Author: rune, founder of MakerDAO; Translation: Golden Finance 0xxz

This article will outline the potential SparkDAO SPK pre-mine airdrop for Spark Protocol borrowers, as well as the general token economics of SubDAO farming that will be launched in Phase 2.

1. SPK pre-mining airdrop

The purpose of the SPK pre-mine airdrop is to give users and lending arbitrageurs a reason to continue using the Spark protocol if the EDSR proposal to increase the stability fee to 5% is passed. We do this for two reasons:

We want to ensure that a large amount of assets are deposited into the Spark protocol to build the Lindy effect and market trust. Therefore, even lending arbitrage is also true.

We hope to kick-start a community of users and DAO participants that aligns with the mission and potential of SparkDAO.

The way the pre-mine airdrop works is that at the launch of Phase 2, after the SubDAO tokens and SubDAO farming go live, the Support Facilitator will retroactively calculate how much users have borrowed from the Spark Protocol from the moment the EDSR anti-loan arbitrage change increased the borrowing rate to 5%. A fixed number of SPK tokens will be specified in the support range of the next amendment, which will be distributed proportionally to Spark Protocol borrowers who use volatility assets as collateral based on the amount and term they borrow - this will effectively enable farming, but the tokens will eventually be distributed in batches in the form of airdrops. This will apply to all types of users, accounts, contracts, multisigs, etc. Users do not need to take any special action to qualify for the airdrop, all they need to do is borrow from the Spark Protocol as usual.

These SPK tokens will be funded from the SparkDAO labor bounty pool. I’ll need to spend some time calculating the different scenarios before giving a specific number of tokens, but the annual yield should be modest, and it’s not a ton of free money - the majority of the SPK token distribution should still benefit NewStable farmers through regular token economics.

2. Conventional SubDAO Token Economics

Now, to add context, I will explain how regular SubDAO token economics work following the recent proposed denomination adjustment in MIP102c2-SP13: MIP Amendment Subproposal.

Farming will be available to all NewStable (NST - Upgraded Dai) users, as well as NewGovToken users (NGT - Upgraded MKR) who choose to lock their NGT (excluding US users).

In Phase 2: SubDAO Launch, there will initially be 6 SubDAOs available for farming, each with its own independent token farming schedule.

3、SubDAO Genesis farming

First, a brief introduction to how SubDAO Genesis farming tokens are distributed. Over the first 10 years, a total of 2 billion SubDAO tokens will be distributed to each SubDAO in the Genesis farming event.

In the first two years, Genesis farming will be at a rate of 500 million SubDAO tokens per year, of which NewStable farmers will be at 350 million SubDAO tokens per year and NewGovToken farmers will be at 150 million SubDAO tokens per year.

In the next two years (Year 3-4), Genesis farming will be 250 million SubDAO tokens per year, of which NewStable farmers will be 175 million SubDAO tokens per year and NewGovToken farmers will be 75 million SubDAO tokens per year.

Then, for the next two years (Years 5-6), Genesis farming will be at a rate of 125 million SubDAO tokens per year, of which NewStable farmers will be at 87.5 million SubDAO tokens per year and NewGovToken farmers will be at 37.5 million SubDAO tokens per year.

In the last 4 years (Years 7-10), Genesis farming will be at a rate of 62.5 million SubDAO tokens per year, of which NewStable farmers will be at 43.75 million SubDAO tokens per year and NewGovToken farmers will be at 18.75 million SubDAO tokens per year.

4. SubDAO Labor Bonus Pool

In addition to these Genesis farming tokens, each SubDAO also has a labor bounty pool, starting at 300 million SubDAO tokens, which SubDAO token holders can use to pay rewards to project contributors (using the standardized budgeting and project scoping process performed by Maker Core, so the SubDAO cannot be stolen).

We will be funding the SPK pre-mine airdrop from this additional pool of SubDAO tokens.