[RFC] Mendi Improvement Proposal - Integration and Partnership with Turtle Club

Governance Proposals
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Author: SuperChad (Founder of Turtle Club)

Title: Integration and Partnership with Turtle Club

Type: Request For Comment

Link to Snapshot: Snapshot

Turtle.Club Proposal Summary
This proposal advocates for a strategic integration between Mendi Finance’s lending protocol and Turtle Club, aiming to enhance liquidity provision and security measures synergistically. Aligning with Mendi Finance, Turtle Club seeks to cultivate a stronger, mutually beneficial ecosystem by leveraging its innovative solutions. This partnership addresses challenges faced by Web3 and DeFi platforms while empowering Mendi Finance to leverage Turtle Club’s expert auditors and liquidity providers, reinforcing due diligence and ecosystem resilience. Turtle Club will reward all of Mendi Finance’s liquidity pools with Turtle rewards, offering new and existing Mendi LPs significant emissions boosts and a stake within the Turtle Club syndicate. Additionally, Mendi Finance DAO will receive Turtle rewards at each epoch’s end based on the amount of contributions Mendi and Turtle Mendi LPs make to the TurtleDAO. In exchange TurtleDAO asks Mendi Finance to contribute 25% of all the emissions Turtle Club LPs acquired during each epoch. Further aligning the interests and granting Both DAO’s a role and say in each other’s direction.

Please note that all Mendi Finance emissions received by the TurtleDAO will be retained within the TurtleDAO treasury, preventing market dumping and nurturing a symbiotic relationship between both parties.

About Turtle Club
Turtle Club was formed by a host of Crypto OGs across multiple fields Operating within a DAO framework, Turtle Club realigns incentives among key stakeholders in Web3—Protocols (founders/developers), Liquidity Providers (LPs), Venture Capitalists (VCs), and Smart Contract Auditors (auditors)—empowering each member to leverage superior collective security and bargaining power through a decentralized liquidity syndicate. Consequently, even novice Turtle Club participants stand to gain better risk-adjusted rewards compared to established whales or existing Web3 VC funds without having to pool their liquidity or take on any additional smart contract and counterparty risk.

Turtle Club is the first phantom protocol with no smart contracts and fees. And thus, provides LPs with unlimited upside and no downside.

Motivation
The integration with Turtle Club presents a multitude of advantages for Mendi Finance and its community. By partnering with Turtle Club, Mendi Finance gains access to a network comprising seasoned auditors and liquidity providers, thereby bolstering security measures and fortifying the overall resilience of the ecosystem. Furthermore, the provision of a 25% emissions boost for Turtle Club LPs serves as a powerful incentive for liquidity provision, consequently enhancing Mendi Finance’s prominence within the DeFi sphere.

Turtle Shield Security Seal
Through exclusive collaborations with ConsenSys Diligence, Omniscia.io, Code4Arena, and Creed, alongside our internal auditing team and community, Turtle Club implements proactive security protocols to protect the assets of our LPs and the wider Web3 community. We prioritize close cooperation with Turtle Club Protocol Partners, including Mendi, to forge robust and resilient Web3 building blocks. In pursuit of this goal, we advocate for increased investment in security measures at every stage of development. To facilitate this, we directly subsidize audits.

Auditing and Bug Bounty Discounts
We secure the best industry-wide rates for auditing and bug bounty services through our partners:

  • ConsenSys Diligence
  • Omniscia.io
  • TheCreed.xyz
  • Code4Arena (To Be Determined)

Direct TurtleDAO Stablecoin & Turtle Emissions Subsidies
Upon securing discounted rates for our Protocol Partners’ auditing and bug bounty needs, the TurtleDAO offers a security grant equivalent to up to 10% of the total security costs in stablecoins and an additional 10% in Turtle emissions. This results in a subsidy of up to 20% (in addition to any negotiated discounts or competitive pricing) towards the security expenses of our Protocol Partners.

Liquidity Rehypothecation & Turtle Club Emissions Boost
Turtle Club offers a unique opportunity for both existing and new Mendi liquidity providers (LPs) to amplify their emissions by collaborating with our platform. LPs can increase their Turtle emissions by rehypothecating their liquidity across Turtle Club’s partner protocols. Whenever liquidity is rehypothecated, Turtle Club Partner Protocols contribute to the TurtleDAO, triggering rewards distribution to LPs (80% share) and Turtle Club Partner Protocols (20% share) in Turtle emissions.

ZeroLend example and power of safe rehypothecation
Presently, Turtle LPs participate in providing liquidity to both ZeroLend and (Gravita and Renzo) simultaneously. Consequently, Turtle LPs earn double Turtle points, as they make two distinct contributions to the TurtleDAO by providing liquidity to both ezETH and Grai ZeroLend liquidity pools and thus receive two different emissions streams from TurtleDAO.

TurtleDAO Emissions Model
Emissions generated by Turtle Club LPs are channeled directly into the TurtleDAO treasury at the culmination of each epoch, typically spanning one month. Backing the Turtle points the TurtleDAO has issued to LPs throughout the epoch, which translates into a Turtle emissions boost for liquidity provided to Mendi Finance’s lending and borrowing protocols. 80% of Turtle points will be distributed these incentives benefit Mendi Finance LPs enrolled in the Turtle Club initiative, while the remaining 20% are allocated to the Mendi Finance DAO. This provision grants our Protocol Partners voting rights within the TurtleDAO, aligning the interests of both projects. It’s essential to clarify that this model isn’t a rebate; rather, our co-incentivized emissions approach offers additional yield for both existing and new Mendi Finance LPs. During our inflationary bootstrapping phase, this yield is expected to surpass Mendi Finance TurtleDAO contributions, providing a substantial emissions boost to new and existing Mendi LPs. This mechanism aids Mendi Finance in boosting yields and transitioning to a more sustainable emissions model, while mitigating the risk of flooding the open market with Mendi Finance tokens.

TurtleDAO Monetary Policy
TurtleDAO’s monetary policy is crafted to provide additional incentives through Turtle emissions across all Turtle Club partner protocol liquidity pools. Our objective is to assist Protocol Partners in attracting and retaining liquidity by co-incentivizing and leveraging their Total Value Locked (TVL) at a higher utilization rate, fostering a more sustainable and productive liquidity model over time.

The issuance model of TurtleDAO enhances the collective bargaining power, security, and network effects of the Turtle Club liquidity syndicate, surpassing the pace of reward reduction for Turtle LPs and Partner Protocols. Adjustments to the Minting Cost (MC) of Turtle tokens are made solely in response to significant growth in Turtle Total Value Locked (TVL) and Turtle Syndicate TVL (undeployed TVL), facilitating a transition towards a sustainable issuance and deflationary rebasement model as the Turtle Club Syndicate expands. This rewards early contributors and increases the interest-bearing price floor of each Turtle token in circulation.

Token Swap Agreement
Turtle Club will provide Mendi Finance with a list of Turtle Club members that have farmed Mendi emissions throughout the epoch. Mendi Finance agrees to transfer 25% boost on all the Mendi emissions that Turtle Club member LPs have farmed throughout the epoch. Turtle Club agrees to pay out 80% of the Turtle incentives to Turtle Club LPs that have provided liquidity to Mendi Finance and 20% to the Mendi Finance DAO. This ratio and allocation is subject to change with a Turtle Club DAO Improvement Proposal. Both Mendi Finance and Turtle Club commit to executing the token swap within 48 hours following the culmination of each epoch. This agreement underscores a mutual dedication to expedient and seamless collaboration, facilitating the exchange of tokens and fostering closer integration between the two protocols.

Alignment with Mendi Finance’s Vision
This proposal seamlessly aligns with Mendi Finance’s ethos of innovation and community-driven growth. By embracing collaboration with Turtle Club, Mendi Finance endeavors to cultivate a more transparent, efficient, and secure ecosystem that caters to the diverse needs of all stakeholders. Through this strategic partnership, Mendi Finance reinforces its commitment to driving positive change and unlocking new avenues for growth within the DeFi landscape.

Technical Considerations
The integration involves sharing the Mendi Finance emissions API’s with Turtle Club. So that Turtle Club can facilitate its seamless interoperability and emission boost. 2 to 3 days of development work will be required by Turtle Club to ensure compatibility and optimize performance post-implementation. No work is required by Mendi Finance core development other than sharing the correct API data. As the Turtle Club CTO & CSO will oversee the technical aspects of the upgrade, ensuring adherence to best practices and security standards.

Expected Timeline
Deployment Target: aiming to integrate with Mendi Finance before the LXP - L campaign starts at the beginning of April.

Increased Liquidity
By integrating with Turtle Club and offering an additional yield source in the form of Turtle potints, Mendi Finance not only stimulates participation and engagement but also attracts top-tier liquidity providers, fostering organic expansion and enhancing market depth and efficiency within the platform. This access to a broader network of liquidity providers amplifies liquidity depth and market liquidity within Mendi Finance. Additionally, existing Mendi Finance LPs will benefit from a Turtle points boost on LRTs such as ezETH and weETH, further incentivizing new and existing Mendi LPs with additional and compounded Turtle yields.

Collective Due Diligence: Turtle Club’s community-driven approach to due diligence ensures that Mendi Finance benefits from collective insights and expertise, mitigating risks and enhancing overall protocol integrity.

Mutual Growth Opportunities: Collaboration with Turtle Club opens doors to mutually beneficial growth opportunities, such as cross-promotion, shared resources, and collaborative initiatives, fostering a stronger and more interconnected ecosystem.

Transparent Governance: Integration with Turtle Club aligns with Mendi Finance’s commitment to transparency and community governance, empowering users to participate in decision-making processes and shape the future direction of the protocol.

Additional Benefits for Partner Protocols

20% Emissions Share: Partner protocols such as Mendi Finance would receive 20% of the emissions assigned to the community, aligning the incentives and encouraging further collaboration and partnership within the Turtle Club ecosystem.

Lack of Smart Contract Risk: Partnering with Turtle Club mitigates smart contract risk, as Turtle Club operates without deploying any smart contracts, ensuring a streamlined and efficient process for liquidity providers.

Token Acquisition Strategy: Turtle Club intends to acquire and not sell the Mendi.tokens it receives, ensuring a long-term commitment to the success and growth of partner protocols like Mendi Finance within the ecosystem.

1 Like
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I missed the snapshot but I am in favor of this proposal :+1:

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Thanks SuperChad and Turtle DAO for writing up this proposal.

We have talked with Turtle DAO and SuperChad about this potential integration and the whole architecture of the protocol and its MVP is very interesting. We helped Turtle DAO post the proposal, as we think that this is an interesting RFC and potential future proposal that belongs in the governance discussion.

As the RFC is currently more geared towards the community, we are not planning to participate by voting in the RFC.

We believe that for a healthy discussion, the community should consider the proposal by its affect on the DAO, competitiveness, and long-term effects.

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Hi, Can you detail better what liquidity provision do you guys do?
Are you providing LP on Mendi/USDC on DEX or is it Lending tokens on Mendi?
Can you post link from your socials to know you better?
What token emissions are you guys asking of about 25%?

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Of course, the Turtle.Club is a phantom protocol. Thus we do not have any smart contracts. Our members deploy liquidity into any protocol or liquidity pool they like. We are not financial advisors and do not want to dictate what they should do with their money. All we do is create interesting liquidity strategies with our protocol partners as options for our members to consider. Currently Turtle.Club members should have close to $4m or $5m in liquidity on Mendi. Lending & Borrowing ezETH, ETH, WBTC and USDC primarily. However, we can provide and incentivize any Mendi dex pool as well. As long as Mendi emissions are being offered on those pools. We can also provide emissions boosts on pools without Mendi emissions, assuming we have an agreement in place with the dex and their emissions. Currently we have a 25% boost agreement with thenile.exchange, lynex.fi and we are in the process of agreeing terms with Pancakeswap. Thus, if they list any Mendi pairs and incentivize them with emissions, by extension we will be paying out Turtle emissions on Mendi pools for any Turtle.Club LP that provides liquidity to those Mendi pairs. In the instance where two or more of our protocol partners are emitting emissions on a Mendi pool. We would be paying two seperate streams of Turtle emissions to our Turtle.Club LPs. As they would be generating two seperate contributions to the TurtleDAO (think Nile and Mendi emissions for example).

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Where is this 25% more emissions that you want from Mendi come from?
Can you simplified what gains do we have and what gains you have?
What is the purpose of your points?
I’m sorry guys, but I didn’t see much advantages for us imo.
I understand you guys lend and borrow tokens and can provide LP on dexes, but this is what everyone in the market can do.

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It looks like I didn’t convey what Turtle.Club is and what the value add is for the Mendi community very well. I’d suggest reading the Docs - Turtle Club Syndicate whitepaper as this isn’t a fork with a twist, Turtle.Club is bringing real innovation into DeFI and LPing.

The 25% Mendi emission boost will come from the Mendi Treasury and be paid into the TurtleDAO. We will mint Turtle incentives which should equate to a even greater $$$ value of Turtle emissions being distributed to the Mendi LPs and community. Thus, Turtle emissions are a function of each Partner Protocols $$$ contributions into the TurtleDAO at the end of each Epoch.

Given that Marco, Cameron and I worked very hard on the LXP L campaign and will continue to bring value and liquidity to all the Linea ecosystem Dapps in the future. It is disheartening that one whale can nuke my proposal, especially given that they bought all their Mendi a couple of days before the LXP L campaign was announced?

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Is it possible to see an estimation of how much the TVL of Mendi would increase should this proposal pass?

On a first read through I had missed that the MENDI were going to be held by Turtle DAO rather than merely sold by the Turtle members farming it. What is the smart contract address they will be held in, and is there more information available about it? eg is it a multisig, x of y, or an EOA?

Edited to add: Will this Mendi be staked? It would make sense for Turtle DAO to be able to participate in governing Mendi if they see the value long term

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I think the most direct track record of Turtle DAO in terms of scaling up the Linea ecosystem is their direct involvement with designing the LXP-L campaign. Glad that SuperChad mentioned that.

TVL growth:

I think there are two factors two consider:

  • Unrealized or loss of growth if other protocols partner with Turtle DAO like ZeroLend and LPs within this large network choose a competitor
  • Potential upside: I can’t speak for Turtle DAO in terms of actual numbers. My understanding is that this is a large upside, and if it would have been in terms only a couple million I wouldnt have seen this as relevant discussion given the size and growth trajectory of Mendi DAO.

I think if this proposal would pass the RFC, the MIP proposal should expand more on:

  1. Security of storing the emission boost within Turtle DAO (Good point from Dave)
  2. some estimation fo upside would be beneficial
  3. terms of maintaining the partnership. Would there be a minimum liquidity requirement in the first 1 month for example?
    I do have to point out again that Turtle DAO did already deposit liquidity to Mendi in terms of a couple million to the protocol.
2 Likes
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All our Protocol Partners tokens will be kept in the DAO and Staked. We plan to launch a DAO on Linea before the end of Epoch 1 (End of April) where all the tokens will be held.

We plan to participate actively in governance of every project we acquire a significant stake in.

The Turtle.Club members have around 4m or 5m of the total Mendi TVL as of this moment and this should increase substantially over the coming months.

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I understand concerns around security in Web3.

Turtle.Club have assembled one of the strongest if not they strongest collective of auditors in the world.

Our Head of Security is the CSO and Co-founder of Omniscia and one of the most prolific bug bounty hunters in the history of web3. We know how to safeguard funds.

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I have voted for yes, as I believe this can be beneficial for Mendi. People and organizations behind Turtle.DAO look quite legit (someone who has been involved in designing the LXP L campaign + auditors like Consensys Diligence, Omniscia.io, Creed, and Code4Arena). I also see the risk of having this LP going somewhere else instead of Mendi, as mentioned above me.

Although if RFC passes would love to see these in the MIP:

  • Mendi receiving the audit made by Turtle DAO, so the protocol and community can directly benefit from it
  • Setting up a vesting period for the 25% emissions received (I could imagine it even vested into a uMendi or sMendi staking contract)
  • A min. liquidity size for a certain period
  • A cap for total number of Mendi emissions
  • And would would like to see more exact predictions on what size of LP the community can expect
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All of these suggestions are possible, they just impact how many Turtle emissions are minted. As less TurtleDAO Mendi contributions = less emissions being distributed back to Turtle Mendi LPs and the Mendi DAO.

I would advise against placing a cap and just reduce or change the Mendi/TurtleDAO emissions boost percentage at the start of each epoch to align with Mendi’s liquidity needs.

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I agree with this, but also caution against the appeal to authority argument of Turtle DAO knowing auditors, and helping design the LXP L campaign. In my opinion, it should be made clearer the benefits to Mendi if the proposal passes. Ideally this would be in the initial post for the MIP now that the RFC is currently passing. I know a lot of auditors too, but unless there is a defined benefit to the proposal recipient from me knowing them, I leave it out of the proposals I make

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When you say kept in the DAO, I asked specifically around how the wallet they will be kept in is managed - can you answer specifically? Sorry for the question, but there is a lot of trust difference between EOA, multisig, and aragon forks - and all could be considered a DAO. Do you have a public governance forum?

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As it stand the RFC passes and it will be able to move forward to an MIP.

With the many questions the community had we have agreed with Turtle DAO to cooperate on implementing the feedback on the proposal together and submit tehe MIP as Mendi Core Team x Turtle DAO.

We see this as a strategic move, where inaction could potentially put the protocol at a disadvantage against competition, so we offered to Turtle DAO that we come onboard as an author for the proposal and participate in improving the proposal to be ready for MIP. They agreed to this.

There is no requirement to post automatically the MIP once the RFC passes, so we will first rework the proposal and post it once ready. I do think that a better structured proposal will answer a lot of questions and the DAO can vote on the MIP with more information.

Due to this we weighed in on the RFC with some votes, although it does not change the outcome of the RFC.