AIP Idea: APE liquidity incentives for borrowing and lending APE on Ooki

Abstract

Two or three sentences that summarize the proposal.

Ooki DAO recently released a protocol update enabling APE/ETH margin trading, borrowing and lending on Ooki.com

Ooki is the first and only truly decentralized, DAO governed margin trading, borrowing, and lending trading platform to offer APE as both collateral for borrowing, lending, and also margin trading in a single DeFi app.

For current APE token holders, Ooki offers an excellent opportunity to borrow or lend out APE holdings. For users who aren’t familiar how this works, if you’re an APE token holder you can easily lend out your APE and earn 16% interest! We are really excited about this, we believe it’s a win-win opportunity for $APE holders to generate yield.

Instead of leaving APE sitting idly in your wallet, this is a great opportunity for $APE holders to use their APE tokens to earn interest by lending out their tokens to borrowers.

For APE holders seeking to borrow stablecoins, you can easily use APE sitting in your wallet as collateral in order to borrow a stablecoin. A simple example strategy would consist of using APE as collateral on Ooki, then borrowing a stablecoin against it to then generate yield from stable farming.

To improve the user experience of APE lenders and borrowers, we believe that the Apecoin community would benefit from additional liquidity incentives on Ooki. This proposal would allocate APE treasury towards incentivizing APE holders to lend out and borrow APE on Ooki.

About Ooki

Ooki is a DeFi protocol for margin trading, borrowing, lending and staking deployed on multiple blockchains. Ooki is a fully decentralized, DAO led project, governed by community vote for all major changes to the protocol.

Ooki users can open margin trades with up to 15x leverage using a fully decentralized trading platform. Ooki users can lend out funds and earn interest on their APE tokens, and also borrow funds against APE collateral. Ooki users can participate in platform governance through the OOKI DAO, and use their OOKI tokens to vote on proposals, submit new proposals, and participate in platform governance.

Motivation

A statement on why the APE Community should implement the proposal.

We are excited to progressively service the Ape community with secure and reliable DeFi leveraged margin trading, borrowing, and lending for APE holders. Offering incentives would give APE holders the ability to generate yield from APE idly sitting in their wallets. By enabling APE on Ooki, we are enabling the community to generate yield through a DeFi permissionless platform.

Rationale

An explanation of how the proposal aligns with the APE Community’s mission and guiding values.

Summary of Benefits for the APE token & community:

  • Yield on passive APE holdings.
  • APE as collateral.
  • APE enabled borrowing, lending, and use as collateral for stablecoin loans.

Benefits for APE lenders and borrowers:

  • Earn interest and generate yield on APE otherwise sitting idly in your wallet.
  • Use APE as collateral for stablecoin borrowing, which can then be used to farm and generate yield.

In order to provide an optimal DeFi experience, sufficient liquidity is needed for traders, lenders, and borrowers. On Ooki, anyone can lend out funds and earn interest. Initially, seed liquidity is necessary to provide liquidity to attract and incentivize new lenders, borrowers and traders to the application.

Once sufficient liquidity is established, users will be able to borrow funds with APE collateral, as well as lend out funds and earn interest on APE. Ooki has recently launched an innovative and unique dynamic interest mechanism to ensure borrowers and lenders receive optimal rates when opening new positions on Ooki. Ooki’s approach to delivering optimal rates to lenders and borrowers uses a variable interest rate with a dynamically changing interest rate curve. The new dynamic interest rate system is preferable because it will allow liquidity pools to grow larger.

Specifications

A detailed breakdown of the platforms and technologies that will be used.

Ooki is another supporter of the Apecoin Community. Integration of APE on Ooki has enabled substantial opportunities for APE token holders to margin trade, borrow and lend APE in order to generate yield.

Steps to Implement

The steps to implement the proposal, including associated costs, manpower, and other resources for each step where applicable.

Ooki protocol will deploy the incentives and the Apecoin DAO will deposit 30,000 APE coins as a seed investment into the Ooki DAO controlled multisig.

Timeline

Relevant timing details, including but not limited to start date, milestones, and completion dates.

The liquidity incentives will be deployed within one week of the end of the snapshot vote. After the seed investment has been made, it will be left up to the discretion of the Special Council as to when to terminate or withdraw the liquidity incentives.

Overall Cost

The total cost to implement the proposal.

30,000 APE coin to ensure there is enough capital to get started. The Apecoin DAO remains in control of these coins and can choose to withdraw these coins and reappropriate them for any reason, at any time.

We have our own staking mechanic in the works AFAIK, it seems odd to incentivize staking elsewhere to me. Naively, I’d prefer we just offer a higher percentage yield in our own defined pools. I’m open to being convinced that partnering with a 3rd party for staking would raise the yield that ape staking on our own would return. The business model just doesn’t make sense to me at the moment.

We have our own staking mechanic in the works AFAIK, it seems odd to incentivize staking elsewhere to me.

Ooki’s addition of APE for use as collateral for margin trading, borrowing, and lending enables more functionality for APE tokenholders that is not available through the staking mechanics which you mentioned are being developed by the Apecoin team. Although the staking mechanics developed by the Apecoin team may enable some yield generation opportunities for APE holders, there are additional forms of yield available through Ooki that would not be available through the staking mechanics you mentioned are being developed. For example, using APE as collateral borrowing against multiple assets, using APE as collateral for opening margin trades with up to 15x leverage short or long, and lending out APE with dynamic interest rates. Also, using APE in yield generating auto compounding vault strategies for stablecoin farming.

Additionally, not only does Ooki enable more yield generating options for APE token holders, Ooki’s yield generating opportunities for APE are also available immediately, while the Staking mechanics that you mentioned are being developed may not be available until some time in the future. For APE holders, it is beneficial to have more than one yield generating option available, and to have an option available immediately.

In the future when staking mechanics you mentioned are ready, the liquidity incentives for using APE as collateral for borrowing, lending and trading on Ooki would also be beneficial because it would increase the liquidity available on multiple platforms instead of just one platform. Multiple liquidity pools across platforms is preferable as it is beneficial for stability to diversify liquidity rather than combining all liquidity in a single pool or platform.

2 Likes

Thanks you make some good points. I sense that your biggest obstacle to getting votes is going to be general concern about an unknown (to me anyways) and the inherent risk that comes with that. How do we trust the code, etc. If you’d like to address that, I promise at least one open mind as an audience. :grinning:

DeFi applications and smart contracts are trustless and available to review by the public for inspection. Likewise, the Ooki protocol doesn’t require you to trust the code. The protocol is decentralized and decisions governing the protocol are made by Ooki DAO. You or anyone can verify and view the smart contracts underlying the protocol.

Everything you’ve said was also true about LUNA, and the people who owned that coin got rekt. To me, “read the code bro” isn’t a very compelling answer to how we should trust a protocol that’s less than a year old and has such a low market cap. Maybe there is no way to develop that level of trust so soon.

Barring a much more compelling argument that this protocol is rock solid trustworthy, I’m a hard NO. Too much risk for me. Maybe in a few years when there is a larger TVL and a longer history of not-getting-hacked I could be convinced. Just one ape’s opinion of course.

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Hi @Oooki_Community,

Are you content with the feedback received, or do you wish to extend community discussion for a further 7 days?

We look forward to hearing from you.

- river