Beefy Tokenomics 3.0

The Beefy token price has inversely correlated with the value of Beefy, the breadth of impact Beefy has made, and the equity Beefy currently commands on the Ethereum, Avalanche, Base, Berachain, BNB, HyperLiquid, Linea, Optimism, Polygon, SEI, and Sonic ecosystems. Below is the proposal to update the tokenomics of the BIFI token to more accurately accrue value to the Beefy token.

Background and Reasoning

This current and recent price trend on the Beefy token has not properly tracked the value, productivity, and capabilities of Beefy. This is shockingly apparent when doing the most simple apples-to-apples compare Beefy to Beefy's most similar competitor Yearn - both in functionality and size ($320 million TVL of Yearn vs $290 million of Beefy).

Yearn Finance, has only 10% more TVL than Beefy, but instead of their total token YFI's token's valuation being valued by the market as $12m, Yearn is valued at $206m. This is 17x larger for essentially the same TVL , with much less capability and functionality.

What Needs to Be Done

Artificially creating "interest" in a coin by marketing gimmicks can be very short lived or unfruitful altogether. Genuine product building with valuable and modern capabilities for the modern times is how the value of a protocol will increase. Beefy has been consistently doing this via the DAO's contributors (thank you for your hard work, thoughts, innovation, implementations, updates, and more Beefy contributors!) , yet potential buyers of the BIFI coin are likely spooked by the price chart, and have likely heard no "buzz" about the BIFI token doing well (price-wise) over the last 2 years, so they have taken it off their radar and are instead putting their capital to use in coins which are more likely to generate "mass pumps" by "a wave of retail or degens".

Beefy's coin being noticed by the larger crypto community and buyers as being genuinely desirable to acquire and stack will likely come from the following events:

1. Price going up

2. Chart showing increase consistently over time

when these 2 items occur, there will likely be an organic movement and rediscovery of Beefy and it's current cash-flows and treasury. When organic interest starts, people start sharing their price predictions and purchases to the crypto and/or CT community and other "alpha" to stack the BIFI token. Luckily, since all the BIFI tokens that will ever be created are already in existence, which makes the BIFI token extremely scarce and well positioned to violently move up with the right support. The token scarcity and HODLers of Beefy, along with it's constant cash flow that is based upon vaults of desirable and widely held tokens create the perfect environment for the price to go up.

... so why hasn't the price gone up much then? 

What has likely caused the price decrease in the Beefy token is these two variables:

1. Emotional fear of chart continuing to trend downward

2. Buyers allocating funds towards projects which have more short term hype around them

so this means given the circumstances the DAO may desire adapt to the situation and use it to our advantage.

The question is

"how do we increase the price of BIFI (addressing #1)

while also

disincentivizing HODLers from swapping it for a coin that has more "hype" "narrative" "astronomical projections from speculators" (addressing #2)

The Optimal Solution to the above is Twofold

Part A: Turn on the incinerator and pour gasoline on it

Rationale: By adding an accelerant on the BIFI chart which pushes the token up twice (first through buying the token, second when it is burned), the chart will likely start to go up.

What: What is that accelerant? A burn mechanism. When a sizable portion of the daily BIFI token buying is permanently removing the tokens in LP pools from circulation, the LP pools shrink, and the amount of money swapping into the BIFI token needed starts to drastically decrease, meaning the BIFI token price moves upwards even with small of amounts of buying activity

How: Implement a 1.5% fee on all vaults which will buy back and burn the BIFI token.

Stats: Create a Burn Dashboard (see PancakeSwap's Burn Dashboard for a general idea https://pancakeswap.finance/burn-dashboard). At the current rate of vault earnings, a projected 15.78% of Beefy's annual $2.8m in revenue would be burned, which is $420k per year, or a 3.5% deflationary pressure at current levels to push the token upwards which is in synergistic addition to the current ~11% buying pressure of the BIFI stakers.

With just part A implemented, we are at a current net result is around a 14.5% annual yield on current BIFI as of today at today's price.

Part B: Reward HODLers

Rationale: When previous purchasers of BIFI who don't understand the long term impact, inner workings, cash flow, value, or product-market-fit of Beefy get to their respective break-even on their investment, or get into the profit zone, they may panic sell. This goes back to the two reasons from before of:

1. Emotional fear of chart continuing reverting to trend downward, and they believe "this is finally their time to exit at a small loss, breakeven, or profit before the chart dumps again"

2. Desire to allocate funds towards projects which have more short term hype around them which have the charts going up faster and have a general upward trend in the last year or two instead of a downward trend

What: We introduce a locking mechanism to the BIFI token which rewards long term HODLers of Beefy and buyers who want relatively stable cashflow.

How: Implement a 1.5% fee on all vaults which will go toward those who lock BIFI for 90 days or 180 days

Stats: At the current rate of vault earnings, a projected 15.78% of Beefy's annual $2.8m in revenue would be distributed to HODLers, which is $420k per year, or a 3.5% buying pressure to push the token upwards which is in synergistic addition to the fact that those BIFI tokens can not be sold on the open market for 90 days. With the current annual~11% buying pressure of the BIFI stakers, the annual buying pressure from buying back and burning - AND the permanent removal of the token from the burn, and this additional buying pressure to distribute that BIFI to lockers will create an estimated around a 18% annual yield on current BIFI at current market conditions.

That means, if someone buys BIFI and locks it even if the price dips by 18%, they will still be break-even on their investment dollar-for-dollar at the end of the year. If the price of BIFI goes up by 18% for the year, they will be up 36% on their investment for the year.

If organic demand and attention starts being directed towards BIFI due to this chart pump, and/or a bull market compounds that interest, the returns will be much higher.

Is this adjustment of 3% of the fee now fairly compensating BIFI holders? Maybe it's too high?

Yearn's v2 vaults charge a flat 20% of yield earnings

Yearn's v3 vaults charge up to 0-50% of vault earnings (each v3 vault fees determined by DAO)

YieldYak (a previously Avalanche native yield aggregator) charges 5-10% of performance, with MUCH less variety of vaults, upgrades, new chains, development.

AlphaFi (the yield aggregator on SUI) charges 20% of yield as their fee

Compare this to Beefy's current 9.5%. Beefy offers the most vaults, is deployed across the most chains, has the most integrations and capabilities, but has nearly the lowest fees. Beefy may want to consider moving up to 15% to 20% of performance as fees like our competitors do in the future, but for now a call for only a fair 12.5% is called.

TLDR:

• Beefy has innovated and developed the most, but the price action has not followed

• The price action is likely spooking away new buyers, and causing old buyers to dump at break-even or profit out of ignorance of the platforms revenue and tokenomics

• We can't artificially generate interest in the token or force the price chart to go up, so we need a solution. Beefy has been historically under compensated based on fair-market-competitors.

•Two simple solutions will propel the token higher.

1 - add an accelerant to the token's scarcity and availability scarcity; a burn mechanism.

2 - take a portion of newly adjusted fee, and pay it out to users who are willing to lock their token's, which temporarily removes tokens from being sold on the market. This exacerbates the scarcity from #1, as those tokens are temporarily removed from circulation, removing more sell pressure in exchange for reaping additional rewards for the person who exchanged their ability to sell BIFI for a specified amount of time for said additional rewards.

How to Vote

The choices and their meaning

YES to this, Let's Burn & Lock

Meaning: This means Let's Burn BIFI at the 1.5% fee rate (it burns so good). The ability to lock BIFI also will be implemented.

Ok, but ONLY the Burn at 1.5%

Meaning: This means Let's Burn BIFI at the 1.5% fee rate. Forget the ability to lock BIFI with a reward for those who do

Ok, BUT Let's Burn at 3% ONLY

Meaning: Let's dial up the burn of BIFI tokens at a 3% fee rate ONLY, and let's not of implement the ability to lock BIFI for a reward and rewarding those who do.

NO! No update to tokenomics

Meaning: This is all bollocks, no updates to tokenomics. These updates to the tokenomics and this burning and locking will do more harm than good to our scared cow and it's token, BIFI.

Extra Information

The Technicals on the Locked BIFI bonus (mooAirdrop)

How would the locking mechanism with the BIFI work?

Overview

How would the locking mechanism with the BIFI work?

• What: Introduce a locking mechanism for BIFI or mooBIFI tokens that goes one step further than staking. Similar to how Beefy Boost takes already deposited/staked tokens in Beefy, and moves them one level “deeper” within the protocol, locking the BIFI tokens will do the same
• Fee Amount: A nominal 1.5% performance fee will be added across all vaults that will exclusively go to the lockers of the BIFI token

The proceeds from this 1.5% fee will be distributed as bonus rewards to lockers via the following proposed mooAirdrop system.

• Purpose of the mooAirdrop/token locking system outlined below: Reduce BIFI sell pressure, reward BIFI HODL’ers, and attract new liquidity through an innovative incentive structure.

Details

• Locking Mechanism:
• Users lock a minimum of 1 BIFI or mooBIFI for 90 or 180 days (will be determined if and after this proposal passes). The BIFI locking contract does not allow withdrawal of the BIFI or mooBIFI for at least 3 months (90 days) from the time the BIFI tokens were locked.
• Locking can begin at any time, which means there will be staggered unlocks, which avoids and prevents synchronized mass unlocks that could destabilize the token price if there were 1 quarterly unlock for all users instead of a 90 day based system.
• Bonus Points System:
• Lockers earn bonus points based on the amount of BIFI locked, calculated using an exponential formula. The formula is exponential because we want to incentivize both 

a) BIFI HODL’ers   

b) a REASON for users to desire to accumulate large VOLUMES of the BIFI token

               The proposed exponential formula for calculating mooAirdrop points is as follows

Bonus amt or B(x) = min(0.804 * x^1.093, 875)

In the formula ( x ) is the number of BIFI tokens locked, and the bonus is capped at 875% for 600 BIFI. (Locks of 600 BIFI or more receive the same bonus as if they locked 600).

• The bonus amount then applied to the locked amount, which determines the total daily boosted points of that user. Once we have calculated the daily mooAirdrop point boost amount using the previous formula, we can calculate the daily mooAirdrop points using the formula below

Total Points = x* (1 + B(x)/100)

Examples of Bonus Calculation:

10 BIFI Locked:

B(10) = 0.804×101.093 ≈ 9.9605

Bonus: ~9.9605%

Total Points = 10×(1+0.099605) ≈ 10×1.099605 = 10.996

20 BIFI Locked:

B(20) = 0.804×201.093 ≈ 21.2351

Bonus: ~21.2351%

Total Points = 20×(1+0.212351) ≈ 20×1.212351= 24.247

120 BIFI Locked:

B(120) = 0.804×1201.093 ≈ 150.682

• Bonus: ~150.682%

Total Points=120×(1+1.50682)≈120×2.50682=300.818\text{Total Points} = 120 \times (1 + 1.50682) \approx 120 \times 2.50682 = 300.818Total Points = 120×(1+1.50682) ≈ 120×2.50682 = 300.818

[[[ *This info – below in between these brackets - is another way to attempt to explain the above

Note: the formula outputs in whole number, but has to be converted to a bonus percentage, to which to multiply the amount of tokens staked by

For example, if the formula outputs 9.45, then that means it is a .0945 bonus for the amount of BIFI locked.

For example, 10 BIFI tokens locked equals 9.9605, so we would take

10 BIFI * 1.09605 =  the total amount of BIFI points that user received for the day

20 BIFI tokens input into the formula as the “x” variable has the result of 21.2351

That means it is a .212351 bonus to the amount of BIFI locked.

20 BIFI * 1.212351 =  the total amount of BIFI points that user received for the day

120 BIFI tokens locked has the result of 150.682

That means that there is a 1.50862 bonus points for the amount of BIFI tokens staked.

120 BIFI * 2.50862 =  the total amount of BIFI points that user received for the day ]]]

• mooAirdrop System:
• Upon locking the BIFI or mooBIFI or at the end of the 90 days when the BIFI/mooBIFI is ready for withdrawal - whichever is better for the devs and safety of the protocol- the user receives a non-transferable mooAirdrop token or NFT, representing their participation.
• Outside of redeeming via the mooAirdrop smart contract, the mooAirdrop token can’t be sold or transferred to any other wallets since the token is representative of that wallets/useres mooAirdrop earnings
• BIFI holders must lock a minimum of 1 BIFI per locking transaction in order to participate in the mooAirdrop program
• The 0.37% performance fee is collected daily from applicable vaults and pooled for distribution.
• Rewards are allocated pro-rata proportionally to users that lock their BIFI based on their daily points (total daily points for a specific user divided by the sum of all participants’ daily points). Users can navigate to the mooAirdrop claim tab and see their pending rewards accruing (updates once daily)
• Rewards accumulate over the 90-day lock period and can be claimed as soon as the 90 day mark has been cleared.
• The locking bonus is capped at 600 BIFI tokens locked, to support whales but also not give them too large of an unequitable bonus, since a 600 BIFI holder owns a little less than 1% of all BIFI that will ever exist. After 600 BIFI tokens, the bonus is constant as if the wallet locked 600 BIFI tokens, and no additional bonus is given
• The bonus is exponential in aim of incentivizing greater BIFI token lockups, to further support the BIFI token price and create long-term alignment with holding the BIFI token
• We can create a mooAirdrop tab (or in a category) at the top of the nav bar of the website.

(I think the phrasing of this program as a continual airdrop – instead of a “Lock BIFI” tab or program- will attract more users and more airdrops hunters. Overall it sounds more rewarding too. This naming may open the door to some new users and airdrop hunters seeing the benefits of holding BIFI)

• Reward Options: If is even possible, at the time of locking BIFI or mooBIFI, it would be great if users can choose and elect their reward token for the 90 days on that locked BIFI (e.g., mooBIFI, wBTC, stablecoin, ETH) declared via their option selected in the BIFI locking transaction.

If not possible to elect from a list of reward tokens, then mooBIFI or wBTC (wBTC is historically most likely to appreciate and maintain value over the 90 days) should be the default reward token for the mooAirdrop program.

• Additional Features:
• If users are locking BIFI instead of mooBIFI, if that BIFI was staked, that BIFI should continue to earn standard staking rewards during the lock period as well
• Rewards must be claimed within 24 months of the lock ending; unclaimed rewards after the 24th month since being made available are redistributed into the Beefy ecosystem (25% of net proceeds to BIFI stakers, 75% of net proceeds to Beefy Treasury).

• At the end of 90 days after locking the BIFI/mooBIFI:
• After the 90 day period ends, the user can choose to withdraw their BIFI/mooBIFI from the locker back into their wallet

Alternatively, the user can they can submit a transaction instead of withdrawing their tokens, they can choose to “re-lock” their BIFI tokens for an additional 90 days (from the moment of submitting that transaction) to jump right back into the mooAirdrop program again.

• Additionally after the 90 day period ends, at any time the user can exchange 1 mooAirdrop token/NFT for their 90 day portion of their 90-day-dated mooAirdrop rewards at any time for the next 24 months. Rewards will sit pending until claimed in exchange for mooAirdrop token or mooAirdrop NFT.
• Users can allow their mooAirdrop token sit for a few months, allowing flexibility on waiting to claim until they desire.

For example, a wallet could accrue 7 mooAirdrop tokens/NFTs to redeem their mooAirdrop earnings, and then that user could claim all 7 previous quarters one day 22 months later, or claim 5 of their mooAirdrops 22 months later, and 2 mooAirdrops 22 months and 1 day later if they so desired (just an example). They can do this since all mooAirdrop pending rewards are within the 24 month claimable window period.