Agola Ecosystem: Pioneering the Governance Wars

Today, winSPIRIT holders earn their share of SpiritSwap protocol fees but they don’t receive any of the benefits from the voting power they must sacrifice. In response, Ola launched rainSPIRIT: the new winSPIRIT mechanism that returns both the protocol fees AND the hidden value within the voting power. RainSPIRIT is the first piece of Agola, an ecosystem designed to provide transparency and efficiency to protocols competing for governance power. This first version of the Agola Ecosystem will produce crucial insights for future products while empowering rainSPIRIT holders.

Part 1 — Background: winSPIRIT, Gauges, and Bribes
Part 2 — Economics of winSPIRIT: the Guarded Secret
Part 3 — RainSPIRIT: The Next Generation of winSPIRIT

Part 1Background: winSPIRIT, Gauges, and Bribes

winSPIRIT tokens are appealing for one main reason: they let users enjoy inSPIRIT rewards (SpiritSwap’s protocol fees) while retaining their ability to exit their positions. Since inSPIRIT is non-transferable and requires a lengthy lock of SPIRIT tokens, users are discouraged from minting inSPIRIT. winSPIRIT forks solve this by wrapping inSPIRIT and incentivizing deep liquidity for their winSPIRIT — SPIRIT pair.

The projects that incentivize this deep liquidity, however, don’t do it for free. While they return the inSPIRIT rewards to the winSPIRIT holders, they confiscate something much more valuable: their voting power. This may not seem like a high price to pay for winSPIRIT holders who don’t wish to vote. In reality, the economic value contained within inSPIRIT voting power is more lucrative than the inSPIRIT rewards themselves, as we show in Part 2.

inSPIRIT voting power is so important because it provides the ability to vote in the SpiritSwap gauges. The gauges determine where the majority of freshly minted SPIRIT emissions go, so power in the gauges is having power over which LP pair receives rewards each week.

Bribe Systems
Another way that winSPIRIT forks and other projects acquire voting power each week is through bribes. Protocols wanting to gain votes for their gauge can distribute a certain number of tokens pro-rata to inSPIRIT holders who vote for them. Unfortunately for current winSPIRIT holders, there is no way to collect the bribes associated with the voting power they sacrificed.

Part 2 — Economics of winSPIRIT: The Guarded Secret

At this point, it clear that winSPIRIT projects want to accumulate inSPIRIT voting power to control the SpiritSwap gauges. But exactly how much is this voting power truly worth, and how much do winSPIRIT holders receive for sacrificing it?

The Value of Voting Power
The ability to influence the gauge system is worth a lot of money. As of March 6th, 242M inSPIRIT tokens were in circulation and controlled the allocation of 5.37M SPIRIT tokens weekly via the gauge system. So how much is this exactly?

If every inSPIRIT holder voted, every 1M votes would have allocated 22,000 SPIRIT tokens to the elected LP Pair. With a SPIRIT token price of $0.115 as of March 5th, every 1M votes was responsible for the allocation of $2,553. Since not every inSPIRIT holder votes each week, the value per vote was even higher.

The Value of SpiritSwap Revenues
In the week ending on March 3rd, 240M inSPIRIT holders received a distribution of 1,219,526 SPIRIT tokens. As mentioned in the last section, winSPIRIT stakers received their share of this distribution. For every 1M inSPIRIT tokens, 5,081 SPIRIT tokens were distributed as a reward. Calculating just like we did before, this means every 1M inSPIRIT tokens received a reward of $600.

The Hidden Gem: Capturing the Value of Both
To put it simply, when you lock your SPIRIT into winSPIRIT, you give away most of the value in exchange for transferability.

So how is all of this relevant? How does this effect you? In last weeks vote, Scarab Finance distributed $35,000 in bribes for 20M votes — or $1,750 per 1M inSPIRIT votes. This is almost 3x the amount of SpiritSwap revenue than what’s distributed to winSPIRIT stakers. If only there was a winSPIRIT fork that allowed holders access to these bribes AND staking rewards, users could receive greater rewards than simply staking with other winSPIRIT forks.

Well, you’re in luck! Without further ado, we present to you the next evolution of rainSPIRIT — the transferable winSPIRIT token that captures value from bribes AND SpiritSwap revenues!

Part 3 — The Current Evolution of winSPIRIT

RainSPIRIT — For Projects

Until today, acquiring voting power was costly and lacked transparency. Projects needed to purchase and lock large amounts of SPIRIT, or offer a fixed bribe amount through SpiritSwap in which the return on investment was unknown. RainSPIRIT addresses these issues by allowing projects to buy packages of voting power for a specific week (epoch) using their own token. Each voting package contains 1 million votes and has a minimum and maximum price, which adjusts each week according to demand. The rainSPIRIT mechanism thereby provides:

  1. Certainty — Projects know how many votes they are getting for their bribes
  2. Efficiency — Prices are adjusted based on the market value of the voting power

As there are a limited number of packages sold each week, voting packages will be secured on a first come first serve basis. The price per package calculation focuses on a few parameters:

  • Minimum Price Per Package: lowest possible price paid by bribers for each package.
  • Maximum Price Per Package: highest possible price paid by bribers for each package.
  • Packages For Sale: maximum number of voting packages being sold for the week.
  • Maximum Bribe Limit: maximum amount of bribes accepted for the week.(Maximum Bribe Limit = Packages For Sale x Maximum Price Per Package).

To determine the price per package for a given week, we take the total amount of bribes received (up to the maximum bribe limit) and divide it by the number of packages for sale. For the following example, let’s assume these variables have been chosen:

There are three different package pricing scenarios that can occur given the parameters:

Scenario 1: Price Per Package = $1000

  • Say $25K of bribes are deposited → Price Per Package = $1000
    ($25K / 30 Packages = $833, rounded up to the minimum of $1000)

Scenario 2: Price Per Package is between $1000 — $2000

  • Say $45K of bribes are deposited → Price Per Package = $1500
    ($45K / 30 Packages = $1500, no rounding occurs)

Scenario 3: Price Per Package = $2000

  • Say $75K of bribes are deposited → Price Per Package = $2000
    ($75K / 30 Packages = $2500, rounded down to the maximum of $2000)

To view a more detailed breakdown of these scenarios, see here: Package Pricing

Ultimately, every project will pay the same price per package, as the final cost is calculated once the bribe-acceptance period concludes. This occurs when the maximum bribe limit has been reached or 12 hours before the SpiritSwap gauge vote ends, whichever comes first.

At this point, voting power will be assigned to bribers proportional to their weight of the total bribe pool and in the order they submitted their bribes. An additional 10% protocol fee is charged to bribers on top of the total bribe value. In the instance that not all packages are purchased, Ola will determine what happens with the remainder of the votes.

RainSPIRIT — For Stakers: A Larger Piece of the Pie

In the current winSPIRIT models, you need to decide whether to stake your tokens in the winSPIRIT staking pool, or to provide liquidity to the winSPIRIT LP pair on a DEX. In rainSPIRIT, another option exists — one that benefits everyone, including those who don’t choose it.

A rainSPIRIT holder can deposit their tokens into one of the bribe pools to enjoy their share of the bribes. While some rainSPIRIT holders will choose to collect these bribes, those who remain in the staking pool will effectively receive a larger portion of the distributed rewards, thus increasing their APR. With rainSPIRIT, every holder will be able to enjoy a larger piece of the pie! Each week, you simply have to decide which rewards you would like to receive and consequently place your rainSPIRIT in the corresponding location:

  1. Staking Pool: earn SpiritSwap revenues given to inSPIRIT holders (Paid in SPIRIT)
  2. Bribe Pools: earn rewards in the token listed by the Briber
  3. Provide Liquidity to a RainSPIRIT-XXXX Pair: earn trading fees + any offered LP incentives

Occasionally, we may declare certain weeks as magic weeks in which we will not accept any bribes, and 100% of the voting power will go to the rainSPIRIT-SPIRIT pair, should it be added to the SpiritSwap gauge system in the future.

While this version of rainSPIRIT is a temporary solution on our way to a fully functioning Agola Ecosytem, we believe it already adds a new perspective to the SpiritWars. For the first time, winSPIRIT users can enjoy a transferable inSPIRIT alternative while still reaping the benefits from bribe rewards. In addition, projects can finally gain substantial voting power in a more transparent, cost-effective way.

We’re excited to start building Agola 2.0 and introduce the next generation of rainSPIRIT, providing even more support to all our rainSPIRIT holders. Until then, strap in — the SpiritWars are about to heat up!

Peace and Prosperity,
The Ola Team

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Ola finance is a platform for creating custom decentralized lending networks.

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