$CRYSTL Governance: Insights on Proposal 2

Join the #CrystalCourt to decide the future of $CRYSTL!

The $CRYSTL Governance snapshot is just around the corner, coming on November 28 at 2200 UTC! It’s incredibly important that every member of our community prepares for the upcoming voting period by staying informed about each decision that could impact our beloved Crystl Finance platform. Every vote counts, and we truly encourage everyone to participate!

In this article series, we will dive into the reasoning behind each proposal, as well as distinguish the differences, benefits, and drawbacks between Option A and Option B in each proposal. With all of that being said, let’s get into Proposal 2!

Proposal 2: Choose Vault Revenue Dividends

  • Option A:
    Stake $CRYSTL-(GAS TOKEN) LP → Earn (GAS TOKEN)
    Example:
    Stake $CRYSTL-$CRO LP → Earn $CRO
  • Option B:
    Stake $CRYSTL-(GAS TOKEN) LP → Earn $CRYSTL and
    Stake $CRYSTL-(GAS TOKEN) LP → Earn (GAS TOKEN)
    Example:
    Stake $CRYSTL-$CRO LP → Earn $CRYSTL
    Stake $CRYSTL-$CRO LP → Earn $CRO

If Proposal 1 Option A is passed then the community will be able to vote on Proposal 2 for one of the options above for any future chain with Crystl Vaults (including Cronos). A dedicated feature will be added where liquidity providers may stake $CRYSTL-(GAS TOKEN) LP to either (Option A) earn the native (GAS TOKEN) of that chain or (Option B) have two separate choices one to earn the $CRYSTL token and the other to earn the native (GAS TOKEN).

In other words, a portion of Vault performance fees will be accumulated and be used to purchase either the (GAS TOKEN) or $CRYSTL which is then used to pay liquidity providers. For example, on Cronos this (GAS TOKEN) would be $CRO. The community may vote to implement stake $CRYSTL-$CRO LP to earn $CRO with Option A, or both stake $CRYSTL-$CRO LP to earn $CRYSTL as well as stake $CRYSTL-$CRO earn $CRO with Option B.

Please note that the introduction of Vault revenue dividends does not mean that single staking $CRYSTL in Pools is going away! We still plan to have plenty of Pools for users to stake $CRYSTL and earn various tokens.

Proposal Reasoning

With the implementation of Vault dividends, the community will have to decide on the matter of which token will be used to pay out dividends. If Option A gets voted in, revenue dividends would be paid entirely in the native gas token. For example, on Cronos, a portion of Vault performance fees would be used to buy $CRO from the market and distribute it to the active $CRYSTL-$CRO stakers. In this case, resulting in an attractive staking option that pays out revenue in a promising bluechip token ($CRO). Option A would allow $CRYSTL to appreciate in value organically based on the demand for this dividend revenue in addition to all the other utility.

On the other hand, Option B would use some of the Vault revenue dividends to buy $CRYSTL from the market and distribute $CRYSTL to the active $CRYSTL-$CRO stakers. This would result in an automatic buyback of $CRYSTL and therefore positive buy pressure on the $CRYSTL token. In addition to this, there would be a separate feature for staking $CRYSTL-$CRO to earn $CRO as well.

What’s important to consider between both of these options is that not everyone is a $CRYSTL maximalist, by keeping revenue paid out only in $CRO with Option A this would avoid putting investors in a position where they have to sell their $CRYSTL in order to cash out profits. However, if the general sentiment of the community is that everyone wants to accumulate and hold $CRYSTL long term, then Option B may be preferable.

Promote Healthy Liquidity

Investors who provide liquidity for $CRYSTL take on the biggest risk, i.e. impermanent loss, thus, rewarding liquidity providers with dividends would act in favor of building deeper liquidity. By paying out dividends to incentivize liquidity providers, this would encourage organic liquidity growth for the $CRYSTL token. As we continue to grow on Cronos, as well as other networks down the line, having healthy liquidity is critical to make the token accessible and easy to purchase without the pains of price slippage. With deeper liquidity, slippage will be lower, and price volatility will also be reduced! This approach is scalable, and can be replicated on any future networks with Crystl Vaults. Making $CRYSTL liquid on future chains will benefit the price by reducing volatility.

Price Appreciation

By making $CRYSTL liquid and accessible across various networks, the price of $CRYSTL will have a chance to grow proportionally to the revenue generated by every single future blockchain on which we launch our Vaults! Think of it this way, as the TVL on our Vaults continues to grow, this would increase the amount of performance fees earned by our platform. With more revenue, the dividend staking option would become more and more attractive. The more attractive the staking APR, the more people would want to buy $CRYSTL so that they can pair it with the native gas token to earn these lucrative dividends. Down the line we can replicate this model on future chains with promising native gas tokens like $CRO.

Chain Incentives

Option A $CRYSTL-(GAS TOKEN) → Earn (GAS TOKEN) is particularly appealing from the perspective of chain incentives. Consider the following incentive bands offered by Fantom (Source):

  • Protocols are rewarded based on their time-weighted average TVL:
  • $5,000,000 to $50,000,000 TVL = 1,000,000 $FTM
  • $50,000,000 to $100,000,000 TVL = 1,800,000 $FTM
  • $100,000,000 to $200,000,000 TVL = 5,000,000 $FTM
  • $200,000,000 TVL and above = 12,000,000 $FTM

From a business-development perspective, there is a possibility for Crystl Finance to work out a deal with a chain like Fantom such that our platform would receive an incentive grant in the native gas token, assuming we meet certain TVL criteria. If we pursue Option A, the fact that our protocol would perpetually buy-back the native gas token, resulting in potentially millions of dollars worth of annualized buy pressure — this suddenly becomes a powerful bargaining chip. Let’s consider a hypothetical example. Suppose Crystl Vaults on Fantom resulted in performance fees being used to buy-back 2M $USD worth of $FTM annually. If we had made a deal with Fantom that they would match any revenue generated by our Vaults. That would mean in addition to the 2M revenue, Fantom would give us another 2M in incentives! This extra 2M worth of $FTM could be used to further increase our dividends, to boost our Vaults, or fund other lucrative means of rewarding the users of the Crystl Finance platform.

In this sense, although Option B would result in direct buy pressure on the $CRYSTL token and a strong price impact, Option A may actually be the better choice if there is a potential for our platform to obtain native chain incentives that are matched by the native chain for every gas token our Vaults buy back.

What’s Next?

Keep an eye on our Medium as well as our social media. We will be posting 2 more articles over the coming days that get into the details for the remaining proposals. It is highly recommended that every community member revisits this article as the snapshot approaches on November 28 at 2200 UTC. Being well informed is how we can best come to a decision as a community. If you have any questions about the upcoming proposals, feel free to join our community to ask any questions on Telegram or Discord!

Read the $CRYSTL Governance Announcement

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Discover unprecedented flexibility for maximized passive income with Vaults, Ultra Farms & Revenue Sharing that is only possible on Crystl Finance💎

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