Introducing Passive Income for Odos Stakers from Protocol Revenue

General
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1. Overview This proposal aims to introduce a passive income mechanism for Odos stakers by distributing a portion of the protocol’s revenue to incentivize long-term staking and enhance ecosystem engagement.

2. Background Odos generates revenue through trade surplus capture, simple swap fees, limit order execution fees, multi-token advanced swap fees, partner code revenue, and API plans. Currently, these revenues contribute to the protocol’s sustainability and growth but do not directly benefit stakers. Implementing a staking rewards mechanism will encourage user participation and foster a more decentralized, engaged community.

3. Proposal Details We propose allocating a percentage of Odos’ total revenue to reward stakers in a sustainable and transparent manner. The revenue distribution will be structured as follows:

  • Revenue Allocation: 30% of the net revenue generated by Odos will be allocated to a staking rewards pool.
  • Reward Mechanism: Stakers will earn rewards proportional to the amount of Odos tokens staked relative to the total staking pool.
  • Distribution Frequency: Rewards will be distributed on a weekly or monthly basis to ensure consistent and predictable passive income.
  • Lock-up Period: To encourage long-term staking and reduce sell pressure, a tiered lock-up system can be implemented, offering higher rewards for longer staking durations.

4. Benefits

  • Enhanced Token Utility: Staking rewards will increase demand for Odos tokens as users seek passive income opportunities.
  • Incentivized Long-Term Holding: A reward system encourages long-term staking, reducing market volatility and stabilizing token value.
  • Community Engagement: Providing passive income to stakers strengthens community participation and governance.
  • Sustainable Revenue Sharing: The allocation of protocol revenue ensures a sustainable model where both the protocol and its users benefit.

5. Implementation Plan

  • Phase 1: Feasibility Study – Conduct research on the optimal revenue allocation percentage and reward structure.
  • Phase 2: Smart Contract Development – Implement secure and auditable staking contracts.
  • Phase 3: Governance Proposal & Voting – Engage the community in finalizing the proposal details.
  • Phase 4: Launch & Monitoring – Deploy the staking rewards system and monitor performance for future optimizations.

6. Conclusion By implementing a staking rewards system funded by a portion of Odos’ revenue, we can enhance token utility, incentivize long-term participation, and ensure sustainable community growth. This proposal seeks community support to move forward with the development and governance discussions required for implementation.

3 Likes
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Good proposal!

Why only 30% of revenues share tho? 50%+ seems more fair imho!

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Brilliant idea, lets do this :smiley:

1 Like
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Its just an idea we could adjust the % with Odos team

1 Like
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Comments applicable to both proposals.

First of all I think it is great to put this in place in order for the ODOS market capitalization to reflect the value of the business over time.

It could also function as a first step towards more professional and decentralized DAO governance. Eventually you would like to get to a point where 100% of the revenue and treasury is DAO managed. With a budget cycle etc.

With regard to a revenue share there are a few things to be detailed out.

  • Revenue share %: 30% means that 70% goes towards operational expenses and treasury for future development. On top of that there are also ODOS tokens owned by the treasury for the same purpose. Run-rate revenue is $6.2m, 70% of that is $4.3m (again excl. ODOS which can be used). This feels like a high budget for an aggregator. So maybe we have an opportunity to set a higher rate? Another option would be to define $ amount for current expenditures and for future treasury building, and use all excess as revenue share (ie if revenue increases % share increases, if revenue decreases % share decreases)
  • I would make it explicit to exclude the treasury wallet from staking given the above
  • What is the best distribution method? Buybacks can be considered instead of yield.

ODOS is one of the few profitable protocols. I prefer to keep it simple and not implement long term locking mechanisms. It’s a no go for many investors, and primarily has value for protocols which are not yet profitable imo.

2 Likes
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Locking mechanisms its an option either you normal stake gain low % from revenue or you locked your tokens and get higher revenue , it could have weight and power the higher duration the higher power you get

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totally agree with you!

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Thanks so much for putting in the time to submit this proposal and contribute to the DAO’s direction

I know this has been up for a while, and I truly appreciate your patience.

We’ve been working in the background to put in place the right governance structure so proposals like this can be properly evaluated. At the same time, we’re in the process of hiring a Treasury & Trading Strategy Lead, a key role for assessing proposals that involve incentives and treasury management.

Both pieces are almost in place now, and we’ll be revisiting this proposal as soon as we’re ready to give it the thorough review it deserves.

Thanks again for sticking with us through this early phase, it means a lot :orange_heart:

1 Like
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Date: 13/05/2025

Prepared by: Treasury Lead

Original Pre-IOP Thread:

  1. Introducing Passive Income for Odos Stakers from Protocol Revenue

Proposal Author:

  1. Profile - SlashCry - Odos DAO

Proposal Title:

  1. Introducing Passive Income for Odos Stakers from Protocol Revenue
  2. Proposal for a Hybrid Model: Gas Rebate + Revenue Sharing for Odos Protocol

1. Summary of the Proposal

The proposal aims to create a way to reward token holders with protocol revenue, specifically in the form of revenue distributed as staking yield.

2. Proposal Type

  • Financial Proposal

3. Feasibility Assessment

Strategic Alignment: Partial

While we are in favor of creating a mechanism by which $ODOS token holders can be rewarded (and thereby aligning incentives between Odos users and $ODOS holders), this method will either make $ODOS a security, or create additional selling pressure on $ODOS.

Resources Required: $ODOS or stables

We will need smart contract development to create a staking pool, staking function / mechanism, etc. This will need to be formally reviewed by legal and fully audited by a Web3 audit group as well, which is an expensive undertaking.

Budget Impact: High

This will have a direct impact on budget (if paid out in stables). An audit will likely cost $20k. Legal review likely $5-10k.

Execution Complexity: Complex

This requires a non-insignificant lift from the development team.

Community Benefit: Limited

It’s unclear if this will have the anticipated benefits to the community. Whilst there is staking revenue distributed to token holders, if the revenue is distributed in the form of $ODOS, this will add to selling pressure of the token at the detriment of long term $ODOS holders.

Legal & Compliance Risk: High

This, with high likelihood, will result in $ODOS being categorized as a security.

4. Key Risks & Considerations

Under the current passive income proposals, Odos can either reward stakers using $ODOS or using stables. If using $ODOS, this increases sell pressure on the $ODOS token. If using stables, this marks $ODOS as a security, which introduces many layers of legal risk and complications.

Traditional corporate treasuries, as it pertains to stocks, are typically used to conduct the following:

  1. Pay out dividends
  2. Conduct share buybacks
  3. Leverage for M&A
  4. Issue new shares
  5. Split shares

As it stands, only 2 of these are directly value accretive. Of these, the one that carries less risk of $ODOS being labeled as a security is conducting buybacks.

5. Recommendation

Currently, Odos rewards traders who hold $ODOS tokens with fee rebates. However, there are currently no passive reward incentives for non-traders to hold $ODOS. We believe that there should be a mechanism in place to reward long-term holders of $ODOS and to create long term alignment between Odos platform users and $ODOS holders, but in a way that has lower legal risk.

6. Counter proposal

We propose a buyback scheme using revenue accumulated by the Odos DAO. A portion of the revenue (post-expenses including market, fee rebates, etc.) will be set aside for period buybacks. This results in more direct value alignment across the ecosystem without adding to systemic sell pressure. This will be outlined in greater detail in a future proposal.

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Cross posting here as well:

Historically data has shown buybacks have little to no long term price impact, usually serving as a short term publicity stunt rather than fostering sustainability. Accumulating the native token is a strategic misstep and ODOS should be focused on divesting away from the native token over time. Instead, I’d prefer to see the buyback funds used to deepen liquidity pools through LP incentives. If buybacks are necessary as legal insulation, I’d suggest allocating 50% to buybacks and pair it with USDC and LP it as POL.

This ensures liquidity can deepen over time and the project can divest away from the token in a sustainable manner

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Hey mate, what you suggested is something that I’ve been thinking about as well. The aim of the buybacks isn’t just to accumulate tokens - we need to deploy those tokens in a way that brings additional value to the treasury. POL is the perfect way to do that, and we can deepen our liquidity pools on Aerodrome / Uniswap in the process.