sINV
sINV is designed as a tokenized ERC-4626 wrapper around the INV market on FiRM. An XY=K Dutch auction swaps DBR streaming rewards for INV and, along with INV staking rewards, deposits the INV into FiRM and the vault smart contract, leading to the INV:sINV exchange rate to continuously grow.
sINV brings the INV governance token to users who do not trade on Ethereum mainnet or who do not use FiRM. sINV also gives users a way to hold INV without the need to manually claim rewards, while creating opportunities to make sINV available in liquidity pools or as loan collateral on third party lending markets.
Depositing INV for sINV further incentivizes the long-term holding of INV, creates continuous market buy pressure on INV, and results in reduced liquidity costs per circulating INV and improved overall unit economics of the protocol. Please note that the INV deposited into sINV do not retain their on-chain governance voting rights.
Contract Address: 0x08d23468A467d2bb86FaE0e32F247A26C7E2e994 (Ethereum)
Minting sINV
To stake INV for sINV, simply follow the steps presented below or open the sINV homepage.
First, select the "sINV" tab on the upper navigation bar:
Select "sINV" in the pulldown menu and connect your wallet. Next, indicate the desired amount of INV to stake as sINV
Finally, approve the desired amount of INV in your wallet (gas required) and stake your INV to receive sINV in your wallet. You can keep track of your sINV deposits and earnings (along with INV, DBR, and FIRM borrowing positions) on the dashboard page.
Important points about minting sINV:
The sINV token represents pro rata deposits within the ERC-4626 vault and is always withdrawable for INV governance tokens at the pro rata rate.
There is no maximum number of sINV that may be minted by a user depositing INV.
INV staked to mint sINV is never rehypothecated or loaned to third parties.
sINV Yield Accrual
sINV yield is derived from two sources:
xINV Staking Rewards: xINV staking rewards function as a remedy to dilution experienced by INV holders when the DAO mints INV in order to fund liquidity and other DAO operations. Until the release of sINV, xINV staking rewards were available exclusively to INV stakers on FiRM. For both sINV users and INV stakers on FiRM, xINV staking rewards are added automatically to a user’s staking position on a continual basis with each Ethereum block. At present, INV dilution protection rewards are set to 0 since the DAO is currently operating at net 0 INV inflation.
DBR Streaming Rewards: DBR streaming rewards function as a revenue sharing mechanism for holders INV stakers. DBR’s are a primary revenue generator for the DAO and are issued to INV stakers who in turn sell them in marketplaces or auctions, primarily to borrowers who need them for DOLA loans on FiRM. Until the release of sINV, DBR streaming rewards were available exclusively to INV stakers on FiRM and required users to manually claim their DBR streaming rewards. With sINV, DBR streaming rewards are automatically swapped for INV via a dedicated XY=K Dutch auction and deposited weekly into the sINV vault with no manual claiming required by the user.
The token flows involved in autocompounding sINV can be illustrated as follows:
To convert DBR yield into more INV for the user, the DBR yield must be first swapped for INV. sINV implements the DAO’s XY=K Auction contract, meaning this will create additional depth to DBR’s market and run in a fully automated manner via Miner Extractable Value (MEV).
The XY=K Auction operates as a virtual, x*y = k constant function market maker auction. The purpose is to provide a market-driven, continuous, Dutch auction for DBR, paid in INV. DBR reserves increase over time, pushing down the price of INV in the auction, until the price is low enough for an arbitrageur to extract profits. Upon a successful trade, the buyer will deposit INV in return for freshly minted DBR. Essentially the contracts function very similarly to a Uniswap V2 pool, except one side of the pair is virtual (INV), and the other (DBR) has a continuous stream of new tokens being added to the reserves.
sINV Yield Distribution
Yield generated from sINV's DBR-INV swaps is allocated to sINV holders on a pro-rata basis over a 7-day period. This distribution cycle is structured on a weekly basis, with weeks starting and finishing at roughly Thursday 00:00 UTC each time. The yield for any given week is derived from auction activities in the preceding week.
This mechanism implies that as the supply of sINV increases, the current yield lags the projected yield, appearing lower. This is because the revenue earned in the previous week was from a comparatively smaller sINV supply than the present distribution base. Conversely, if sINV supply diminishes due to withdrawals, remaining holders experience a temporarily enhanced yield until the current and projected yields align. Importantly, sINV does not have a predefined minimum or maximum APY.
Withdrawing sINV
Users may unwrap their sINV at any time through a conventional un-staking transaction. There is no maturity date, no waiting period to withdraw INV, and users may re-stake into sINV at any time.
sINV Cross-Chain Bridging
sINV cross-chain support is planned for Q4 2024.
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