Delegation tokenization module

Archived Cosmos-SDK
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Here is what Iqlusion thinks an optimal staking derivatives system would look like.

Like in Bharvest’s proposal, there are two types of derivative token: Delegation Tokens and Reward Tokens. h/t StakeWise for naming the tokens: https://github.com/stakewise/contracts/tree/feature/stakewise-2/contracts/tokens

Delegation & Reward Token

Delegation Tokens are a fungible token denominated by validator and maturation date issued by the staking derivatives module.

A delegation of 1000 ATOM to Iqlusion with a maturity date of Oct 26th would be ‘1000 ATOM_Oct26_iqlusion_Delegation tokens.

The staking derivatives module would also issue Reward Tokens that act as zero coupon bonds for the future rewards. There should be a normative duration for the bond.

The module would issue 1,000 Iqlusion Reward Tokens for each week between the delegation and maturity:

  • 1000 ATOM_Sept28_iqlusion_Reward
  • 1000 ATOM_Oct5_iqlusion_Reward
  • 1000 ATOM_Oct12_iqlusion_Reward
  • 1000 ATOM_Oct19_iqlusion_Reward
  • 1000 ATOM_Oct26_iqlusion_Reward

Key advantages over Bharvest’s scheme

  1. Maturity dates on the Reward Tokens affect the fungibility of the delegation. Bharvest scheme doesn’t recognize this. The right to issue more Reward Tokens or unbond only comes upon maturity. Our proposal incorporates this into the denom.

  2. Bharvest’s proposal creates a stateful Non-fungible token (NFT) object for the Reward Token. This class of object does not have a mature IBC protocol as of today. The token objects proposed by Iqlusion are all IBC friendly. All distinguishing information is incorporated into the denom of the object.

  3. These tokens should all be relatively easily priced as discounted to an ATOM. They should be easily integrated into yield farming using constant function market makers as price oracles.

  4. The governance rights end up with the validator.

We believe that this kind of structured cashflow will maximize the utility of stranded ATOM capital in DeFI but there is also ample room for experimentation.

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