In an effort to be as brief as possible with the BIP-0001, it appears that brevity created some additional questions. Fortunately, the comments made by @Seventh and @Hyde answered some of these questions already. To clarify: BIP-0001 is specifically to jumpstart Governance, and consequently vote on liquidity mining parameters not fully visualized on the diagram.
BIP-0001 in brief:
If approved, this proposal seeks to reward 1.42% of FISH once to XUSD holders (80%) and FISH stakers (20%). The reasoning is that XUSD holders must have a voice on future liquidity mining incentive proposals. Although the FISH rewards will have a cliff and six-month vesting (at least), the recipients will nevertheless have their respective amounts automatically staked and have a proportionate voting power. Early withdrawals are possible only after the initial cliff and vesting has passed, and will be the same currently used for Sovryn’s bitocracy. Hyde’s suggestion to use these “penalty FISH” to reward patient FISH stakers sounds logical.
Short-term liquidity mining rewards:
The reasoning here is to 1. incentivise stablecoin flow directionally towards RSK. The diagram states that FISH will be rewarded to XUSD depositors, but to avoid dilution of FISH and the system being gamed, this amount will be symbolic and capped between 1-10 FISH, depending on the amount deposited. This reward should also have a cliff and a 6 month vesting to start.
Liquidity mining rewards are meant to incentivize deposit, but not to be held idly, rather to be used across protocols on RSK. Consequently, we will engage protocols already accepting XUSD to provide lenders of XUSD with an LP token that can be used to earn FISH. This part has been left out of the diagram until further advancements are confirmed with participating protocols. These rewards ought to be calculated on a per-block basis to be as accurate as possible and visible in the UI. Alternatively, a UI can be designed within BabelFish to facilitate these processes and keep it simple.
Short-term XUSD Rewards for FISH Stakers:
The reasoning here is to 2. Lend collateral on parent chain’s blue chip lending protocols and 3. Use yield to accrue rBTC for protocol insurance and FISH staker rewards. IMHO BabelFish should start building an rBTC insurance pool with sky as the limit, rBTC should be BabelFish’s only protocol-owned liquidity (POL). One of the perks of being a FISH holder is deciding how to manage this ever-growing POL.
As for 4. Recalibrate lending and collateral parameters through bi-weekly votes, and deposit/withdrawal incentives for certain stablecoins (balancing curves), this requires us to 5. continue researching the stablecoin landscape and hedging risk and will come once the first promises are delivered. This does not mean it is the least important, it is a top 5 promise, and it is massively important to diversify the collateral further. Potentially a vote can be had to do a significant part of this manually at first (i.e. bridge back half of rUSDT to Ethereum and lend it out).
Hope this clarifies the intent and spirit of BIP-0001. Keep asking questions and let’s keep this conversation flowing in the right direction - forward!