Staking & Lending

Like V1, JIMBO V2 tokens can be staked for a portion of the sale taxes in an ERC-4626 vault called ULTRA JIMBO (uJIMBO). However, there are a few differences in how staking rewards are distributed. First, V2 staking rewards are not streamed over a week; rather, they are distributed immediately.

In V1, staking rewards were distributed over a week because buys were being taxed, and I wanted to ensure everyone was able to get their fair share of the staking rewards. In this model, if the rewards weren't streamed over a long period of time, the fastest stakers would earn a disproportionate amount of fees because they would capture a portion of each downstream buy.

In V2, however, the tax structure has changed. While the net distributions remain the same (5% burned, 3% staking rewards), the order has changed. Now, only JIMBO sales will generate staking rewards, so stakers only need to worry about being in the vault before a sell happens to collect their fair share. This also creates a natural incentive to be the last one staked, as each subsequent unstake & sell into the pool will give remaining stakers a higher proportion of the rewards.

Additionally, the timelock has been removed from the staking contract. After what happened in V1, I realized staking should be kept as simple as possible, so in the case of unexpected failure (knock on wood), there are less potential issues for everyone to withdraw their funds.

The staking timelock was originally designed to prevent people from entering and exiting the contract vault arbitrarily, so with it removed, a new mechanism has been added in its place: upon unstaking from the vault, a .5% reflections tax will be applied to the withdraw amount to be redistributed to those who remain in the vault, further rewarding the longest term holders. These mechanisms are designed to incentivize the same behavior without preventing people from withdrawing in case of an emergency.

Oracle-less ETH Borrows at Floor Price

In addition, JIMBO V2 now allows for interest-free borrowing of ETH at 100% of the floor price of ETH against uJIMBO. By collateralizing uJIMBO with the protocol, stakers uniquely benefit by being able to borrow the floor value of their JIMBO + accumulated rewards immediately, all without withdrawing from the staking vault.

In order to ensure borrowing activity is accretive to the protocol and to prevent JIMBO stakers from having a free exit, a 5% upfront fee will be applied (in ETH) to the borrowed amount. Of this, 4% of the fee will go directly towards supporting token liquidity, while the remaining 1% will be sent to the JRS. This will ensure any borrowing activity immediately impacts the floor price.

Borrowing ETH against uJIMBO will withdraw ETH directly from the floor bin liquidity for maximum capital efficiency. As a result, the protocol doesn't need to source external ETH liquidite to set up lending facilities, since holders borrow directly against the liquidity that would otherwise be used to back their JIMBO position.

Borrowing ETH from the floor bin liquidity should still be safe for holders because when a borrow occurs, the uJIMBO is locked and cannot be sold until the debt is repaid. In theory, the ETH from the floor bin can never be utilized twice, so even in the case where there is significant borrow activity, the protocol will still have enough liquidity to support anyone who wants to sell their JIMBO at any time (#jeet-jail, anyone?).

Additionally, because the floor price is interally calculated and can never go down (barring smart contract/mechanism failure), it shouldn't be possible for the protocol to accumulate bad debt or lack the necessarily liquidity to support JIMBO selling at any point. This model also allows the protocol to facilitate lending without the need for an oracle or liquidations, drastically simplifying the process and removing the need for any external services to support lending.

Borrowing effectively allows for JIMBO stakers to access liquidation-free leverage for the full backed value of their JIMBO + staking rewards, which should allow for even more interesting dynamics within the protocol. However, in order to prevent early JIMBO holders from unfairly leveraging their position risk-free & unfairly diluting any future stakers down the road, any outstanding borrows must first must be repaid before additional borrowing can happen again.

Since uJIMBO is constantly appreciating against the floor price, borrowers must repay their loans to realize any gains in floor price appreciation against their uJIMBO position. This mechanism also prevents people from constantly borrowing arbitrarily—people should be selective about when they want to borrow from the protocol, to avoid continuously paying the upfront borrow fee.