[RFC] Accelerating a self reinforcing flywheel for Reserve Defioneers (airdrop 😜): Merkl

Ideas & suggestions
1

Accelerating a self reinforcing flywheel for Reserve Defioneers - airdrop :stuck_out_tongue_winking_eye:: Merkl Request For Comment (RFC)

This document outlines a comprehensive onboarding program for the Reserve Protocol, designed to boost user engagement and ecosystem growth. The initiative aims to address the challenges faced by Reserve in achieving widespread adoption. By leveraging Merkl, an all-in-one reward and incentivization hub, the program seeks to drive high-value, onchain learning and sticky protocol education.

The proposed campaign has a budget of $300,000 in RSR rewards and sets ambitious objectives, including increasing stRSR to 15% of circulating RSR within 90 days, expanding the Reserve community’s talent pool, and targeting a 5% increase in price-adjusted Total Value Locked (TVL)

Through a combination of base points for staking RSR and various booster points for additional activities, the program incentivizes users to actively participate in the Reserve ecosystem, fostering growth and security.

Situation

Opportunity

Emerging tech can struggle with adoption because it’s difficult to use, risky, and lacks word-of-mouth advocacy. Users often don’t know where to begin, let alone understand the upside or the risks. Reserve protocol isn’t immune to this—same challenge, same hurdle.

Proposed Solution

Launch an onboarding program, supported by Merkl, that drives high-value, magnetic, onchain learning and sticky protocol education. Reward users, ignite engagement, and set the stage for viral word-of-mouth advocacy.

Proposed program budget

Reward stakers and boost-behavior users with $300K in RSR.

Program objectives

  • Primary: Achieve 15% stRSR / circulating RSR in 90 days (Boost RSR stakers by 50%), increasing security of the Reserve ecosystem
  • Secondary: Expand the Reserve community’s talent and advocacy pool through onchain tasks, aiming to forge a new crop of supporters and qualified governors.
  • Tertiary: Track RToken supply impact (TVL) from a surge in ecosystem action—staking, governing, holding, LPing, storytelling. Target a 5% TVL lift. Let’s see if we can put a dent in or blow past it by program’s end.

Reward Calculation

  • You will become eligible and earn points by staking RSR on eligible tokens during the program
  • Points will be rewarded to all users at a fixed rate: each staked RSR will earn 1 point per 24 hours.
  • Your points will then be multiplied by boosters to determine your final score:
    • Your score will be: basePoints * (1 + sum of boosters)
  • All user scores will be added at the end of the program, if you hold 3% of the total score, you will earn 3% of the reward pool.

Staking RSR will earn “Base Points”’, these points can then be augmented with “Booster Points.” The boosters will add up and multiply your number of points.

Base Points - earn by performing core actions

  • Sign a message to participate in the program*
  • Maintain a staked 100,000 RSR (or larger) position ensuring the holding period overlaps the final day of the 90-day program. The earlier you are staking RSR, the more rewards you get. The eligible RTokens for staking RSR on are:
    • ETH+ (Ethereum)
    • USD3 (Ethereum)
    • eUSD (Ethereum)
  • Each RSR staked will earn 1 base point every 24 hours

*If you already have stakedRSR it will be retro-actively taken into account if you signed a transaction at the beginning of the program

Boosters - increase your rewards by several folds (max boosters is 4)

Your final score will be calculated as follows:
FinalScore = basePoints * (1 + sum of boosters)

The best you can do is achieve a booster score of 4, meaning that your base points will be multiplied by 5.

Some boosters are static, meaning that they are either earned or not
Some boosters are variable, meaning that the boost depends on the capital commited.

  • “Use RTokens” Variable Booster – Mint or swap-into at least $Y RTokens and hold them during the program
    • The eUSD, USD3 or ETH+ RTokens can be minted at Reserve Register - Reserve Protocol Interface or swapped-into from one of the following pools: Reserve Register - Reserve Protocol Interface
    • You need $100 in at least one RToken in your wallet, if the RToken price decreases during the program, you will still be eligible for this boost
    • Boosters based on $Y:
      • Y >= $100: 0.25
      • Y >= $250: 0.5
      • Y >= $500: 0.75
      • Y >= $1000: 1
    • If you LP these RTokens in one of these pools, the booster is multiplied by 2:
      • ETH+
        • Specific Pool 1 (e.g. Morpho, Curve, etc)
        • Specific Pool 2 (e.g. Morpho, Curve, etc)
      • USD3
        • Specific Pool 1 (e.g. Morpho, Curve, etc)
        • Specific Pool 2 (e.g. Morpho, Curve, etc)
      • eUSD
        • Specific Pool 1 (e.g. Morpho, Curve, etc)
        • Specific Pool 2 (e.g. Morpho, Curve, etc)
      • If you remove the liquidity during the program and the new amount of RTokens is under $100 using your mint or swap price, you will lose eligibility (so either keep them in the pool or mint more tokens before removing your liquidity, this mostly applies to liquidity pools)
  • “Governance vote” 1 Booster – Participate in at least two governance votes on RTokens where you’ve staked RSR during the program.
  • “Original Content” 0.5 Boosters – Share your personal RToken journey in a longform 𝕏 Articles post or blog post shared on 𝕏 (>500 words), written by you—not AI—during the program (AI posts will be disqualified). Reserve team to confirm qualified submissions to Merkl.
  • “Ugly Cash” 0.5 Boosters - be a registered user of Ugly.cash with a linked bank account. BFF/Reserve team to confirm qualified submissions to Merkl.

Scenario Modeling

As of November 2024, the average base staking rate for RSR on eUSD, USD3, and ETH+ stood at 5.43%. The chart below illustrates a generalized (non specific) native stRSR base rate (blue) with an added bonus rate (green), assuming the underlying yield remains stable and only a 5% rise in TVL occurs.

A key additional metric to monitor in this program is the impact of RToken discovery and supply growth. As mentioned above, we’ve modeled a 5% increase in supply (TVL), implied in the chart and linked model below.

658×404 31.7 KB

Those reviewing this proposal and looking to better understand the base rate, bonus rate and the interplay of TVL can do so by forking this model.

About Merkl

  • Merkl is an all-in-one reward and incentivization hub designed to optimize liquidity incentives by connecting incentive providers and DeFi users. Merkl enables projects to incentivize any user behavior based on their specific goals, while users can explore the most competitive DeFi opportunities through the Merkl opportunities dashboard.
  • Merkl has saved thousands of integration hours for protocols that no longer need to deploy new contracts and setup new APIs to incentivize their assets and saved millions in gas due to Merkl non custodial approach that enables users to be rewarded without having to stake their positions.
  • Since its inception, Merkl has developed many internal tools to measure user activity on chain, enabling the system to adapt itself to almost any use-case related to tracking onchain events
  • Merkl is born out of Angle Labs but is operated independently from it. Merkl is entitled to help any potential ‘competitors’ of Angle Labs and can keep the work confidential by signing NDAs that exclude Angle Labs.

How Merkl works

Here’s a step-by-step overview of how Merkl works:

  • Campaign Creation
    • An Incentive Provider creates a campaign using the Merkl Distribution Creator contract. This includes specifying the rules and conditions under which rewards will be distributed. The campaign details are then pushed onchain, ready to start tracking eligible user activity.
  • User Participation
    • Users interact with the protocol in various ways (e.g., providing liquidity, lending, borrowing, etc.) to become eligible for rewards as defined by the campaign rules.
  • Reward Computation
    • The Merkl Engine, an offchain component hosted by Angle Labs, regularly collects onchain and offchain data to measure user behavior. At fixed intervals, the Merkl Engine processes the collected data to update reward distributions. This ensures that users can claim new rewards multiple times a day without needing to stake tokens or perform additional onchain actions. Based on the data, the engine calculates the reward distribution, aggregates it into a merkle tree, and compresses it into a merkle root. The computed merkle root is then pushed onchain. Following the merkle root update, a dispute period allows anyone to verify the reward distribution and contest it if necessary.
  • Reward Distribution
    • Once the dispute period is over and the merkle root is validated, users can claim their rewards. The rewards from potentially multiple campaigns are aggregated, enabling users to claim all their rewards in a single transaction. Users can track their active positions and rewards through the Merkl user dashboard, providing a transparent view of their earnings and investments.
  • For the Reserve campaign, Merkl will leverage all the components it has developed in its Engine to measure all the metrics of the participating users. At the end of the campaign, the rewards will be distributed by using the built-in airdrop feature of the system.

Results Merkl has achieved with other protocols

  • Merkl powers incentive distribution for top protocols, including UniSwap, PancakeSwap, Lido, and Thruster, among many others.
  • Merkl managed liquidity incentives for Optimism’s Superfest, an eight-week liquidity program across four chains that resulted in a +$100M TVL increase in incentivized liquidity pools and lending/borrowing markets. Since the end of the program TVL has been sticky and kept increasing (+ 150M since the program ended)
  • Merkl is used by Aave to distribute the rewards of their Merit program
    • Merit started in February 2024, since then:
      • Aave’s TVL has almost doubled (~8b in February 2024 to ~$15.5b in November 2024)
      • GHO Market cap has been multiplied by 5 ($34M in February 2024 to $175M in November 2024)
  • Launched a staking program with Trust Wallet $TWT. The locked $TWT TVL went from $0 to over $110M in 2 days with $78k rewards per day.

How users interact with the program

  • Reserve will build www.reserve.org/cool-program-name (similar to ACI Dashboard) to include the following:
    • Call to action to participate
    • Current round average APY
    • Rules and Base Points and Booster Points tiers
    • User connect your wallet and sign a message to participate (signing message qualifies existing stakers for the program, and shows higher APY)
    • Choose which RToken either USD3 or eUSD or ETH+ to stake on
    • Integrate Merkl data or manually calculate (apy boost) into RToken staking front end page
    • Thorough FAQ
  • Optional dashboard to be built by Reserve (Dune or custom) or Merkl (branded custom) with the following features:
    • Show the total number of users participating in the program and the RSR staked by all the eligible users
    • Show the % of RSR staked vs the 15% goal
    • Show a user their current staked RSR balance across the different RTokens
    • Show a user’s eligibility to the program and see how many points they have accrued so far
    • Show the boosters earned by users
    • Show the potential total score a user is entitled to
    • Show users their positions (and the positions’ eligibility/associated booster)

Merkl fee structure

  • Merkl will charge two types of fees for this program
    • Man hours spent on developing the dashboard and reward calculation backend. Both of these costs will be drastically reduced for subsequent programs.
      • Optional frontend and dashboard built by Merkl (hosting included)
        • 20,000€
      • Program reward calculation/distribution
        • 25,000€
    • A 0.5% fee on the RSR distributed by the program (~$1500 at the time of writing this proposal)
  • 50% of the tokens paid for the man hours will be staked on one or several RTokens for a duration of at least 6 months

We invite the community to discuss and share questions to help further refine the RFC. Upon healthy discussion in this RFC we hope to meet with ABC Labs and Confusion Capital to explore refinement and implementation. In the meantime, Merkl would be happy to attend an upcoming Friday Reserve GovOps call to discuss the proposal and answer questions.

4 Likes
2

Let’s Grow the DeFioneers!
Funnel: more stakers–>more governors–>more decentralization–>more buzz–>repeat loop↩

I am pretty excited for this proposal after discovering the success of the Merit program in the Aave community, assisted by Merkl.

As highlighted in the Merit program link above, Aave achieved ‘significant gains in market share’ within 60 days of launch, including: 200k ETH supplied, improved GHO stablecoin peg support, and +40% supply growth with +125% revenue growth.

Now, nearly 9 months later, the Aave ecosystem has shifted priorities to cbBTC. With monthly epochs, Aave Merit operates like a shark with lasers—recently pivoting from GHO to cbBTC with precision and focus.

On Oct 17 2024, they did:

2 weeks later, Aave added $200M in cbBTC TVL:

Today, Aave is the leader in Bitcoin DeFi:

Who are the proposed target personas and awareness marketing timeline to make this campaign successful?

  • Target Personas:
    • “DeFioneers” ~10 billion currently staked RSR
    • “Nibblers” ~12 billion currently self-custodial RSR, not staked
    • “Bystanders” ~30 billion RSR on CEXs, not staked currently
  • T-30. Teaser marketing (memes, polls, breadcrumbs, @tagging, etc.)
  • T-14. Pre-announcement to DeFi/Staking/Airdrop newsletters & video creators
  • T-7. Announcement + how-to guide
  • T-7. Activate Rangers (and Vanguards?) word of mouth
  • T-0 LAUNCH DAY
  • T+0-90. Listed/ promoted at https://merkl.angle.money/ (30k MAUs)
  • T+0-90. Behavior & rewards progress reports, weekly during campaign
  • T+97. Campaign results, observations and lessons-learned announcement

What if the first 90-day Reserve epoch focused on DTFs or dgnETH TVL instead of RSR stakers and governance?

That’s the power of the Merkl framework: its modular flexibility adapts seamlessly to new objectives and timelines. While Reserve begins with 90-day epochs, it could pivot to monthly epochs, like Aave’s Merit program. Just as Aave shifted focus from GHO to cbBTC, Reserve could unleash the shark with lasers on new goals.

For instance, several Memecoin or RWA indexes may crowd the market in 2025. DTFs could standout with an opportunity to lock in staking contracts for extra yield, paid in $RSR rewards–a tokenized index product with yield! The Merkl framework makes priority shifts seamless, time-sensitive (FOMO-worthy), and gamified for maximum engagement. Merkl unlocks a further decentralization opportunity acting as the distributor of $RSR rewards, and opening the door to RToken governors to set epoch priorities via the current Reserve ecosystem governance process.

Lastly I will close with this latest report from DL News on the state of decentralized governance, which I believe is an area the Reserve ecosystem could lead in if committed.

You are invited to chime in with questions, support, or concerns. Let’s share, debate and invite better ideas (if they exist) to achieve the goal of increased staking, community competency and decentralization.

2 Likes
3

Great and well written proposal. I put [RFC] at the beginning of the title to conform with Reserve Protocol governance guidelines.

4

Thank-you @baptistg for submitting this well thought-out and structured proposal.

I knew participation in governance was low, but i’m still shocked to read that the combined active governors on our top 3 RTokens sits pitifully at 21! Something need to urgently be done about this and feel green-lighting both this and the Rangers and Vanguard programme would be an excellent place to start, I actually think they would work very synergistically if executed correctly. Merkl clearly has a track record as demonstrated by OP Superfest and the Merit programme. I’m very open to exploring a Merkl programme to boost active participation in the protocol.

While I agree with the sentiment and the proposed campaign would have been perfect 6 months ago, I think it needs to be iterated on to involve Reserve V2 al a DTFs. As suggested a 90 day campaign focussing on both sides of the protocol (RTokens/DTFs) makes sense as an initial campaign before swapping to a MERIT style monthly epochs to dive into and highlight specific aspects of the protocol. I suggest a discussion with ABC Labs and Confusion Capital one to see if RSR can be allocated to a campaign of this nature and two to get a better grasp on V2 and how we can leverage your tech for a successful post-launch campaign.

@baptistg we missed you at the last GovOps. I hope you can make the next one, Friday 4pm UTC, to discuss this in more detail.

2 Likes
5

Looks good to me. The reality is people often need to be incentivized with $$$$$ to get involved. Even the most die-hard supporters will often not engage unless without the proper honey. This is a solid use of these resources.

2 Likes
6

I think this initiative combined with the Rangers and Vanguard program would create a compelling incentive for more and broader governance participation. It now all comes down to execution. I am not in a position to lead this in any way, but I am very much willing to dedicate 7 hours a week to help get this and the Rangers and Vanguard program off the ground. One other thing still: incentivizing is not the only thing that helps increase and sustain governance participation. The other thing is actually taking the governance feedback and discussion in this forum seriously. The recent lack of discussion around the resulting RSR seizure in the hyUSD basket change and subsequent questions related to eUSD proposals illustrate this: multiple people have had to asked in- and outside this forum multiple times about root causes and whether the same could happen with the proposed eUSD basket change in the forum proposal. I believe this was a valid question that was disregarded here in the forum and the proposal simply closed and moved to onchain voting stage ([IP] eUSD Collateral Basket Change Proposal 3 - #2 by R72). Incentivizing combined with truly embracing and completing forum discussions is a powerful way of increasing governance participation and dedication.