PowerPool Newsletter #004
In today's edition:
Understanding the value of CVP token and meta-governance value creation pattern
PowerOracle explained
PowerIndex Grant program
First PowerPool Politicians nominees
PowerPool Ambassador program
Understanding the value of the CVP token and meta-governance value creation pattern
An important article from the PowerPool team outlines how the value accrual is happening and further transferred to the CVP. So let's have a look at value creation patterns.
The value creation pattern is a standardized path on how value is captured and transferred to the token holders.
Internal Product governance
Governance tokens are responsible for influencing the direction of different DeFi protocols. In many cases, their value is directly correlated to the value of the protocol itself (usually measured in terms of Total Value Locked or TVL). This is due in large part to the value in governing something that’s valuable itself, as well as the ability for some governance tokens to receive fees from the Protocol.
With the PowerIndex, CVP holders have total control over a basket of governance tokens. They can vote to change the composition of tokens that comprise the index and their make-up within the index (e.g. 10% for one token, 20% for another). Let's have a look at a simple example:
Let’s assume the PowerIndex has $100 million locked in it (TVL)
Within this hypothetical PowerIndex there are eight tokens with an equal distribution of 12.5% of the Index.
Now imagine if the community decided to substitute one of the tokens for another one. That means a change in the circulating supply for both of them. One protocol now decreased selling pressure on their token by $12.5 million, another - increased. Here you see how CVP holders can have a direct influence over the market.
Meta-governance value creation pattern
All tokens pooled into the PowerIndex have voting rights, and CVP holders decide how they will vote.
Our current vision is to define the meta-governance value as a sum of all pooled assets value (excluding CVP). Pooling numbers from our previous example, we can calculate the potential meta-governance value of CVP:
Our vision is that meta-governance value creation patterns (accumulating voting power of several protocols into a single asset) are one of the possible ways of governance systems development. It can contribute to solving Voters' Apathy problem, empower minority token holders, and lead to bigger engagement and participation rate in governance.
Future cashflows value creation pattern
It is the most straightforward concept, somewhat similar to DCF (discounted cashflows method)model, widely used in finance. The question is, what is the source of this cashflow?
PowerIndex has a set of fees: entry fee, exit fee, and swap fee. Currently, these fees are set at 0.1%. It can be changed by community voting at any time. All charged "community" fees are collected into the special treasury contract governed by CVP holders. The idea is to distribute the reward among active CVP holders (who use the token to vote on proposals) to give them extra incentive to be involved.
The "work token" value creation pattern
The "work token" value creation pattern is one of the most known patterns on the market. It was developed as a solution to the Sybil attack problem constantly rising in pseudo-anonymous networks. The idea is simple — to perform some kind of work for the network, an agent is required to place a safety deposit (a skin in the game) first. In the case of performing honest work (correct operation) agent receives a reward, and in the case of misbehavior is punished (slashed) losing this stake completely or partly.
In the Power Oracle case, we have Price Reporter (has the biggest CVP stake) and Fishermen, who can slash the price reporter to earn an extra reward. Current APYs for the agents:
Price Reporter: 50% APY
Fisherman: 20% APY
The fisherman has a lower APY due to the absence of risk and a smaller stake.
The composability of different types of value captured by CVP token
The mentioned above patterns are composable, allowing PIPT and CVP holders to tap into an unprecedented number of value sources.
PIPT holders receive meta-governance value, future cashflows value, and internal product governance value (for all products from PowerUniverse). It works as PIPT is a derivative from CVP.
Liquidity providers can similarly use their LP tokens, collecting meta-governance value, future cashflow value, and internal product management value (for all products from PowerUniverse). It works as an LP token is a derivative from CVP.
Read the full article here.
PowerOracle Explained
The team presented another very technical and detailed article, explaining all ins and outs of the PowerOracle.
Read the full article - here, or key take-aways below:
Power Oracle is a truly decentralized cross-chain oracle. It provides price feeds not only to Ethereum mainnet but also to other networks like xDai & Matic. At the same time, there is no single point of failure in the system: the price is pulled from a decentralized exchange (Uniswap), and the oracle is permissionless so everyone can be a Price Reporter.
Two main agents:
Price Reporter — an agent, pulling the contract to calculate and supply price feed to all recipient chains (Price is reported automatically: the reporter has to run the script and pay gas fees). Hence the only type of punishable behavior here is to not pull the contract on time.
Fisherman — an agent, controlling price reporters. Fishermen check if the price reporter sent his transaction on time, and in case of missing the reporting point, he signs the transaction. For this transaction, Fishermen receives a reward and part of Price Reporter's stake.
Rewards:
Price reporter receives two types of rewards:
Gas compensation. It is paid in CVP tokens by recalculation according to gas spent and the current CVP price.
Profit (or "income") reward. Price Reporter receives profit as APY on his stake. Currently, APY is equal to 50%; however, the community can change it via proposal).
Fishermen rewards:
The reward for activity (being online). This reward is paid according to uptime and is based on signing special transactions proofing that Fishermen is constantly online and ready to slash Price Reporter. Currently, this reward is 20% APY in CVP.
Slashing reward. If Price Reporter fails and Fishermen pulls the contract instead of Price Reporter, he slashes a 5% Price Reporter stake (and an additional 5% goes to the community pool). In this case, Price Reporter loses 10% of his stake. Additionally, he receives a reward for successful price reporting transactions based on the initial Price Reporter's stake.
IMPORTANT NOTICE: currently slashing is 0% as Oracle is still in the testing phase (security audit pending). After receiving audit results it will be set at 10%.
FAQ - how to set-up a price-reporter script. It is the same for Testnet and Mainnet.
PowerIndex Grant Program
As you understood from the previous points about meta-governance & Internal Product governance, CVP will aggregate lots of voting power. To give back to the communities of composite protocols, the team decided to launch a grant program.
The grant consists of two parts:
900k CVP, under the control of the protocol's community.
100k CVP (2 grants of 50k) for Protocol Politicians.
These CVP tokens are locked for three years (accordig to passed proposal number 6, but it can be changed in the future by CVP community) , but Politicians & the Protocol community will have access to the voting power, giving them a loud voice in any PowerPool proposal.
You can find Protocol Politicians' requirements, detailed grant distribution rules, and grant roadmap in the full article.
You can find a list of all published posts on candidate protocols forums here.
Community Spotlight
We had tons of action in recent days. We are proud to present you with our first PowerPool Politicians nominees. These people were the stars of the heated discussion on CVP's distribution scheme (Vesting, Lockup, and more). And as we all know, Proposal 6 was successfully approved.
Our first nominee is Sergey Gurkin - Link to the nomination thread.
Our second nominee is a user with a telling nickname - DeFi, you can find the nomination thread here. We has discord nickname - Scott G
PowerPool Ambassador Program Discussion
Another important discussion is getting traction on our gov forum. The PowerPool team has already publicly supported the cause. You can find the thread here.
But the program needs more structure and clarity, so we invite everybody to apply to be an ambassador and voice their opinion here.
Tweet of the week
More on PowerPool
Power Forum: https://gov.powerpool.finance/
Discord: https://discord.gg/hYJXUBQ
Twitter: https://twitter.com/powerpoolcvp
https://powerpool.finance