for reasons we’ll detail later) a significant surplus of >2m.

The last side problem is the gas cost for delegating + voting: actually if it stays like that we are not going to see a lot of people participate in governance votes because it’s just too expensive to give a voice.

Key Considerations

The Angle Protocol makes revenue from several elements:

  • transaction fees from users minting and burning that are not distributed to SLPs
  • yield from the protocol’s strategies that is not distributed to SLPs
  • and collateral appreciation when the protocol is not fully covered by HAs

This last element is the main reason for which the protocol has made a surplus. The thing is that if the protocol can make money when prices increase and it’s not fully covered, it can also loose money when prices decrease and not enough HAs are here.

The consequence is that the protocol should always try to keep some surplus (like an insurance fund) for these situations. If all the surplus had to be distributed to gov token owners, the protocol could run into some issues in bear market conditions. Like any stablecoin protocol, Angle needs to keep some reserves and the distribution of its revenue and surplus to gov token holders should not be made in an irresponsible way.

Some should always be left aside. The question is then how do you calibrate that.

Proposal

With this in mind, and with all the remarks of the community, we think that a better system for the ANGLE token could be designed. The Core Team has converged around a high-level idea, but there is nothing fixed here and it can always change.

The idea is to inspire the Angle system from a system like Curve with the following properties:

  1. A new token veANGLE (voting escrowed ANGLE) introduced. This is a token that should not transferrable, and it could only be obtained by locking ANGLE tokens. Something like 1 ANGLE locked for 4 years gives 1 veANGLE, 1 ANGLE locked for 1 year gives 0.25 veANGLE.
  2. This token would be used for governance votes and for allocating liquidity mining rewards. The advantage of having such a token is that it alines incentives for people who are here for the long term of the protocol: you want to make decisions for the token, then you should be here for a long period of time and have locked your tokens. The other obvious advantage of locking tokens is that it reduces the circulating supply of ANGLE
  3. Owners of the veANGLE should be rewarded more ANGLE tokens when they stake in the protocol’s LP contracts. You own agEUR, you want to stake it in the protocol, if you own enough veANGLE you can get more ANGLE rewards (up to 2.5x) what you’d get if you did not have any. Imagine a situation where 35 ANGLE are to be distributed to two people who staked agEUR: one with veANGLE and one without => then the one that owns veANGLE would receive 25 ANGLE and the other one would receive 10 ANGLE
  4. Each time interests are accrued by the protocol a small portion of it (not too much in order for the protocol to still keep some reserves and for SLPs to make a significant yield) should be left aside. These left aside interests could then be used to buy back ANGLE tokens. Bought back ANGLE tokens could then be distributed again to owners of veANGLE in a way that’s proportional to how much they own. The reason for distributing bought back ANGLE tokens to veANGLE owners and not to simply burn it is to simply advantage people who locked their tokens and are here for the long term compared with people that did not

About single-side staking and Convex like systems

These was just a proposition, the main question is generally how and in which form the protocol’s revenue can be given back to key stakeholders of the protocol. One way to do thing could be to do single-side staking. We feel that single-side staking (like done by xSushi) could in itself improve the protocol but the system like Curve has all the benefits of single-side staking mechanisms with almost no drawbacks: it has revenue distribution but with locking on top of that.

The only drawback of such system is that protocols like Convex could start and emerge around Angle and do some vampire attacks. I personally feel that it’s not a real issue and that it just pushes the governance layer one step further: instead of deciding on Angle, you decide on Convex

Concluding Remarks

If such system had to be implemented, community should be aware that it’s going to take a bit of time: even though most of the code could be forked from already audited contracts, there would be some core modules to modify. Audits would be needed for that and it may delay the process by some weeks or even months.

There are some more refined governance systems we’d like to explore, like Element Finance one. In such a system, not only holders of veANGLE could participate in governance vote, but we could have also owners of agEUR attributed some voting power. This is more complex and would take us more time, but for sure we could have something like that!

Let’s not forget also that growing the usage of agEUR is the most critical thing to do for the success of the protocol. If agEUR works well, ANGLE should work well. That does not mean that nothing should be done to improve ANGLE!

In any way, now is a time for discussion with community and Angle holders, we appreciate your thoughts and feedback and hope that together we can build the best governance infrastructure to support Angle’s stablecoins.

11 Likes

Great proposal. Can we start voting on this topic?

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Great proposal, it will already be some nice changes for Angle

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This makes great sense to me. I am here for a long time not a good time. I should probably find a better saying as I’m sure the good times will come to the long termers!

Just curious what would be an example of enough when you mention “if you own enough veANGLE you can get more ANGLE rewards”?

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Ya I like the idea of launching the veANGLE as I’m the long term HODL of Angle token, it really incentives me.

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I like the idea. However, please think about incentivizing the people equally who have already staked their agEur and are holding ANGLE Tokens. High gas fees makes it very expensive to stake the coins. Also think about some cheap way of converting current ANGLE coins to veANGLE - because for people like me - who own only 200 ANGLE and have to pay 50$ or more just for the conversion does not make sense

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Totally support new tokenomics. Especially, that veAngle stakers get boost in rewards for LPing. Ready to vote :triangular_ruler:

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Just wait till devs deploy Angle on any other chain. It could be Polygon, Fantom, Moonriver, etc. In other words, low cost L1.

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When it comes to another chain, it’s mostly going to be about bridging the tokens, not the protocol, the Core of the protocol will remain in L1, in particular it’s going to be only possible to mint agTokens in L1

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The goal with this proposal is first to get a high level overview of what’s going to be implemented!
Saw one question about: “if you own enough veANGLE you can get more ANGLE rewards”?

The idea is that the more veANGLE you get the more ANGLE rewards, and owning veANGLE can give you a boost of up to 2.5x on the amount of ANGLE you’d receive if you did not have veANGLE

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This is a critical proposal that should go into effect immediately. $ANGLE is just a farm token without this.

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I like the idea Ready to vote

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I have already staked agEur and am currently receiving rewards. Once veAngle tokens are available and I lock my existing ANGLE coins - will I automatically get 2.5x rewards ?

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The idea of a veANGLE is definitely a good one. As an ANGLE holder, utility is definitely something which is very important to us. Implementing single-side staking will drive up the utility of the token itself which is good.

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We have refined what we propose, and the changes we propose to implement are the following:

The idea is to improve the Angle protocol and the ANGLE governance token utility through several changes:

  1. Implementation of a module to buyback ANGLE governance tokens using a portion of the interests generated by the protocol’s strategies. Each time interests are received from strategies, a portion of it directly goes to the buyback pocket, the rest is split between SLPs and surplus. The surplus main use is to cope with collateral price decrease when the protocol is not fully hedged
  2. Launch of veANGLE token similar to what Curve does. This token is not transferrable and can only be obtained after locking ANGLE tokens for a period of time (min 1 week, max 4 years)
  3. veANGLE token holders are the ones receiving the bought back ANGLE tokens: they can choose to do what they want of it. veANGLE holders are also privileged when it comes to staking in the protocol’s contracts (like staking agEUR): they can earn boosted yield compared with people that do not own any ANGLE token: the boost is still to be determined but if we stick to Curve it would 2.5x what someone with no token would receive
  4. Improvement of the staking contracts to be able to support multiple reward tokens (besides ANGLE reward): this would imply a migration of the liquidity
  5. Setup of a gauge system where veANGLE holders can allocate their voting power to decide where the ANGLE emission should go (like Curve does)
  6. Let veANGLE token holders participate in all on-chain governance votes, but also give the governor role to a multisig implementing the results from off-chain Snapshot votes where ANGLE holders and veANGLE holders could participate (like FRAX does)
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This is a critical change and should probably be prioritized above all else.

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The temperature vote went fine, let’s wait for the final results but I guess given the trends we’ll priorize that by a lot

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Hello Angle. I created this account to comment, as a casual staker of ageur. I don’t think this plan bodes well for Angle price. Price comes from utility, and this proposal makes the angle token very hard to monetize: you have to lock for 4 years to maximize revenue and 4 years is a very long time in defi. Additionally, I would suspect angle lockers to dump the angle they receive (they have expenses to pay and have to take a profit some day). So in the end the freshly bought angle will be sold right back, resulting in 0 price impact of ANGLE and the continued fall of it’s value.

Pickle went down the same route with dill and it hasn’t worked very well. CRV price wouldn’t be where it is without Convex. I would suggest to be a bit more like convex and a bit less like curve:

Allow access to share of angle revenue without locking (like with cvxCRV that can be sold). long term holders shouldn’t get a bigger share of the revenue. Companies give dividends to shareholders without requiring locking. I’d rather dump my angle than lock for 4 years or get progressively more diluted vs lockers.

Additionally, it is much easier to evaluate the value of ANGLE in terms of revenue generated in stable coin than in ever-fluctuating governance token price.

It is fair however to give more voting power to long-term investors. Convex requires you to lock for only 4 months to vote in gauges. But the power of cvx is quite different: cvx lockers can be bribed by protocols to buy liquidity. I doubt deciding on where to incentivize ageur would be worth much bribing.

It’s just my 2 cents but I’d be much more excited about a system like:

  • 1 contract to stake angle and get protocol fees as ageur
  • 1 contract to stake and lock (4 months or more) which allows to get protocol fees and voting power.
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Hi guys, did you study the possibility to get a reactor on Tokemak ? The ANGLE token is bleeding price-wise and as agEUR staking program represent 50% of the ANGLE emission, the inflation would be highly reduced if we got a reactor.
As stated in this article (The Evolution of DAOs. by Tokemak Founder, Liquidity Wizard | by Tokemak | Tokemak | Nov, 2021 | Medium)

TLDR: ALCX (used as an example in the article) will tremendously reduce its Liquidity Mining cost thanks to Tokemak mechanism.

I know this discussion was supposed to be about increasing ANGLE utility but reducing inflation would also benefit to ANGLE holders.

There is a Votium like to bribe TOKE holders in order to get a reactor, I would suggest to cut the ANGLE rewards on agEUR staking and delegate this to Tokemak.

To get an agEUR reactor, I would use a few weeks of ANGLE rewards originally intended to reward agEUR stakers on Angle protocol and use them to bribe TOKE holders on Votemak.com.

agEUR would still remain the highest Euro stable single side apy farm in town (but on Tokemak) and should see an increased in demand.

→ Angle protocol would then be in possession of more ANGLE tokens and so could incentivized the people who brings the more surplus (fees) to the protocol.

→ Switching to a fee distribution token instead of a CRV-like mechanism as discussed above by Potcasso.

→ The newly regain ANGLE tokens could also partially be used to rewards your former supporters : people who own the ANGLE NFT (3 differents level of rewards)
It maters to have a faithfull and reliable community.

→ Being present on Tokemak would increase awareness on agEUR and thus put the spotlight on Angle protocol.

I consider this opportunity a chance for Angle protocol to be able leverage Tokemak this early in its LM program, the reduction of the LM cost is huge and although 0xMaki has just joined Tokemak the protocol is still under the radar and getting a place in it still seems within the reach of a young project like Angle.

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Hey! Thanks for this interesting feedback! We’re also starting to think that having the protocol fees distributed as ANGLE is not the best solution.
If these ANGLE tokens are bought back, the effect is equivalent to distributing agEUR → like buybacks make price increase and if all distributed bought back tokens are sold by owners of veANGLE, then the price comes back to where it was before the buyback and veANGLE token holders made a profit from that.

One solution could be to distribute agEUR, or to distribute sanTokens

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