Expand the role of HBB beyond governance while increasing its value proposition and empowering the holders.
If adopted, this discussion seeks to:
- Progress the role HBB plays in Hubble Governance through the following components
Vote-Escrowed HBB: introduce vote-escrowed locking of HBB (veHBB) as a replacement of HBB staking, where a longer locked duration grants a greater share of voting power and boosted HBB emissions in the form of subsidies to the borrow rate. HBB would be locked up for up to 4 years in a contract to mint veHBB.
Voting: veHBB will replace HBB in governance voting. Introduce gauges that dictate HBB emissions directed towards each Hubble-approved collateral type as an ongoing governance topic
- Improve Hubble Protocol incentive alignment by driving value accrual to the HBB token
- Direct a portion of protocol earnings as rewards to veHBB token holders
- Direct a higher portion of future HBB emissions to veHBB token holders in the form of subsidies to the borrow rate
Incentivize Long Term Supporters: veHBB holders will support the protocol over a longer-term horizon rather than speculate on price fluctuations in the short term. Those with strong conviction are rewarded the most over time.
Ecosystem Growth: veHBB creates a flywheel effect where emissions drive higher TVL, in turn generates more fees, and leads to greater value accrual to the HBB token. This better aligns incentives between HBB holders and the core stakeholders for the Hubble protocol.
Increase incentives for 3rd parties to accumulate HBB: Protocols will be incentivized to lock up HBB to vote and support the base borrow rate for their preferred collateral asset. Directing HBB emissions can often be a more efficient use of funds for 3rd parties than native incentive programs.
Locking Hubble Supply: Longer lockups of HBB contribute to a lower HBB supply (less is available on the open market to sell). HBB will maintain a more stable price as a result of the new design.
Improved Security: In its current state, Hubble is susceptible to attacks via borrowing HBB, and voting with HBB to make adverse changes to the protocol.
- Lacking Incentives: Hubble may not generate enough fees or governance value may not be enough to motivate HBB holders to lock into veHBB.
- Vote-Escrowed HBB:
- HBB can be locked up to 4 years into vote-escrow HBB. This locking mechanism will replace HBB staking
- veHBB is non-transferrable but could be converted to a transferrable NFT in future improvements
- Lock period will be in a range of min 1 year to a max of 4 years
- Locking duration corresponds to linear weights, so if max duration is 4 years, voting weight for year 4 = 100% and year 1 = 25%
- Voting weight decay as the remaining HBB lock duration decreases and can be extended back up to the maximum lock duration
- Borrowers that stake assets (i.e: Ray, SOL, mSOL) as collateral could get a discount ontheir minting fee with direct correlation to their amount of owned veHBB
- USDH depositor on the USDH vault can receive boosted HBB emissions on their USDH deposits according to their veHBB holdings
- Based on their amount of veHBB, users can boost their USDH borrow rate up to 1.5x proportional to the number of tokens locked.
- HBB staking rewards will be redirected as rewards to veHBB holders
- A portion of protocol earnings are directed to veHBB holders
- General Voting:
- Once veHBB is introduced, only veHBB is accepted voting power in Hubble Governance
- Gauge Voting
- Gauges represent each Hubble approved collateral type
- HBB emissions are distributed to gauges based on biweekly governance votes. Each gauge can receive a different amount of HBB to emit to its respective collateral type
veHBB incentive alignment can be subdivided into economic and governance incentives:
- veHBB rewards holders by subsidizing borrowing APRs with greater HBB emissions (higher distribution APR)
- veHBB holders receive a portion of Hubble Protocol earnings
- HBB staking rewards are redirected to veHBB holders given staking will be replaced with vote-escrow locking
- veHBB holders are eligible to vote on how future HBB emissions are distributed across Hubble collateral types on a biweekly basis (every two weeks)
- veHBB holders can vote to change borrowing parameters (asset listings, collateral parameters, liquidation parameters)
- veHBB holders can vote to change lending parameters (market parameters)
Any feedback is welcome, and this aims for the community to discuss. Ideas will be incorporated as needed before a poll is introduced.