KIP Draft: Doubling your Rooks

Proposal

The current community sentiment showed interest in token buybacks and burns. My perspective on the most rewarding approach for protocol users is creating our version of xSushi and creating xRook. For those unaware, xSushi is the distribution method the protocol uses to redistribute 0.05% of its swap fees back to users. This is done through single-sided staking to avoid impermanent loss risk and rewards are auto-compounding.

Specification

The execution of this approach is based on token buybacks from the free market which are deposited onto the xRook pool, you can then choose to burn your xRook back into Rook at a higher ratio than what you initially deposited.

The advantage of xRook, as opposed to outright burning the purchased equity, stands on three pillars, it rewards market participants who refrain from selling their tokens for extended periods, incentivizes newcomers to the protocol to stake their tokens instead of trading with them, and finally offers much-needed productivity to Rook through staking.

There are many different venues to take for Rook buybacks what I propose is a multi-pointed approach that is the least damaging to the protocol’s expansion, 10% of revenue is allocated to buybacks, a 10% of treasury yield is allocated to buybacks, and all arb profits from the Rook/xRook pair get redistributed to stakers.

Limitations

The risks associated with this are if the on-chain data goes against this proposal. In other words, if sushi stakers into xSushi historically have not staked for an extended period and in times of high volatility have historically sold then xRook might not be the best good approach.