General (non-BEX) RFRV Reward Vault Request for drUSD

1. Proposer Details

  • Email
    • derek@reservoir.xyz
  • Proposer’s project name
    • Reservoir
  • Proposer’s X account (you will be required to make a post from the X account provided for verification purposes)
  • Best Telegram Handle for questions/fixes
    • @spacewhalecapital
  • Affiliation (protocol / one of the tokens in the contract)
    • drUSD (Dolomite rUSD)

2. Protocol Details

3. Contract/Pool Details

  • Contract Name (Example: $EXAMPLE / $BERA)
    • $drUSD
  • Contract Address: Insert the contract address.
    • 0x3000c6bf0aaeb813e252b584c4d9a82f99e7a71d
  • Contract Type / Configuration: Is it a standard AMM pool, a lending pool, a derivatives pool, a custom contract
    • Lending pool
  • Describe how the contract works (e.g., how to mint and redeem shares of the contract, if tokens can be exchanged within the contract…)
    • Deposit rUSD into Dolomite
  • Contract Fees: Outline the fee structure (e.g., 10% of staking rewards)
    • No fees for depositing or withdrawing
  • Existing Liquidity / TVL: current liquidity and volume stats (if applicable).
    • Launched during Berachain’s genesis. Usage is just ramping up now.
  • Identify any address(es) controlling more than 10% of the contract shares
    (address / type: team, protocol-owned liquidity, etc.)
    • N/A
  • Is the contract upgradable?
    • Yes
  • Contract Control: (Multisig/Single Owner/RBAC/Permissionless/Governance)
    • It’s controlled by the owner of DolomiteMargin, which is a delayed multisig.
  • Additional details on Contract Control
  • Is the contract verified?
    • Yes
  • Can the contract be paused?
    • No
  • Does the contract rely on oracles?
    • Yes, indirectly since the contract wraps around a user’s Dolomite Balance. Collateralization checks are skipped as long as transfers with a dToken are between accounts that do not have debt.

4. Token Details

Provide the following details for each token in the contract (up to 5):

For Major Tokens:
For Non-Major Tokens:
  • Name - Reservoir Stablecoin
  • Symbol - $rUSD
  • Contract Addresses (on Berachain and bridging addresses if cross-chain):
    chain / address
  • Tokenomics, Distribution, and Vesting (links to official docs, website, etc.)
    • n/a
  • Identify any address(es) controlling more than 10%
    (address / type: team, foundation, investor, etc.)
    • n/a
  • Does the project issuing the token have any relationship with current Berachain validators?
    • Yes
  • If yes, which one?
    • Infrared, Kodiak
  • Total Supply Cap (if any)
    • n/a
  • Circulating Supply
    • $63.5m ($48m on Berachain)
  • Token Type:
    (Governance, Utility, Memecoin, Stablecoin, LST, RWA, Other)
    • Stablecoin
  • Provide extra details (e.g. Use case, Redemption mechanics, Peg stability)
    • PSM on ETH for 1:1 swaps with USDC, there is also a liquidity pool on Kodiak
  • Are token contracts upgradable?
    • yes
  • Token Control: (Multisig/Single Owner/RBAC/Permissionless/Governance)
    • Permissionless
  • Additional details on Token Control
    • n/a
  • Is the token contract verified?
    • yes
  • Is the token a standard ERC20 or any functions have been customized? (e.g. transfer, balance, mint, burn…)
    • Standard ERC20
      (If custom, provide a link to an audit.)
  • Can the token be paused?
    • no

5. Token / Project Background / Incentive Token Whitelist

Only two tokens can be whitelisted for use as incentives in a Reward Vault. Indicate which tokens will be used and provide all relevant information below.

Required Data for Incentive Token:

  1. Token #1
  • Name - wBera
  • Symbol - $wBERA
  1. Token #2
  • Name - Dolomite rUSD
  • Symbol - $drUSD
  • Address: 0x3000c6bf0aaeb813e252b584c4d9a82f99e7a71d
  • Token Type: Lending Market receipt token, standard erc20
  • Can the token be paused?
    • No

Additional Requirements:

  • Specify how many tokens you plan to allocate for incentives and over what period of time.
    • 15,000 BERA over 6 months
    • A portion of borrow revenues may go towards bribing validators
  • Outline how decisions about token incentives are made (DAO, multi-sig, etc.).
    • DAO based governance decision
  • Incentive Manager address (this address will manage the incentive token, being able to add incentive tokens to the reward vault and change the incentive rate)
    • 0x5e102471d7084884836eE994877635c8399BD7b7

6. Growth, Community & Ecosystem Impact

Why This Contract Matters:

  • How will this contract benefit Berachain?
    • rUSD will be a fantastic asset to lend on Dolomite. Already approved for emode, rUSD will be used for automated looping of srUSD, providing sustainable stablecoin yields within the Berachain ecosystem. Users can also borrow rUSD against many other assets on Dolomite. drUSD will be a key pillar of a robust stablecoin lending market.
  • Will it deepen liquidity for a major ecosystem token (e.g., BERA, core stable asset)?
    • No.
  • Does it enable important trading pairs that drive adoption or integrate with other Berachain projects?
    • Yes it drives demand for rUSD in the Kodiak rUSD/Honey pool and the rUSD deposits on Dolomite will provide leverage for many other berachain tokens.

Potential Volume / TVL:

  • Provide metrics or estimates on liquidity you expect to attract.
    • $50mm+
  • Highlight any known liquidity commitments. (If you or partners plan to seed the contract, provide proof of funds or a statement of intent.)
    • Several of our partners are ready to deploy once this goes live

Synergies with Other Protocols:

  • Will this contract feed into any yield aggregators, lending markets, or liquid staking derivatives on Berachain?
    • Yes this will feed into Dolomite and Infrared. Dolomite will accumulate more lending liquidity for rUSD, which will increase staking rates for srUSD and make looping more desirable.

Marketing / Promotion:

  • Are there plans to co-market with another project to bootstrap liquidity?
    • Yes - Dolomite + Infrared

Long-Term Vision:

  • How could this reward vault evolve over time? (E.g., eventually becoming a core liquidity pair or a major stable pool for the chain.)
    • Major source of leverage for berachain assets and consistent source of yield
    • Eventually drUSD deposited in PoL will be a collateral asset to borrow against

7. Verification

Please post the following text with the provided X account:

Submitted Reward Vault Request for $drUSD on protocol Dolomite with incentive token wBERA

3 Likes

The goal of this reward vault is to contribute to the growth of the Berachain ecosystem. In order to ensure this goal is met, below are a few notes to ensure the implementation of the vault aligns with Governance.

  1. To kickstart this flywheel of borrowing, much of the early activity will be synthetic. The maximum leverage on this loop will be capped at 10x. Once there is a healthy amount of borrowing demand for rUSD, this loop will transition to include using Honey as a borrowing asset for polrUSD.

  2. The reserve factor will be set at 50% for rUSD, 50% for Honey.

  3. Reservoir and Dolomite will bribe the rUSD token deposits into Dolomite in order to encourage deposits.

  4. The new deposits will kick off a flywheel for using drUSD as a collateral asset, and also raise rates for srUSD to encourage more looping using Honey, USDC and other stables.

  5. Borrowing against drUSD deposited into proof of liquidity (polrUSD) in emode will only be available in rUSD and Honey. This will establish Honey as the premier lending asset for PoL assets, while also safeguarding other major stables from excessive rates.

In the long run, this flywheel establishes significant demand for Honey generating a positive outcome for the DeFi markets on Berachain and the ecosystem as a whole.

Following up on the post above, from the Reservoir perspective, rUSD supply scaling drives 2 net benefits for Berachain:

  1. higher srUSD rates which drives activity in the lending markets (Dolomite and Euler)
  2. increased revenue for the Reservoir protocol, of which a portion of those profits will be to buy Bera and incentivize the reward vault on a consistent, long time frame (alongside Dolomite putting up incentives as well).

Reservoir scaling drives TVL growth natively on Berachain and creates buying demand for Bera to provide incentives as the protocol will need to do more of as TVL grows.

We welcome and comments / feedback from the community and the @BeraLabsTeam.

Thank you for the additional explanation team.
Can you speak to the expected profit margins (from any projected calculations) for example, and what percentage of these profits you expect to go towards incentvization?

Thanks @BeraLabsTeam5, see notes below!

At launch as an example, $100m deposited into drUSD (this would be a minimum $10m principal rUSD into the protocol at 10x looped; if people use less leverage, the principal will rise) and with the current Reservoir balance sheet yielding 6% apy - this would equate to $600k in annualized profit margin for the protocol. Reservoir intends to use 25% of this profit, $150k annualized, $12.5k per month to incentivize the reward vault.

Additionally, Dolomite is contributing incentives to the vault - 30% of the fees from lending for drUSD. For example, $10m deposited ($100m in drUSD, so $90m lent), at a ~90% utilization, 16% apr, at 30% of fees equates to $4.32m, annualized, $360k per month.

Bringing this together results in $372,500 of BERA being purchased each month to use toward incentivization. We intend to grow and scale this market as much as possible and this will create more buying demand for BERA.

The other net positive through this profitability, is that Reservoir can keep the srUSD apy rate (the yield bearing stablecoin) at the highest yielding level on Berachain creating more TVL growth and increase lending and borrowing in both Dolomite and Euler.

The interest rate for borrowing rUSD vs. supplying srUSD is purposefully set higher to encourage people to loop other stables into srUSD — so there are implicit second-order effects of this loop that will drive risk-off stablecoin loopers into the Berachain ecosystem. Looping those “other stables into srUSD” will likely result in more net buying of BERA as Dolomite creates reward vaults for assets like HONEY and redirects fees into buy pressure.

2 Likes

bm excited to see this pol vault go live, very creative. im looping srUSD on Dolomite and looking to put my rUSD to work to acquire BGT.

Any update on this reward vault? I have idle rUSD patiently waiting to deploy here