Proposal 34 - Ecosystem partnership with xToken & using xToken as a building block

Summary
We as a core PowerPool team propose an ecosystem partnership with xToken - project automatizing yield harvesting & re-investing for staking tokens. Based on that, we propose to use products called “xTokens” such as xINCH xAAVE xKNC, and as a building block for PowerPool structured investment products.

Motivation
xToken is an ecosystem of xTokens - products that can be defined as simple Vaults for a specific token. For example, for 1INCH it harvests 1INCH governance staking rewards and adds it to the main staking position, compounding yield and saving gas costs that could be spent on this operation. We already had a call xToken team and discussed possible ways of integrations.

xTokens are auto yield compounding building blocks. Being used as components of PowerPool products, xTokens can save time for development and allow to build capital-efficient structured investment products for PowerPool users. Since xTokens are ERC20 tokens they can be easily added to any product (however, we should clarify DAMM strategy for these tokens taking into account value growth based on accumulated interest). The investment vehicle composed of xTokens compounding interest in real-time is a good example of an Unlimited ETF product built on PowerIndex v2 and Dynamic AMM.

We consider adding xTokens to PowerPool products as a win-win strategy for both protocols since it will boost TVL and user experience for users of xToken/PowerPool.

Specifications
We propose to make following steps:
(1) establish ecosystem partnership with xToken
(2) add xTokens to all new PowerPool investment vehicles where it is possible taking into account technical specification and parameters of Dynamic AMM strategies

8 Likes

great idea! It solves a big headache with utilization of underlying assets, definitely a step in a right direction!

Thank you for putting together a new proposal. Wait for the vote.

I have been following xToken for a while now. Absolute fan of their design and idea in general. Full support :sunglasses:

great! I believe this is the kind of partnership PP should be looking for.

I have actually missed the opportunity with xTokens, great that the PP team nailed it.

Still have a question - do you propose to put all the tokens from PP products in to X, or aggregate initial liquidity in xTokens?

1 Like

Great idea! Do you know if xToken has plans to introduce some BSC products?

Excellent idea ! I see this as a real value add for all parties and a great example of Powerpool team innovating to find creative solutions. A few questions please:

(1) Will PIPT v2 be big enough to induce xToken to build relevant tokens for the gaps for any of the ones where there is yield to try to recapture or those tokens can be staked elsewhere (e.g. YFI in the Yearn vault)

(2) Should PIPT v2 holders get a fee rebate due to size and commitment? If so what form? Maybe PIK using their token or monthly fee rebate based upon actual fees charge.

(3) How will PIPT v2 choose between the governance models?

(4) Time and milestones to implementation?

hey, thanks for asking your question. I’m not sure this partnership means transferring PIPT to xToken out of the gate, it’s more like a work in progress to launch the best vehicle to accommodate xTokens as I can see it rn.

Re questions 2: I’m not sure I got you, I think the first solution to reduce fees should be the ZAP feature expand to other products. Works like a charm for YLA.

Hi, I don’t mean gas fees - I mean the management fees that xtoken charges (see below). Especially if Powerpool takes a new product from zero to minimum viable size by its own weight, I would say it’s typical to get a hefty fee discount vs. the rack rate. Certainly Powerpool could insist on being exempt from the burn fee.

For instance from the FAQ
What are the management fees on xKNC?
xToken charges a 0% mint fee and a 0.2% burn fee, the lowest possible fee to ensure that arbitrageurs aren’t able to join the pool just before rewards and exit the pool just after in order to make a quick profit. There is also a 1% fee on claimed rewards (if the fund claims $100 of ETH in a year, xToken will earn $0.50).

Moreover, I don’t understand how 1% of $100 is $0.50 - this is a worrying level of math skill now that I think of it. :open_mouth:

Moreover, I don’t understand how 1% of $100 is $0.50 - this is a worrying level of math skill now that I think of it.

Hm, that’s some-what worrying indeed.

Re fees:
If we plan to use DAMM burn fees can negatively impact overall performance and the core team is aware of it. So the fees are one of the main points of negotiations/partnership