[PROPOSAL] Saber Chapter 3

[rdev42]

The chapter 2 of the SaberDAO revival story is nearing its conclusion, we’re proposing the next chapter in this proposal that aims to bring Saber back to its former glory and beyond.

But first, let’s retrospect what has been done. In July 2023 c2yptic successfully convinced the original developers of Saber to release the DAO assets to the DAO, allowing the community to continue their work. This complex transition took over a year and a half. Initially, the project was set to be managed by Rockooor, with JS and JLee as key members. However, JS and JLee departed early due to personal circumstances.

The team adapted, bringing in Rar3 to maintain operations and later c2yptic to handle communications.

Throughout this entire period, communication was deliberately minimal due to potential legal complications in the United States related to the previous team. Any misstep could have serious legal repercussions for everyone that holds veSBR or in other words, a DAO member, despite these issues being unrelated to the project itself. The course taken has been to make sure that the DAO members (veSBR holders) are protected at all costs.

The good news is that the project now has legal protection in this new phase, and the communication silence is finally lifting. We're ready to share our progress and move forward transparently.

Chapter 2 was all about transferring ownership from the old team to the DAO. Saber couldn´t be revived if many of its components are still owned or managed by a small group of people that are not active anymore in the project. To that end, we have:

• Transferred the Pool Manager smart contract upgrade authority from the old team to the DAO

• Moved the quarry admin address from the old team to the current operations team (Rockooor, Rar3, c2yptic)

• Moved the Executive Council members from the old team to the new operations team (Rockooor, Rar3, c2yptic)

• Moved the foreman from the old team to the operations team which manages new pool and gauge creation, fees and more

We want to stress that these points might seem minor, but this was a huge undertaking that required a lot of coordination and technical expertise to get it done. Unfortunately, it will not (ever) be possible to transfer the saber.so website or domain to the DAO. In addition to transferring the project ownership, we also have done a lot to improve the user experience of the Saber dapp ecosystem:

• Moved the Quarry and Tribeca websites to new RPC infrastructure

• Implemented the (now industry standard) Solana wallet adapter package and priority fees in Tribeca

• Incorporated Quarry staking and merge mining into the SaberDAO frontend.

• Created a new landing page for the SaberDAO website

• Automated the start of new epochs using a crank on Tribeca

• Onboarded a market maker

On the management side we also made a ton of improvements

• Made it possible for the operations team to create new pools and gauges

• To get more insight into the analytics, a Grafana dashboard was created but discontinued due to inaccuracies

• In favor of the Grafana dashboard we have implemented and updated a Dune dashboard: https://dune.com/0xpibs/saberdao

• Created a simulation program to identify pool parameters improvements 

• We also integrated the Birdeye API for accurate real-time information on the SaberDAO website

• SaberDAO became a legal entity providing team, veSBR holders, and users of the platform with Liability Protection, Regulatory Compliance and Token Legitimacy. 

• Created regular communication regarding weekly volume, APY and more statistics

We also worked hard on getting more and more efficient pools on Saber:

• We started the Saber wars initiative, where projects received 1 million 5-year locked SBR to vote on their own pools with a no-sell commitment. This was aimed at LSTs and LST-LST pools specifically, as they are more capital efficient on Saber compared to LST-SOL pairs. This led to more than $900K increase in TVL in exchange for 5 million SBR 5-year locked to veSBR, and increased governance participation

• We introduced a grant initiative in which MetaDAO was the first recipient. The product is a bribes market for Saber gauges. After the first minimal viable product MetaDAO delivered we created a new team to upgrade and maintain the product. 

During Chapter 2, SaberDAO acquired LP finance, a protocol where one can mint synthetic SOL using LSTs as collateral. The main goal of this acquisition was to adapt the protocol to accept Saber LP tokens as collateral instead and stake those in Quarry. Using staked Saber LP tokens as collateral means one can leverage up SBR farming for example. The development of this has taken longer than initially anticipated because while the smart contracts were good, the frontend left much to wish for. Together with the fact JLee, the founder of LP Finance, left SaberDAO prematurely because of personal issues, this has led to delays. In addition, we wanted to upgrade the smart contract to work without any oracles but calculate everything on-chain on the fly. Therefore, we decided to stop the LP finance protocol, wind down the dapp, upgrade the smart contract with the aforementioned features and redeploy it right inside the new Saber dapp. The smart contract development of this is already finished ánd fully audited. The report will be shared when the new product goes live.

As you can see, chapter 2 was all about regaining ownership from the old team, to the DAO, and getting the Saber protocol ready to function as a decentralized entity. Some of these are still under development and nearly ready for launch, and we want to gear up for the next phase which will bring SaberDAO out of the shadows and into the top of Solana Defi.

Chapter 3

The third chapter for Saber will have a big emphasis on making Saber a fully autonomous protocol that is run and managed by the DAO. Next to finished the ongoing projects, here’s the list of projects that are planned for the third chapter:

Full ownership of everything regarding Saber

While in Chapter 2 the ownership of the most important elements of Saber have been transferred to DAO control, we plan to move SaberDAO to a new infrastructure: new domain, new servers, new socials including Discord and updated platforms such as Birdeye, Coingecko, Dexscreener, etc.

Make Saber feature complete

Currently, Saber Protocol has multiple moving programs, Tribeca handles governance and gauges, Quarry has authority over token emissions, Saber program contains pools and trading. Interacting with it requires interacting with multiple dapps on multiple frontends. We will unify everything under one Dapp. That includes all functionality of Quarry and Tribeca, and the integration of the new-and-improved product based on the LP finance smart contract (if you have a good idea for a name, feel free to propose)!

Make Saber efficient

Right now, fees and concentration coefficients are not set optimally.The optimal values are dependent on the market conditions. For example: the concentration coefficient of the USDC-USDT pool could increase and decrease as the volume increases and decreases in the Solana ecosystem. We are planning to set up an AI agent or system, specifically trained for this purpose, to automate the control of fee and coefficients for maximum APY. This marks the beginning of a broader AI system to maximise efficiency of the protocol.

Following the DAO decision, the USDC in the treasury has been staked and made around $125K to date. While this is commendable, we want to make Saber truly profitable. This might mean (re-)adding platform fees for specific or all pools, (re-)introducing withdraw fees for specific or all pools, among other things, like fees for the upcoming leveraged LP token product. These decisions are all pending a DAO vote of course.

The profits of the Saber protocol can be directed to anything the DAO chooses: buy and burn of the token, revenue share, etc.

Launch sbrSOL

The Saber leverage product is based on LP finance but includes an oracleless system and unliquidatable leverage. By borrowing sbrSOL using staked Saber LST-LST LP tokens, one can leverage up on swap fee and SBR emission (and other token emission) rewards as well as staking rewards. By setting the borrow fees to less than what you earn from these, one cannot be liquidated, creating essentially risk-free leverage (except for the regular risks like smart contract risk etc).

The plan is to launch sbrSOL, sbrBTC, sbrETH, etc. A Saber stablecoin is a future idea as well, which needs some more regulatory clarity but planned.

The smart contracts are flexible enough to eventually also launch leverage on unstable pools, if the DAO so wishes. For example when someone creates a BONK-USDC pool on Saber, one could use the LP token of this to borrow sbrSOL. In this case there of course is a risk of liquidation. If the DAO decides, Saber could move into this avenue as well.

Collaborate with Vota to bring bribes to Saber

Vota launched a few months ago with veSBR delegation and bribes. Vota is actively developing a system to mint tokens that represent permalocked SBR. By staking them one can obtain bribe rewards as well. We believe this system will be incredibly important for SBR as it will bring liquid permalocked SBR into the market.

This project replaces the “xSBR” project as having 2 liquid permalocked SBR tokens that compete with eachother is very confusing. However, people that already have their SBR locked cannot mint the new permalocked SBR by Vota.

As Saber has funded the development of Vota, veSBR holders will receive their pro-rata share of Saber’s allocation of future Vota tokens.

One-time veSBR Unlock and SBR buyback

We plan to propose a one-time opportunity for veSBR holders to early unlock their SBR and have the opportunity to mint permalocked SBR.

For those that want completely out, for example because they locked their tokens when the old team was still active, we will aim to propose to provide liquidity from the treasury to buy back these tokens, for a limited amount of time, at a 30% discount from the market price, determined to be the minimum of 1) the price at the moment this proposal is posted and 2) the price at the moment the proposal has passed, with a budget of up to $2 million USDC. This will give everyone the chance to either join the new Saber journey, or to step away from the project while not being “held hostage” because of a decision to lock tokens years ago. As the current operations team does not have a team allocation compared to new protocols, the SBR that would be bought back would then be allocated to the new team as 5 year locked SBR, meaning these tokens cannot be sold on the market for a substantial amount of time. In addition, active contributors of SaberDAO will not participate in this deal. This also aligns the incentives of the operations team with the long term goal of making Saber and SBR successful.

The proposal

In order to finish all ongoing projects, and start and finish the new projects outlined in the plan above, we ask the DAO a budget of $500K for the development of the projects outlined above. This is a substantial budget that will make the development of all the above possible, in addition to creating any future ideas that might come up. It is, however, not a huge ask compared to other similar protocols. SaberDAO already has the funds ready to support its development, let’s utilise the funds to build something awesome.

We are super excited to finally be able to share everything that has been done and planned to be done and hope you’ll join our journey to bring back Saber into its former glory!

[autocatalytic]

Thank you for writing this up, and spending so much effort developing a vision for Saber! I really appreciate the clarity around xSBR and leaving that to Vota from here. Some high-level comments follow.

• Burn-mint-equilibrium: I don't see anything describing a way to bring value to SBR directly, and in the sbrSOL section it looks like there will be continued emissions (above current pool rewards).
• Are there any metrics we can attach to the proposal which give an indication that things are not working out? Slowly bleeding market share and SBR value for another 18 months, even with the amazing effort from Chapters 1 and 2 complete, place us squarely in the "sunk-cost fallacy" zone. The one-time exit idea is commendable, but perhaps there are some metrics that will help inform DAO members at the point of decision?
• Some detail around the budget would be greatly appreciated. This will increase accountability of the council and, depending on the amount of detail, help the rest of us make an intelligent decision. Perhaps expenditures can also have timing or a schedule roughly in-line with the above bullet point?
• If we are leaving a significant piece of the plan in the hands of the Vota.fi team, maybe we can get a little more information about them, and their dedication to the effort?

The added information about legal clarity helps a lot. It's clear the council has wanted to discuss these ideas and plans for some time but was unable to safely do so. Respect.

Bummer about JLee and LP Finance. If the remaining three of you are determined to make this work I'm inclined to argue in favor of giving you the room to try, but with the pace of change in crypto we don't have forever.

[VariousAlex]

This sounds very promising! Looking forward to follow this project evolve. Please make regularly updates on the progress.