Proposal for a Hybrid Model: Gas Rebate + Revenue Sharing for Odos Protocol

General
1

Currently, the Odos protocol utilizes a gas rebate model to incentivize users. While this approach provides immediate value to traders, it does not create long-term incentives for token holders. To enhance sustainability and increase the attractiveness of holding ODOS tokens, I propose shifting to a hybrid model that combines gas rebates with revenue sharing.

Proposed Changes

  1. Maintain the Gas Rebate Model – The existing gas rebate system will remain in place, ensuring users continue to benefit from reduced transaction costs.
  2. Introduce Revenue Sharing – A portion of the protocol’s revenue will be distributed to ODOS token stakers, providing them with passive income and increasing long-term holder engagement.

Benefits of the Hybrid Model

  • Enhanced Token Utility – Staking ODOS tokens will become more attractive as it provides real yield, increasing demand and reducing selling pressure.
  • Sustainable Growth – By balancing incentives for both users and long-term holders, the protocol can achieve sustainable adoption and growth.
  • Increased Community Participation – Token holders will have a direct incentive to support and promote Odos, leading to a stronger and more engaged ecosystem.
  • Greater Decentralization – By distributing a portion of the protocol’s revenue to token stakers, the governance and economic benefits are spread across a broader community, reducing reliance on centralized entities and increasing the protocol’s resilience.

Implementation Considerations

  • Smart contract upgrades to enable staking and revenue distribution.
  • Community governance to decide on revenue allocation ratios.
  • Transparent reporting mechanisms to ensure fairness and efficiency.

Conclusion
This proposal aims to enhance the Odos protocol by introducing a hybrid incentive structure that benefits both traders and long-term investors. By keeping gas rebates while introducing revenue sharing, Odos can position itself as a more sustainable and attractive platform in the DeFi space.

I invite the community to provide feedback and discuss potential adjustments to this model. Let’s work together to optimize the long-term value of Odos!

2 Likes
2

Both idea is similar we can merge them into one , we need to add lock duration.

  • 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.
2 Likes
3

I love this proposal. What do the Odos team thinks about it?

2 Likes
4

I definitely support ideas that can help increase the ODOS price. Maybe we can add tiers of staking time, like if you lock your ODOS for 1 month, the reward percentage could be X. For 3 months, it could be X + 1% (or X + 2-3%), and for 6 months, X + 3% (or X + 4-5%). We can discuss the percentages later, but what I’m trying to say is that we need to do something that can help make the ODOS price sustainable. It has dropped a lot, aside from market conditions.

1 Like
5

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
6

Date: 13/05/2025

Prepared by: Treasury Lead

Original Pre-IOP Thread:

  1. Proposal for a Hybrid Model: Gas Rebate + Revenue Sharing for Odos Protocol

Proposal Author:

  1. Profile - DAOM - 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.

7

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