[SEP #21] SAFE Token Utility

I’ve thought more about the Activity Program and how it can be a testing ground for Safe token utility.

In my POV, activities that relate to OBRA (as the primary builder coordination mechanism), have a high potential to generate revenue, or directly contribute to Safe Token health should be prioritized.

Below is a list of initial activities I propose to incentivize:

Propose to allocate 20% of the program to reward OBRA s1/s2 participants.

  • User voted on OBRA proposals or delegated to someone who did: Fixed Reward based on a minimum voting power / delegate amount of, for example, 1,000 SAFE tokens.
  • OBRA projects who received their entire funding Stream, as this showcases they accomplished their milestones, and they should be rewarded in tranches based on the size of their proposal: e.g., Under 10k = 2,500 SAFE, Under 25k = 5,000 SAFE, under 50k = 7,500 SAFE, under 100k = 10,000 SAFE.

High Revenue Potential
Propose to utilize 40% of the program to reward High Revenue Potential activities.

  • Holding selected yield-bearing assets, starting with sDAI, stETH, rETH, rsETH, ETHx, stUSDT, sfrxETH, and stEUR in a Safe would receive a proportional share of SAFE for this category. I see a lot of potential in taking a (small) custody fee on yield-bearing assets. On average, these assets earn 3-4% APY. We could charge a custody fee of 0.1% a year for the additional access and security users get from Safe, leaving them with over 95% of their returns. At 91B stored in Safe, charging a 0.1% custody fee would generate up to $91M. Assuming we don’t charge accounts under an x amount and potentially only charge certain assets (such as YBA or LP tokens), we would still be able to earn at least 10M a year.

I think the allocation for YBA in Safe should be significant, as it would incentivize current Safe holders to transform their idle assets into YBA and hopefully attract new, large holders to Safe, providing them with the security and utility of our platform.

Safe Token Health
Propose to utilize 40% of the program to reward increased liquidity and locking.

  • I see value in having stakeholders lock their Safe to signal long-term alignment; however, I believe locking an LP token (as opposed to just SAFE) is more beneficial to Safe. While deploying a full-fletched veSystem out of the gates might be too much effort, I can see a simple system comparable to what Aura does (tokens are locked for a fixed 16 weeks and earn some rewards during the time they are staked) to be valuable. I would propose starting with a 20% ETH (or staked equivalent) and 80% SAFE pool on Balancer - as this pool could be converted into the ve or staking token comparable to AAVE’s Stake ABPT or Balancer’s veBAL. \

In the longer-run, I think our Ecosystem Accounts initiative (supported by OBRA and initially starting with a pilot for Optimism) could play a role in streamlining additional Safe Activity Programs!