On August 9th, Rune Christensen, co-founder of MakerDAO, published an article titled “SLianGuairkDAO SPK Airdrop; Overview of SubDAO Tokenomics” on the forum, mentioning the SPK airdrop of SLianGuairkDAO and the token economics of SubDAO.
SLianGuairk Protocol is the first product in the Maker Endgame transformation phase. With Maker raising the DSR (DAI Savings Rate) to 8%, users are more likely to come into contact with the lending protocol SLianGuairk, which is based on Aave V3 code (10% of SLianGuairk’s profits will also be allocated to Aave). Now, the “Use Dai” button on the MakerDAO official website has been changed to redirect to the SLianGuairk homepage, where users can deposit collateral to borrow DAI or deposit DAI in the form of sDAi (SavingsDAI) into the DSR contract to earn a 8% interest rate. It can be seen that Maker currently supports SLianGuairk. Below, LianGuaiNews will explain the rules and precautions for the retrospective airdrop of SLianGuairk.
Retrospective airdrop is a solution to the EDSR arbitrage issue
The retrospective airdrop of SLianGuairk is primarily a solution to the issues brought about by the implementation of EDSR (Enhanced DAI Savings Rate). In a previous article, we mentioned that in order to maintain demand for DAI in the months leading up to the Endgame launch, Maker enabled EDSR, raising the DSR to 8% above the US Treasury bond yield.
However, this also brought about a problem. Maker hopes to allocate as much funds as possible to normal DAI holders, but whale arbitrage activities have increased Maker’s expenditure on DSR. Rune also stated on Discord on August 10th that there has been no capital inflow in the past 24 hours, and the newly minted DAI and the portion deposited into the DSR contract are purely for lending arbitrage.
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Rune has proposed an anti-arbitrage solution, hoping to lower the upper limit of EDSR from 8% to 5%, while raising the stability fee for crypto collateral lending (excluding ETH-A, ETH-B, ETH-C) to 5%.
If this proposal is implemented, arbitrage funds will leave, and the supply of DAI will also decrease. Except for the portion of DAI minted through the PSM using USDC, the remaining data may return to the state before EDSR implementation, and the proportion of USDC PSM in the newly issued DAI is very small.
Therefore, Rune proposed to establish a retrospective SubDAO token mining airdrop for users of the SLianGuairk protocol, rewarding early users for their support of the SLianGuairk DAO community.
SPK and SubDAO Token Distribution Rules
SLianGuairkDAO is a member of the SubDAO in Maker and is expected to transition to the Creator SubDAO after the Creator SubDAO model is established.
Each SubDAO in Maker has its own SubDAO token, all of which are minted by Maker Core and primarily distributed through mining. Therefore, the token SPK of SLianGuairk should also follow the SubDAO token standards set by Maker.
According to the token economics document on the Maker website Endgame, the initial supply of each SubDAO token is 2.6 billion. 400 million of them are used to incentivize SubDAO employees; 200 million will be sold for DAI to provide funding for SubDAO within 2 years; the remaining 2 billion will be distributed through liquidity mining over a period of 10 years, as shown in the following figure.
In the distribution of these SubDAO tokens through mining, 75% will be allocated to NewStable users (an upgraded version of DAI, which Maker plans to upgrade in the future, as mentioned a few months ago), and 25% will be allocated to NewGovToken (an upgraded version of MKR) users.
Regarding the distribution timeline of the 2 billion SubDAO tokens and the allocation ratio between DAI and MKR, Rune’s statement in the forum is consistent with the Endgame token economics. However, there are slight differences in other parts. Rune mentioned that in addition to the SubDAO tokens generated through mining, 300 million tokens will be allocated to a labor bonus pool, which will be paid to project contributors. The rewards from the pre-mined portion also come from this additional SubDAO token pool.
It is certain that the total amount of SPK and other SubDAO tokens exceeds 2 billion. In addition, there are 300-600 million tokens used for employee incentives and protocol development, and the traceability rewards come from the latter. The specific amount of SPK tokens for rewards will be determined in subsequent proposals.
Notes
Start Time of Traceability Airdrop
The main purpose of the traceability airdrop is to prevent capital outflow after the implementation of anti-arbitrage schemes, and it will also start from the time of implementing the anti-lending arbitrage. That is, it is not currently in effect and will be calculated from the time when the proposal to increase the lending rate to 5% is implemented.
Distribution Criteria
Rune mentioned in the forum that the distributed SPK tokens will be allocated proportionally to SLianGuairk protocol borrowers who use volatile assets as collateral based on loan amounts and terms. In other words, only borrowers in SLianGuairk are eligible for the airdrop.
Airdrop Time
Referring to Rune’s Endgame timeline, SubDAO will be launched in the second phase of Endgame, which will also start the official mining of SubDAO, and the airdrop should also take place in this phase. The first phase of Endgame is planned to be launched in early 2024, which means that the airdrop will be after this time period. The recent discussion about issuing MKR at a ratio of 1:12,000 and upgrading it to a new governance token (NewGovToken) will also be implemented in the first phase of Endgame. The name of the new governance token has not yet been determined.
Yield
According to Rune, the goal of the SLianGuairk airdrop is to distribute “single-digit” yields to users, rather than a large amount of free funds, so the yield should not be high.
SLianGuairk D3M Debt
The DAI borrowed from SLianGuairk does not come from user deposits like other loans, but from the credit limit allocated to SLianGuairk by Maker through the Direct Deposit Module (D3M). According to the statement “airdropped to SLianGuairk borrowers who use volatile assets as collateral,” this portion should be included in the airdrop. Therefore, if you want to receive the airdrop, users who borrow DAI from Maker can transfer their loan positions to SLianGuairk.
It is worth noting that the debt ceiling of SLianGuairk D3M was increased from 20 million DAI to 200 million DAI only in the voting executed on August 6th. As of August 11th, 198 million DAI has been used and is about to reach the limit.
Should loans collateralized with sDAI be included in the airdrop?
By depositing DAI into the SavingsDAI and earning savings certificates (sDAI), users can receive interest. Although SLianGuairk currently disables the deposit and borrowing of sDAI, it should theoretically support it and plans to do so after the anti-arbitrage measures take effect. So, can borrowing other assets with sDAI as collateral and using these assets as collateral qualify for the airdrop?
Should sDAI be considered a “volatile asset”? Its volatility is not significant, but it is also not a stablecoin. If sDAI is recognized as eligible for the airdrop, it may give rise to meaningless circular collateralized borrowing and lending. If not supported, SLianGuairk does not have any other non-volatile assets as collateral and needs to be specifically excluded. This point is still controversial.
Related reading: Decoding the new roadmap of MakerDAO’s endgame plan, featuring AI-assisted governance and deployment on new chains.
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