# ARBUSD proposal

@baygeeth

Mon 18 Nov 2024

https://superposition.so

## Introduction

ARB is about to become a productive asset (outside of governance)
with the staked ARB proposal. Indeed, some teams, including
Fluidity Labs ([Superposition](https://superposition.so)/[Fluidity
Money](https://fluidity.money)), are planning on bootstrapping the
Arbitrum community at large's expertise and economic power for their
9lives oracle infrastructure.

The binary use of ARB as a staked asset with different protocols leaves
a few verticals on the table:

1. Optional productive pressure on interest repayments. Protocols could
opt into forcing staked assets vested to generate a return to be usable
in their system.

2. Looping of staked ARB for extra yield on established protocols. Staked
ARB could be easily looped in the protocol context for greater yield.

3. Optional protocol spread on ARB value accrual. Easy access
to a single, unified interface which can be leveraged alongside
the ability to collect yield alongside lending as a simple
`collect(uint256[],address)`. Guaranteed repayment from the caller
by conversion back to the user using the `redeem(uint256[])` feature,
which takes a special NFT as argument.

4. Some resistence to ARB price shocks. A staked asset that is presumably
adjusted for any shortfalls in value with ARB for universal ease of use.

## Proposal

We propose a simple stablecoin public good asset powered by a lending
market to compensate for these shortcomings.

## Philosophy

A very simple to use with zero fees taken proxy to ARB exposure with
maximum flexibility for using protocols with revenue.

### The goals

1. Every asset supplied is lent on an lending protocol. Though debt
is needed to be serviced for this system generally, an extra layer of
lending provides the using protocol an extra revenue opportunity.

2. A fully optional non-linear interest curve on repayments to incentivise
a "setup window" in line with staking functionality on depending protocols
to incentive gradual allocations into protocols. The interest repayment
is optionally claimed with a custom NFT.

3. A simple `collect(uint256[] ids,address recipient)` to collect
simply any yield accumulated on a staked asset since creation using a
NFT created when wrapping.

4. Zero fees for the ARBUSD protocol. Entirely governed by the Arbitrum
DAO.

## User experience

### High level

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#### Simplified

1. Wrapping your Staked ARB to ARBUSD sends you two NFTs. Interest is
needed to pay for the stablecoin a la LUSD.

2. The "Debt NFT" is used to service repayments for the token's debt. It
should be sent to the caller.

3. The "Yield NFT" is kept by the protocol, and entitles it to yield
paid for lending, and for positive price increases since wrapping.

4. Debt is repaid according to a non linear curve with a initial cliff
to incentivise small amounts being created.

5. The protocol pays the holder for participating in their staked
system. It presumably either takes the yield (and pays it to the user), or
optionally subsidises a security fund (for example), or simply takes the
yield as revenue. This way, the protocol itself could avoid taking a fee.

### A user story

Erik is a devoted ARB DAO participant, and wants to extract value from
his newly Staked ARB beyond just lending it out. He goes to participate
in 9lives Infrastructure Markets, a oracle market based on ARB. He goes
to the 9lives Staking Module, and receives SNINE, a token with slashing
capabilities. Behind the scenes, the Staking Module vested his Staked
ARB into ARBUSD. The ARBUSD the protocol received also creates a "Yield
NFT", and a "Debt NFT". The Debt NFT is sent to Erik. The Debt NFT is a
representation of repayment that should be made, and is needed for him
to receive his ARB back.