AIP-393: Proposal to stake 2.5 Million APE into the Cyan ApeCoin Vault

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Title: Elevating Earnings: Cyan’s Innovative Approach to ApeCoin Profit Sharing

PROPOSAL NAME:

2.5 Million $APE to Stake on Cyan

PROPOSAL CATEGORY:

Ecosystem Fund Allocation

TEAM DESCRIPTION:

Cyan is a developer-first team, with Mikio, Naba, and Derrick (DareVader) leading efforts on the overall mission. Mikio has over a decade of TradFi experience, working at various banks and hedge funds in trading and fund management roles. He made the full-time switch to crypto in 2017, where he transitioned from trader to builder and had his first startup exit in 2020. Naba is a competitive programmer with deep expertise in backend systems. At Google, he helped build the Google Pay app and has contributed to many projects, including predictive typing on Android devices.

Derrick is the resident NFT whisperer, with deep connections in the space. He specializes in Business Development and Relations by focusing on community building and outreach. Years of experience in business management and finance with migrating to crypto in 2021 to pursue Web3 experiences and growth.

ABSTRACT:

This proposal aims to have 2.5 million $APE staked directly into the Cyan ApeCoin Vault from the ApeCoin DAO.

Cyan is a DeFi protocol enabling users to Buy Now Pay Later, Borrow, Lend, Stake, and truly retain their ownership through the power of our wallet, allowing users to take advantage of Wallet Connect.

The $APE provided by this grant will be staked to the Cyan ApeCoin Staking vault until the emissions expire, upon which all funds will be retained by the DAO. This $APE can safely be used to increase membership, spread awareness, and expand the ecosystem by putting $APE directly into the hands of more BAYC and MAYC users who have little to no $APE and no exposure to the DAO. We’ve battle-tested and have proven the vault increases participation in the ApeCoin DAO.

Our current users have created AIPs, voted on AIPs, and dived deeper into the ecosystem by developing stronger relationships and exploring deeper parts of the community. With Cyan, we can incentivize users to participate at no cost to them, while generating profits for the ApeCoin DAO. Cyan will pass through 100% of the yields from the 2.5 million $APE to the DAO. Cyan will also share 50% of the revenue generated by staking activities with the DAO. At the end of the ApeCoin staking emissions schedule, the 2.5 million $APE will be returned to the DAO.

How is Cyan able to do this through our protocol? Explainer here:

The Cyan ApeCoin Vault provides multiple ways to earn yield. Staked $APE is always earning yield as the following logic is applied:

  • $APE is paired to BAYC/MAYC/BAKC owners who want to stake but don’t have $APE. The generated yield is shared between both parties.

  • $APE which isn’t utilized for the above activity are directly staked into Horizen Labs staking contracts

  • Staking positions are continuously compounded on a bi-weekly basis. Gas is paid by Cyan

Through these activities, staked $APE is always earning yield to its maximum potential. For a deeper dive into the mechanics, please visit our documentation here: https://docs.usecyan.com/docs/staking-apecoin

The original AIP idea thread can be found here: https://forum.apecoin.com/t/proposal-to-stake-5-million-ape-into-the-cyan-apecoin-vault/20921

BENEFIT TO APECOIN ECOSYSTEM:

  1. ApeCoin DAO generates more $APE for their treasury and other initiatives.

  2. Delegated people/groups can increase their voting power through users accessing $APE.

  3. BAYC/MAYC users can access $APE for free and get voting power equal to their max stake allotment such as 10,094 for BAYC and 2,042 for MAYC, effectively onboarding more users.

  4. The staked $APE CANNOT be liquidated by users, ensuring the full amount of 2.5 million is protected at all times.

  5. The 2.5 million $APE grant will be returned at the end of the staking period. This effectively costs the ApeCoin DAO 0 $APE.

  6. The ApeCoin DAO generates 50% of the revenue from $APE-related transactions processed through Cyan.

KEY TERMS:

Cyan Wallet: a smart contract wallet that is designed to act as an escrow during loans and staking activities. The Cyan Wallet behaves like a normal wallet, allowing users to sign into dapps, events, games, and other actions outside of selling or transferring out NFTs. The purpose is to retain the utility of the NFT during the loan or staking periods.

Cyan ApeCoin Vault: a vault designed to stake, pair, and compound $APE. Owners of BAYC/MAYC/BAKC can freely access $APE from the vault to stake and share generated yields. Idle $APE is used to stake into the native Horizen Labs contract and is compounded bi-weekly.

Pair Staking: A user seeking to access $APE from the Cyan ApeCoin Vault can do so by creating a Cyan Wallet, selecting the NFT they wish to stake using accessed $APE, and starting staking. There is no debt, interest, or market risk associated with this. Paired Staking is free, outside of gas costs, for any BAYC/MAYC to engage with.

PLATFORMS & TECHNOLOGIES:

Cyan has been building the Cyan protocol for the past two years. Leveraging protocol v2 components, NFTs on loans can be escrowed within the Cyan Wallet. This feature unlocks the ability to stake BAYC/MAYC/BAKC for $APE into the Horizen Labs contracts while being financed for purchase or on an NFT-backed loan for liquidity. The user retains the utility of the NFT during staking, BNPL, or loan periods.

Outside of the Cyan protocol, no other notable technologies are required for this proposal.

STEPS TO IMPLEMENT & TIMELINE:

  1. The APE Foundation will stake 2.5 million $APE into the Cyan ApeCoin Vault: https://dapp.usecyan.com/#/vault/mainnet/0x40138d542f23503429ea7ab9630545d628912446

  2. The vault has an estimated 30% annual yield, so this would be an estimated 750,000 $APE in accrued interest for one year. Thus far the vault has returned 7.65% in the past three months, which is in line with the estimated yield.

  3. Through compounding the staking done through the vault, Cyan collects 5% of the yield as a platform fee from the paired $APE. This is separate from the 30% annual yield above. Currently, the utilization of the vault is ~80%, so 5% * 80% would be a 4% revenue fee collected. We will split this revenue 50/50, so 2% will go to the DAO. This is an estimated 50k $APE in revenue to the DAO annually.

  4. Users do not receive the revenue split. Users can stake into the Cyan ApeCoin Vault to receive the estimated 30% annual yield. Or, they may enjoy the utility of the vault by accessing $APE from the vault to stake with their BAYC/MAYC/BAKC for yields from this page: https://dapp.usecyan.com/#/ape-coin

OVERALL COST:

Amount requested from the ApeCoin Ecosystem Fund = 2,500,000 ApeCoin + $13,504

The cost comes from a 0.30% deposit fee, which is universal across all Cyan vaults. At current APEUSD prices of $1.80, this would be approximately $13,500. An estimated $4 gas fee is added.

Moreover, an investment of 2.5 million $APE (valued at USD 4.5 million as of March 19, 2024) into the Cyan ApeCoin Vault is necessary, though not an expense. The DAO would maintain control of these funds. Any increase in value and interest earned throughout the investment period would be kept by the DAO.

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Hey mattborchert!

Thanks for the question - the revenue share is intended for the staked portion of 5mln $APE, but we’re open to discussions on sharing other parts of the revenue generated from the vault if we can both benefit from more visibility.

As for the length of the revenue sharing, we intend to share for the duration of the staking. As long as the DAO has $APE staked into the vault beyond the proposed period, we’re happy to continue revenue sharing.

Hope this helps clarify!
Cyan Team

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No problem!

The difference would be the revenue-sharing terms. The 50/50 split is being made available exclusively to the ApeCoin DAO :slight_smile:

Happy to answer any other questions.
Cyan Team

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Hi, thanks for sharing the AIP idea. A few points / questions from me:

  1. Could you share an example of how the yeild / profit / revenue is split between Cyan / The DAO / The users. It isn’t clear from the proposal and there seem to be a number of conflicting statements.

  2. It’s my opinion that we shouldn’t be using the DAO treasury to stake, this will significantly dilute the APY for the community who have already invested to stake.

  3. This proposal creates no buy pressure for apecoin, giving significant voting power to individuals who have not financially invested doesn’t seem right. Also those without BAYC/MAYC may see this as a challenge - as their voting power will be diluted.

Would like to hear your thoughts on the above. Thanks.

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Thanks for the thoughtful questions! Below we’ve attempted to answer them the best we can. Please let us know where we can elaborate, or if you have any further questions!

  1. Sure, it might be easier if we laid out the exact steps:
    a. ApeCoin DAO stakes 5mln $APE into the Cyan ApeCoin Vault: Cyan Dapp
    b. The vault has an estimated 29.50% annual yield, so this would be an estimated 1.475mln $APE in accrued interest for one year. Thus far the vault has returned 7.65% in the past three months, which is in line with the estimated yield.
    c. By compounding the staking done through the vault, Cyan collects 5% of the yield as a platform fee from the loaned-out $APE. This is separate from the 29.50% annual yield above. Currently, the utilization of the vault is ~80%, so 5% * 80% would be a 4% revenue fee collected. We will split this revenue 50/50, so 2% will go to the DAO. This is an estimated 100k $APE in revenue to the DAO annually.
    d. Users do not receive the revenue split. Users can stake into the Cyan ApeCoin Vault to receive the estimated 29.50% in annual yield. Or, they may enjoy the utility of the vault by borrowing $APE from the vault to stake with their BAYC/MAYC/BAKC for yields from this page: Cyan Dapp

  2. Fair enough, there will be some dilution to rewards in the case of additional staking. As it stands now, there are roughly 100mln $APE staked in the Ape pool, 43mln staked in the BAYC pool, 16mln in the MAYC pool, and 3mln in the BAKC pool. So assuming an even distribution of 5mln making its way to the various pools in the same distribution ratio, it may impact yield on the Ape pool by 0.4~0.5%. For those who wish to keep up with the best rates, Cyan’s ApeStaking Vault is returning 29.5% vs. the native Ape pool yield of 16.7%, so there are ways to recapture lost opportunity costs.

  3. This is a fair argument, we believe there are valid points to both sides here! It can be argued the $APE distributed through yield in the current pools would make their way to the secondary market. By having a part of the DAO’s treasury staked, the distributed $APE on this position would not make its way to the secondary market. The 5mln $APE will still be in the possession of the DAO, and at the end of the ApeStaking program, all 5mln $APE and additional yield will be retained by the DAO. Unless the DAO decides to sell this allocation, there would be less $APE circulated and thus value accretive to the community.

To your point about BAYC/MAYC seeing their voting power diluted, we understand this concern. The flipside to this is, that by keeping 5mln $APE from being staked and freely available to vote with, there is less ability for those who wish to participate. To access the DAO staked $APE in the Cyan Apestaking Vault, one would have to stake with their BAYC/MAYC/BAKC, which we consider a significant investment at current market values.

Also to make a point on the dilution of voting power, this may be considered a preferable outcome by many. Currently, a few whales hold significant positions of $APE which skew the results of AIPs in their favor. Adding more $APE to vote with to the broader community decentralizes whale voting power. As holders of $APE ourselves, we believe providing voting power to more individuals should be the mission of the DAO, which is to serve the community.

We hope this clarifies some of your concerns. Please let us know if you have any further questions or comments!

Many thanks,
Cyan Team

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Thanks for your responses. So the staking rewards from a BAYC/MAYC go to the user that borrows the apecoin from the 5m pot? if so I’m not sure I can get behind that - there has been zero buy pressure for that 5m apecoin. I know there are solutions out there where you can match apecoin to BAYC/MAYC’s but the apecoin comes from other users so that’s fine, someone is investing and taking that risk.

Regarding voting power, understand your point about getting power into the broader community but people have that opportunity and I’d rather it was equal chances for everyone.

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This topic was automatically closed after 7 days. New replies are no longer allowed.

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Hi ApeCoin DAO Community,

Edits have been made to this Topic, by the author or by the author’s request. You can click the Pencil icon at the top of the post to see these edits.

The AIP Draft submitted is currently incomplete and feedback has been provided to the author.

Follow this Topic as further updates will be posted here in the comments.

Thank you,

-@Facilitators

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Hi ApeCoin DAO Community,

@Cyan has completed editing their AIP Idea to be their AIP Draft.

This proposal has been assigned the AIP ID Number 393.

Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-@Facilitators

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Hi ApeCoin DAO Community,

Our team has reviewed and discussed @Cyan’s AIP Draft and have sent a list of initial questions. We await answers.

Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-@Facilitators

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Hi ApeCoin DAO Community,

@Cyan has responded to our questions and they are in our review once again.

Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-@Facilitators

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Hi ApeCoin DAO Community,

We have no further questions for @Cyan. This AIP is now under Administrative Review.

Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-@Facilitators

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Hi ApeCoin DAO Community,

Edits have been made to this Topic, by the author’s request.

You can click the Pencil icon at the top of the post to see these edits.

Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-@Facilitators

1 Like
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This proposal is live for Snapshot vote at Snapshot. The voting period closes 13 days from now at 9PM EST.

The AIP implementation is administered by the Ape Foundation. Implementation may be immaterially or materially altered to optimize for security, usability, to protect APE holders, and otherwise to effect the intent of the AIP. Any material deviations from an AIP, as initially approved, will be disclosed to the APE holder community.

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Hi ApeCoin DAO Community,

The voting has closed for this proposal and it has not been approved.

This Topic will be moved to and remain in the Rejected AIPs subcategory.

-@Facilitators

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