We’re looking to build a venture fund with a fraction of the fees generated by the LINKSWAP platform, which will then be utilized to make seed investments in early-stage projects. To mitigate issues with transparency and liquidity, we will be only making investments in tokens, not equity.
The new system will not reduce the percentage of the fees directed to the staking vault, so YFL stakers will receive the same amount of income from staking as before. The capital will instead come from a portion of the percentage of fees that are presently set to be directed to the treasury (more details to follow). If needed, the cash reserves within the fund can be sent to the treasury if any expenses arise via a governance proposal.
The goal of these investments is to drive value to YF Link and the YFL token — by finding early-stage projects with tokens that have yet to list, we can help bootstrap their development and direct exclusive listing to the LINKSWAP platform. In a way, projects that we will fund will become branches of the YF Link ecosystem.
A portion of the profits made by LINKPAD will be allocated to holders on a rolling quarterly basis. This essentially makes all YFL stakeholders Limited Partners in an actively managed venture fund and opens up a new revenue stream for the staking vault.
Here’s a simple breakdown of the ways this benefits the YF Link ecosystem and the YFL token:
- Creates a new stream of profits for the YF Link governance vault, decreasing the P/E ratio of the YFL token (and thus increasing its monetary value).
- Directs value to the ecosystem through exclusive listings, heightened liquidity for LINKSWAP, onboards new development projects to the YF Link ecosystem.
- Because many, if not all, of the projects funded by LINKPAD will exclusively list on LINKSWAP, the fees and initial trading volume spikes generated by these listings will also direct value to the governance vault.
- Incentivizes long-term staking — because those staking tokens in the vault won’t receive the profit distribution if they withdraw their tokens before the end of the quarter.
When possible, all assets will be stored in public wallet addresses governed by a 3-of-4 multi-sig. This makes all movements transparent and fully auditable by the community. For more information on our transparency criteria, please navigate to our project announcement post.
We propose that we redirect half (50%) of the fees that would otherwise go to the treasury to be sent to the LINKPAD fund. This capital will be used for investing in projects and driving value to the ecosystem. These funds will remain fully owned by the ecosystem, with all profits from token sales being redirected to the governance staking vault on a rolling quarterly basis.
How fees will look under our proposal:
- 0.05% (one-sixth) of the 0.30% trading fee will be a ‘protocol fee’ (this remains unchanged from the current system)
Protocol fees to be allocated as follows:
- 80% to YFL-LINKSWAP Governance Vault stakers (unchanged from current system)
- 10% to YFL Treasury (reduced by 50%, redirected to the LINKPAD fund)
- 10% to the LINKPAD fund
With this new system, the YFL tokens staked within the governance vault will generate more revenue than they are presently.
To maximize the value we provide to the staking vault and to encourage long-term staking, we propose that 50% of the profits made each quarter are used to market-buy YFL tokens, which will then be distributed via a smart contract to the staking vault. 30% of the remaining profits will stay in the fund to be used for future investments, and the other 20% will be reserved as a profit-carry to be distributed to the 4 members of LINKPAD’s core team. By only distributing half of the profits, we can compound our returns and perpetually increase the profitability of the fund, regardless of the revenues source from the aforementioned LINKSWAP fee disbursements.
Stakers should think of this as a hedge against LINKSWAP trading volume fluctuations, as the fund’s growth will allow for a steady increase in rewards regardless of LINKSWAP’s trading volumes.
To ensure that individuals don’t deposit YFL the day before the distribution to earn some quick profits, only tokens staked for the previous quarter will receive the distribution. Exempli gratia: wallets with YFL staked in the vault before the end of Q2 will receive the profit distributions for Q3, and so on. We intend to develop a time-based payout structure that awards individuals a percentage of profits based on the amount of time they staked their tokens during the quarter.
By voting for this proposal, you support the proposed alterations to the protocol fee disbursement and to the aforementioned structuring of LINKPAD profit disbursals.
By voting against this proposal, you reject the formation of a LINKPAD fund and the changes to the protocol fee outlined above.