## Strudel Finance Economic Policy ### Introduction: The Strudel Protocol started as a simple yield farming protocol which has evolved over time to include several products over multipe chains. This expansion seeks to diversify the Strudel Bitcoin market in order to create opportunities for users to deploy their vBTC. The purpose of the following document is achieve consistency in the actions taken by the DAO in future endeavors. Monetary policy shoud be a goal driven endeavor which will require different solutions for specific market conditions. By implementing a mandate driven strategy the DAO can understand the motivations behind specific actions under a broader purpose which may involve making short term decisions that are not optimal from a purely profit optimization standpoint. ### The Strudel Treasury Mandates ***The Strudel Treasury's first mandate is to secure the peg of vBTC.*** This is a broad mandate that is achieved by implementing several distinct strategies which include but are not limited to: - Funding the development of the Strudel Ecosystem - Acquiring vBTC, Liquidity pool positions and yield incentivization tokens - Liquidity incentives and bond emissions. ***The Strudel Treasury's second mandate is to produce yield for gTRDL holders*** gTRDL is the governance token of the StrudelDAO. gTRDL can be obtained by locking $TRDL on our webpage for a fixed period of time - yield for gTRDL depositors will be denominated in vBTC obtained from revenue produced by treasury strategies and distributing vBTC stock while the token is above the peg. ## The Strudel Liquidity Landscape ![](https://i.imgur.com/w2MEIAU.png) ### Strudel Bitcoin as a primitive #### What is a Cryptoeconomic Primitive? Crytpo Primitives are protocol based incentives systems that are uniquely enabled by tokens. Also referred to as “tokenized economic games”. They enable the coordination and allocation of capital to achieve a shared goal via the use of various economic and cryptographic mechanisms. Liquidity can be considered as the original crypto-financial primitive which alows other assets to have value. Liquidity enables exchanges to create markets over which other primitives can be composed. Our liquidity landscape is constantly expanding. As new primitives enter DeFi, Strudel DAO implements them utilizing vBTC as the liquidity pairing for a number of different assets further increasing our network of products and the diversity of the ecnonomic activity going through the network. As the protocol grows markets in more networks our own network effect increases adding value to everyone involved with the Strudel DAO across the interchain. Arbitrageours distribute value by utilizing vBTC to settle across many different asset classes and networks. By selecting the correct incentive models and monetary policy Strudel DAO can create several liquid markets which expose vBTC and $TRDL holders to several emerging market oportunities such as fractionalized nfts and interesting L1 opportunities in networks such as FTM and Matic. ## Srudel DAO revenue Model. The current goal of the Strudel DAO treasury is to build an important vBTC stock. As new users are onboarded onto the network the price of vBTC can trade at a premium in relation to normal BTC which the DAO could arbitrage by distributing vBTC to gTRDL holders. By providing BTC denomitated yields for gTRDL holders we can create demand for $TRDL for users looking for a stable yield which then we can leverage to acquire a greater number of vBTC through the auction mechanism. This in turn creates a feedback loop that can enable Strudel DAO to manage the peg and produce value to all the users involved, all while regulating the increase of the vBTC supply on the market to ensure a stable growth and a continuous peg. ## Strudel Yield Farm Structure The Strudel Protocol inflation is created sthrough the yield farming program which issues 1 $TRDL per block, This ammounts to about 6000 tokens per day depending on block production program. Currently 80% of the yields are distributed to the treasury in order to fund vBTC aquisition through Dutch auctions, which are described in the following segment. The remaining 20% is split evenly between $TRDL/ETH and vBTC/ETH UniV2 Pools. Although the Strudel DAO aims to be the main liquidity provider and holder of vBTC over time through the acquisition program we also intend to foster a diverse base of liquidity providers who participate because of the value proposition of the strudel liquidity network. Furthermore the protocol can use short term liquidity incentives to bootstrap the liquidity of structured products such as the strudel bluechip index which are intended to be used by end users rather than aquired by the DAO. ## Gnosis Dutch Auctions The Gnosis Dutch auction system serves as a short term bond emission program which can be configured to distribute batches of $TRDL at a reflexive discount in order to strategically acquire protocol assets. The typical Dutch auction is structured with at least 2 paralel auctions where Auction #1 aquires $TRDL/ETH liquidity in order to dampen possible selling pressure while auction #2 obtains vBTC in order to increase Treasury stock. ***Auction # 1 $TRDL/ETH UniV2*** 50-60% Batch Allocation Average Auction Length: 5 days Average markdown: 20% under market price ***Auction # 2 vBTC*** 50-40% Batch Allocation Average Auction Length: 5 days Average markdown: 20% under market price ## Orkan Orkan is designed as a standalone expansion to the Strudel Network. The perpetual bond issuance allows the rapid aquisition of a number of strategic assets that open several oportunities in the FTM ecosystem. By having two independent structures bidding as protocols for vBTC demand is going to be insured and arbitrage between chains whil provide a profittable market for an increased number of users who will deepen our liquidity landscape. Furthermore the Orkan is looking to aquire voting power for exchange incentives which wil allow it to capture new yield oportunities for vBTC pools within the FTM ecosystem. By having a leading role in the growth of novel networks Strudel DAO can become an institution for liquidity provision on BTC denominated markets across the interchain.