Summary
Since day one, the Interest Rate Voting Ballot under Governance has been an essential governance function for the community. Community members with veCHESS get to decide the interest rate add-on BISHOP holders collect from ROOK holders. The feature had helped balance the interest between BISHOP and ROOK holders at the beginning stage, but it has also raised concerns with the introduction of the liquid staking BNB fund. To address the questions raised from the community, as well as to prepare Tranchess for its upcoming launch on Ethereum with the ETH liquid staking product, we propose to change the current interest rate voting ballot to an Alpha split voting ballot, with which users get to decide the Alpha earning split between BISHOP and ROOK on a weekly basis.
Abstract
ROOK’s leveraged position comes from “borrowing” the BISHOP’s share of the underlying assets. With simple yield-enhancing asset tracking funds, it is only fair for the community, and that is, both the BISHOP holders and ROOK holders, to decide the final interest rate BISHOP holders collect from ROOK holders.
However, with the introduction of the BNB fund, whose main feature is liquid staking on validator nodes, BISHOP holders argue that their share of the underlying assets deserves a split of the Alpha earning besides the interest rate collected from lending. Alpha earning is generated from the Tranchess protocol staking the BNBs in the BNB fund into the validator node on BNB Chain. With an average utility rate of over 95% throughout the year, most BNBs are delegated to the node for Alpha earning, and the delegated BNBs contain shares from BISHOP holders.
Tranchess will be launching on Ethereum soon with its ETH liquid staking product. To address the concerns raised by the community and ensure that all ETH and BNB holders can share and enjoy the staking reward on BNB Chain and Ethereum, Tranchess proposes to change the current interest rate voting ballot into an Alpha split voting ballot. After the change, instead of voting for the interest rate add-on, community members with veCHESS will vote for the Alpha splitting percentage between BISHOP and ROOK holders every week. The Alpha generated in the following week will follow the previous week’s voting result and be distributed to BISHOP and ROOK holders by the decided percentage. The interest rate from ROOK to BISHOP will be the 7-day moving average BUSD borrow rate from the Venus protocol.
Because there’s a one-week lag between the voting period and the result taking into effect, if the proposal is approved, this is the timeline for the next few weeks:
- Tranchess will update the interest rate voting ballot contract on Sep. 30.
- Users will vote on the new Alpha split for the next seven days (Sep. 30 ~ Oct. 6). The interest rate BISHOP holders collect from ROOK holders still follows the previous routine. It will combine the Venus protocol BUSD borrow rate and the interest rate voting add-on from the last week’s voting result.
- Starting from Oct. 6, BISHOP and ROOK holders will collect the Alpha earning split based on the previous week’s voting result. Going forward, the interest rate from ROOK to BISHOP will be the 7-day moving average BUSD borrow rate from Venus protocol without any additional add-on.
Motivation
The Alpha split voting decides how much of the staking rewards are distributed to BISHOP holders and how much to ROOK holders, which would balance the interest across Q/B/R token holders and better prepare the community for the upcoming Tranchess launch on Ethereum.
After the change, the interest rate BISHOP holders collect would be the “base interest rate” before the change, which is the 7-day moving average borrow rate of BUSD on Venus protocol.
For
Changing the voting ballot would ease the concern of BISHOP holders on liquid staking earnings and better prepare the community for the upcoming ETH liquid staking product.
Against
Based on recent voting results, changing the ballot would reduce the annualized interest rate BISHOP holders collect by 0.3%~0.5%.
Please click here to vote on Snapshot.