Proposal: Pay deUSD staking yield in ELX

Protocol Proposals
1

Summary:

This proposal suggests redirecting the native yield earned from collateral backing deUSD to acquire ELX tokens off the open market. Instead of distributing yield directly in native assets (deUSD yield paid in deUSD), yield rewards should be paid in ELX to stakers holding “sdeUSD”. This will strengthen the ELX token economy, align stakers’ interests with project growth, and foster long-term community engagement.

Motivation:

Currently, yield earned from collateral backing the deUSD stablecoin is distributed in native collateral tokens (i.e. more deUSD). This approach does not directly reinforce the value or utility of ELX, the core governance token of the Elixir ecosystem. By transitioning yield payouts into ELX, we’d achieve multiple goals:

  • Create a strong ongoing buying pressure for ELX ($20M+ a year)

  • Continue providing a clear incentive for holding and staking sdeUSD.

  • Align stakers’ incentives with the growth and success of the Elixir ecosystem.

Proposal Details:

Yield Conversion: Native collateral yields (e.g., ETH basis trade, sUSDS, BlackRock BUIDL, other RWAs) will be automatically acquired by the Elixir Network on the open market into ELX tokens at regular intervals (e.g., daily or weekly).

Yield Distribution: The purchased ELX tokens will then be distributed proportionally among sdeUSD stakers.

Transparency: All ELX buybacks and yield distributions will be done on-chain, solving issues faced by Rollbit and other and executed via the Elixir Network, with fraud proofs posted to Ethereum Mainnet (and linked in the forums).

Benefits:

  • Increased demand and bid pressure on the ELX token.

  • Enhanced community alignment and participation.

  • Simplified yield structure that promotes long-term holding of ELX.

Potential Risks:

  • Short-term market volatility during ELX purchases. To mitigate this, ELX purchases would be spread over multiple randomized timeframes to avoid large market impact.

  • Dependence on ELX market liquidity. Ensuring sufficient liquidity pools and incentivizing liquidity providers will be crucial.

Implementation Timeline:

Phase 1 (0-1 Month): Community discussion, feedback gathering, and temp check vote.

Phase 2 (1-2 Months): Scoping technical implementation, development begins

Phase 3 (Month 3): Product and end to end tests. Full deployment and initial yield distribution in ELX.

Conclusion:

Implementing this proposal will leverage collateral yields more effectively, directly benefiting ELX token holders and aligning incentives for long-term growth of the Elixir ecosystem.

10 Likes
2

ok that right what the problom

2 Likes
3

Interesting idea, would require a 3rd party risk assessment if the community were to want to push this forward.

2 Likes
5

good idea, it will support the ELX active

1 Like
6

As an ELX holder, it sounds good to me ,but is it really a possible approach?
It seems like the proposal suggests using the entire yield, doesn’t it?

1 Like
7

It seems like not everyone fully agrees with the buyback approach in discord Altar channel.
I’d really appreciate it if you could share your thoughts or provide some additional context on your perspective.

1 Like
8

so you’re taking our yield to purchase the gov token that the dao is selling and then giving us the scraps? if this were to be actually done right you would need the buys to be very transpart or ideally random such that someone couldn’t insider trade this. there’s so many issues with ''putting it back in the chart." you would also have to imagine that a lot of this elx that deusd holders are given is also just sold, this whole process adds friction and fee’s that don’t need to be there. I would guess that tvl goes down, yields (barring any extra incentives) also go down after fees and swaps are taken into consideration.

in summary
this whole thing seems like a good way for existing holders to exist (the dao, i see you cole (unban me on twitter)), make the price go up in the short term, add friction to the product and dilute what people actually want from a yield baring stable.

when i buy treasuries i don’t want to get paid in s&p index shares, i just want dollars bro

1 Like