Proposal 1: Implement Vault Revenue Dividends
Should we implement revenue sharing using accumulated Vault fees?
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! With that, 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.
- Option A: Use a portion of Vault performance fees to pay out revenue dividends.
- Option B: Do not use performance fees for revenue sharing dividends. If passed, we will obtain community input and create a new proposal for use of performance fees.
If Option A passes, a brand new staking feature will be added on the Cronos Crystl Finance website where users who stake $CRYSTL-$CRO LP may earn the revenue that is accumulated from the performance fees of the Vaults on Cronos. Otherwise, if Option B passes we will proceed by collecting suggestions and input from our community and launch a separate proposal based on these suggestions later down the line.
Below, you will find a number of details and reasonings explaining why Proposal 1 is being put to vote.
Crystl Vaults, especially on Cronos, are currently earning a significant stream of revenue from accumulated performance fees. The current projected annual revenue from ~4M TVL on our Cronos Vaults is approximately 1,000,000 $USD. Going forward, we foresee that this revenue will only continue to grow as we proceed with our ambitious expansion on this network. By closely working with partners such as Relay, Crodex, CronaSwap, PhotonSwap, and Dexpad (among others) to onboard more projects into Cronos, the number of Vaults offered by Crystl Finance on Cronos will continue to rise while offering users a growing variety of options to exponentially grow their investments. With this, the annual revenue has the potential of growing beyond the current projected figure of 1M $USD.
With the success of our launch on Cronos, as well as the potential for even further growth, we need to consider how we can utilize this new Vault revenue to its full effectiveness. One such method is by directly giving back to the shareholders of the Crystl Finance protocol.
Revenue dividends would allow $CRYSTL liquidity providers to earn real revenue directly from the performance fees accumulated by our Vaults on the native chain (in this example, Cronos). Emphasis on the real revenue! What’s important to recognize is that these performance fees are not composed of tokens perpetually minted out of thin air (like in yield farming), but actual profits accumulated from the services provided by our Vaults. For the first time, our platform now has the opportunity to attract investors which are interested in earning decentralized revenue from the Vault services offered by Crystl Finance.
With Crystl Finance maturing as a premier Vault platform, it’s now a good time to evaluate our current business model and consider our options for the future. Our old Vaults have been designed to use performance fees to buy-back $CRYSTL and burn those tokens. However, this is not the only way for us to benefit our platform or our community, and in fact, it might not even be the best way! It’s entirely possible that those funds currently being used to buy-back and burn $CRYSTL could be put to better use incentivizing liquidity providers. One important factor to consider is scalability, and how we can best set ourselves in a favorable position for the future. Since we plan to expand to multiple chains with Crystl Vaults down the line, it’s important to consider the best way we can take care of our community and benefit our token on multiple chains.
At the end of the day, Proposal 1 is all about making sure that revenue generated from our successful launch on Cronos is being put to use in a way that maximizes benefits for our platform and the Crystl Finance community ($CRYSTL holders, that’s you). With Crystl Finance maturing as a Vault platform, the current buy-back and burn model (or BBB for short) is not necessarily the most effective method of benefiting the $CRYSTL price. As we can see from the data, Vault burns don’t really do much to aid the price of our token. The funds used to BBB could be put to better use with a greater effect on the price through a revenue sharing model. By implementing a perpetual stream of income in the form of performance fees paid out as dividends to $CRYSTL LP stakers, this would allow the price of $CRYSTL to increase organically based on the demand from investors who wish to receive this revenue.
Furthermore, there is a great benefit in having a staking option to earn dividends because it would be both tangible and calculable. To put it simply, a feature to stake $CRYSTL-$CRO to earn dividends is both measurable and comprehensible. In comparison, figuring out the effects of BBB is extremely difficult as these effects are intangible, incalculable, and sporadic! When a new user visits Crystl Finance, it is preferable for them to see exactly how much APR they can earn by staking $CRYSTL-$CRO and earning Vault revenue dividends compared to trying to understand how an arbitrary number of burned $CRYSTL is beneficial for them if they were to become a $CRYSTL holder.
The major benefit of Option A is that $CRYSTL holders will be able to directly participate in tangible revenue coming from the performance fees of Crystl Vaults. By creating and staking $CRYSTL-$CRO LP, investors will have the chance to earn real, sustainable, long term revenue. This is completely different from a revenue model based on minting tokens out of thin air. To put it simply, by staking $CRYSTL-$CRO LP investors will have a tangible piece of the pie from that projected 1M $USD annualized revenue (or perhaps even more as our protocol and the opportunities on Cronos keep growing).
Down the line we can replicate this model on other blockchains as well, and allow users to earn Vault revenue that is native to that chain. For example, stake $CRYSTL-$BNB, earn dividends from Vaults on BSC. And, since the requirement to earn Vault revenue dividends is to provide liquidity, we would actually solve two problems at once. By incentivizing liquidity providers on multiple chains, not only will the $CRYSTL token become more liquid and accessible, but deeper liquidity will result in lower price slippage and increased price stability in the long run.
On the other hand, the benefit of Option B is taking the time to explore other avenues for how we can best utilize the Vault revenue. Implementing revenue sharing through the form of Vault dividends paid out to $CRYSTL LP stakers is only one means of approaching the problem, and there could very well be other ways we can benefit Crystl Finance and $CRYSTL holders.
While there is merit to both options, it is important to recognize that the Cronos ecosystem is still young. If we take too long to decide with Option B, we may miss out on the opportunities of being a first mover. On the other hand, if the community proceeds with Option A we will be able to launch that staking option for $CRYSTL-$CRO sooner and potentially attract new investors that wish to earn attractive revenue dividends from our platform. Cronos in general has been experiencing significant growth, becoming a top 20 chain within a single week from launch. Recently, we have also seen the $CRO token breaking multiple all-time-highs as Crypto.com continues their aggressive marketing strategy. There are a lot of eyes on Cronos and $CRO, and so pairing more liquidity for $CRYSTL with $CRO sooner rather than later could contribute to boosting our growth.
Keep an eye on our Medium as well as our social media. We will be posting 3 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!