We at DeFi Wonderland would like to take over the development of a new economic design for the version 2 of the protocol looking further into the appreciation of KP3R and the inflation management of the protocol:
While Keep3r currently allows users (aka devs) to not spend $$$ to pay the fees on their jobs, the lack of liquidity and increasing volatility of KP3R continues to be an issue for adoption.
Such volatility and lack of liquidity in the market naturally generated by speculators, could potentially prevent the amount of jobs to increase & produce a high inflation period within the protocol that will further de-incentivize adoption within the early stages of the protocol.
This proposal looks further into the tokenomics of KP3R to enable a new mint/burn mechanism pegged to a stablecoin (name TBD).
Create a new stablecoin (STABLE) pegged with the mint/burn mechanism of KP3R and modify JobCredits to mint/burn STABLE instead of KP3R.
The idea behind this is to improve the incentive mechanism for every participant within the network.
The basic changes that come with this proposal would be as follows:
- Maintain Keepers bond as KP3R
- Enable STABLE as the only LP collateral (ex: STABLE/ETH or STABLE/3CRV)
- Enable STABLE as a payment mechanism within the network (later to potentially be used on many use-cases such as MetaWallet)
- STABLE’s enabled mint/burn mechanism of KP3R based on price oracles
The scope of this proposal is to provide a long term sustainability plan for the protocol and enable new possible markets to arise within the Keep3r Ecosystem.
As stated on the Keep3r documentation: “the scope of Keep3r is not to define or restrict the action taken (within a job), but to create an incentive mechanism for all parties involved”.
This incentive mechanism, as of today, is working as following:
Job creator = gets rewarded with JobCredits (KP3R expendable on the protocol) by providing liquidity on a KP3R based pair.
Keeper = gets rewarded with KP3R whenever they execute a task of a job within the protocol (as long as that job contains JobCredits).
While the incentive mechanism is working as intended, on a protocol level there is no economic system to back the value that could be provided and/or generated within the system; there is no tokenomics.
This proposal looks forward to providing a clear value proposition of KP3R as a value accruing token within the protocol and STABLE as a work token within the ecosystem.
This proposal comes as a potential addition/feature to the Keep3r V2 proposal.
The economic design chosen for this case is the same one as implemented in Terra’s UST (link) with an expansion/contraction of the underlying supply (in this case, KP3R) via the minting/burning mechanism of STABLE.
The rationale for this decision was the success behind the stabilization mechanism of UST, providing way more liquid and efficient markets to arise, and providing more stability for a clearer ground for adoption.
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