[SIP #9] Turn ETHx and USDCx into yield for the DAO

Proposals
1

Abstract

Upgrade the contracts for wrapper superTokens (ETHx, USDCx and the full list provided below ) to enable the DAO to invest the underlying asset and accrue yield income to its treasury.

Type

Constitutional [Protocol Upgrade]

Motivation

Create revenues for the Superfluid DAO.

Background

Superfluid has always operated through two main axis:

  • Pure SuperTokens (STREME, SUP, USND)
  • Wrappers (OPx, USDCx, ETHx, MATICx)

I believe it’s now time to start generating yield on these assets.

Based on defillama data which was recently updated, the Superfluid protocol has around $26M TVL.

Of this, only a small part is represented by Pure SuperTokens.
Instead, in large majority, the tokens are wrappers.

The largest is OP, while the others are USDCx and ETHx.

ETHx is spread across a few networks, but in large part used in SuperBoring (at the moment), and until recently by AlfaFrens too.

Rationale

It has become common practice at this point for everyone to seek yield on assets deposited in smart contract platforms. While the risks associated with this were previously considered too high, this is no longer the case.

This also focuses the DAO on specific revenue metrics. Going forward, I expect SPR proposals to incentivise adding ETHx/USDCx TVL, in order to increase the volume of buybacks. This is in contrast to existing proposals, which overall are a net SUP cost to the DAO.

Based on the current top holdings of 1.5M$ in USDCx and 500K in ETHx, and expected yields of around >5% for USDC and >2% for ETH, I expect the DAO to generate ±90K USD in yield from day one.

While this might seem like a small amount, it is also a very clear way for the DAO to generate yield, and a very simple metric to incentivise (ETHx / stablecoin TVL) which can quickly 10x with the right incentives and activations.

For example, when SUP is tradable, it could be paired with ETHx, rather than WETH. This would increase TVL significantly, without making any difference to the users

Similarly, Streme.fun could start creating coins paired with ETHx rather than ETH.

If the ecosystem comes around to using ETHx and other yielding assets, we will be able to create a strong flywheel for SUP, benefitting long term holders and stakers.

This proposal recommends the Foundation execute a first, “basic” implementation in order to be ready before SUP transferability, and then as a next step select a partner through a tendering process. This partner should be selected with the intention of increasing the risk/reward of the invested capital.

Specification

  • Upgrade all relevant assets (marked for upgrade here to become “yielding assets”
  • Assets will be automatically deposited/withdrawn from the corresponding AAVE Protocol pool
  • The resulting yields will be accumulated by the DAO Treasury (dao.superfluid.eth)

Over time, we hope to see USDCx / ETHx embedding itself into more dApps, which will in turn benefit more from the community’s favor and larger SUP allocations.

Steps to implement

  1. Foundation Engineers upgrades relevant smart contracts
  2. Security Council deploys the upgrades onchain
  3. After the initial upgrade, the DAO will select a new partner to run the yield strategies in the future through a tendering process

Timeline

Call for voting - 7days

Vote - 14 days

Waiting period - 7 days

Engineering Development - timing TBC

Security review and deployment by Security Council

Overall Cost

Engineering - 2 engineering weeks

SUP Budget - none

22 Likes
2

I support this idea because DAO funds shouldn’t sit idle. If ETHx and USDCx start generating yield, the community gets real rewards and SUP gains stronger fundamentals.

6 Likes
3

It will make a lot of sense for SuperBoring to use ETHx and USDCx-based Uniswap v3 pools for the liquidity used. This should drive up more deposits of ETHx and USDCx via such a ecosystem application usages.

Other ecosystem applications are encouraged to do similar things.

2 Likes
4

Hello, thanks for your proposal!

I see this as a no-brainer temp check, as it is desirable to advance in studies to generate yield for the DAO, and having multiple revenue streams is almost mandatory.

Maybe it is a good idea not to set in stone that all yield will be used for buybacks because, as the DAO evolves, its treasury will need to hold other tokens (namely stables) to meet its obligations. I believe it is wise not to close this door now, only to have to amend this proposal later.

4 Likes
5

Hey gm @0xFran

Thanks for putting this up. This proposal makes total sense as it is a net-positive for the DAO.

I’m reviewing the proposal and notice that there is no mention of an audit plan in the implementation steps. Since it is going to be a protocol upgrade with updates to contracts, an audit plan should be added.

Or will that be baked into this new audit as mentioned in this latest SC update? If yes, does the timeline you mention in this proposal fit the SC plan?

Also, +1 on this

1 Like
6

Yeah this is a good point!

An argument could be made that, for the amount of money that’s being talked about right now, it might not even make sense to perform the buybacks. Potentially building a treasury might be a more prudent approach at this stage.

Buybacks are a stronger narrative building option, in my opinion.

Would still be keen to hear more opinions before putting together a final proposal.

1 Like
7

This is something that should’ve already been in motion — and it’s still not too late.

The more revenue the protocol generates, the more respect and credibility it gains. When people explore new projects, many of them still look at fee metrics (like on DeFiLlama) to judge a protocol’s strength and adoption.

Higher protocol revenue = more attention, trust, and users.
This creates a positive loop of user engagement and opportunity discovery, both for the protocol and for DApps built on it.

Let’s focus on building real economic activity on Superfluid and showcase its potential to the broader ecosystem.

:rocket: Make Superfluid Stronger.

4 Likes
8

I’m in favor of this upgrade. Putting ETHx and USDCx to work is a smart way to turn TVL into real value for the DAO. Redirecting yield into SUP buybacks not only rewards long-term holders but also builds a healthier feedback loop around Superfluid’s core tokenomics. As long as the yield sources remain conservative and transparent, this feels like a clear step toward sustainable growth and stronger fundamentals for SUP.

1 Like
9

Hi, I have an idea for a small addition to the proposal.

We could also add two simple things.
First – stakers could choose how they want rewards: either a stable stream in USDCx or SUP from buybacks.
Second – a time-boost, which gives extra bonuses to those who keep their tokens staked longer without breaks. This way the model stays simple, but also motivates people to hold longer and gives users more flexibility.

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2 Likes
10

I agree with the idea of generating yield, but also agree with the idea expressed by @jameskbh that we should not commit to any specific buybacks until there is an established history of both capital and earnings growth in the treasury. While buybacks do present a mathematical gain for existing token-holders, they are often seen as a “red flag” by potential investors, because they are sometimes used as a short-term means to mask the effects of underlying growth stagnation. I believe we should avoid any and all red flags until the SUP token is well-established in the open marketplace. Also, treasury value per SUP token is an informative and potentially attractive statistic for investors; one that should be prominently displayed and highly visible.

4 Likes
11

Thank you everyone for the comments and insights.

Based on everyone’s comments, I will be revising the original proposal with a few edits:

  1. Will remove the cashback from this proposal, to be re-discussed later
  2. Give the foundation team sufficient flexibility on implementation and deadlines
  3. Approve a budget to audit the upgrade, which will be paid by the DAO using future yields

Here’s a list of tokens based on likelihood of generating a yield. As can be seen, the more substantial opportunities at the moment are with USDC-Ethereum and USDC-Base.

This proposal will authorize the Foundation Engineering team to execute updates to generate yields on any tokens where the TVL is greater than 50K usd in value, and the yields are reasonably expected to maintain above 5K annualised

6 Likes
12

As mentioned, I’ve updated the main proposal to reflect the latest conversations around the topic.

Pending proposal.

1 Like
13

:mega: Voting for SIP #9 [Turn ETHx and USDCx into yield for the DAO] is now live on Snapshot here

1 Like
14

This is a great proposal and am in support!

Thank you @0xFran for the posted notion sheet. It gives more clarity onto the metrics here. I def. see this proposal as a potentially a strong flywheel for SUP and its upcoming transferability event.

As a delegate and a dao coordinator at Lazy Summer DAO …

CoI disclosure: I do not have a direct benefits from an integration or partnership.

… I would love to make any introduction necessary to explore opportunity for deploying some of the DAO capital into automated Lower Risk strategies (for Base network eg.: USDC and/or ETH). There could be also a potential for a deeper partnership wether that is creating a special vault or similar.

For a short TL:DR on Lazy Summer Protocol:

Lazy Summer Protocol (access via summer.fi) is an automated DeFi yield optimizer, where users deposit into Lazy Vaults, which route funds into DAO curated strategies (ARKs) managed AI/keepers under Block Analitica’s risk framework. It offers passive, risk-adjusted returns, smooth withdrawals (Buffer ARK), and governance via the $SUMR token.

Not sure, if this is relevant already or during the previously mentioned “tendering process”, but feel free to reach out to me.

Besides this side note, I am in support of the SIP#9 proposal.

2 Likes
15

The following reflects the views of the Lampros DAO governance team, based on our combined research, analysis, and ideation.

We are voting in support of SIP-9.

We support this proposal because it’s a practical step toward making the DAO’s treasury more productive. Upgrading ETHx and USDCx to earn yield instead of sitting idle creates real, recurring value for the DAO and aligns well with long-term sustainability.

We like that the plan starts simple with Aave integration and doesn’t overcomplicate things. Still, we’d encourage a cautious rollout, start small, run a full audit before deployment, and share regular yield reports so the community can track progress. Having clear safety measures, like a pause or withdrawal option, would also help build confidence as we scale.

On how the yield is used, we agree it’s better to stay flexible for now. The DAO can later decide how to allocate it between buybacks, audits, or operations once the returns are consistent.

Overall, SIP-9 is a sensible, low-risk move that strengthens the DAO’s financial position and shows responsible treasury management.

1 Like
16

Hey Jensei, thanks for reaching out, this is exactly what we wanted to see and I hope we’ll get started on that tendering process asap.

After this vote has passed, and the initial strategy is deployed, I think we’ll start talking about it.

Risk will always be a large factor to consider, but I do think we can do better than 4% yield!

1 Like
17

Thats awesome! Do ping me when that becomes more viable! Looking forward, I am keeping track of the ongoing votes and things are looking pretty.

As you said, risk is everything and at the moment it is Block Analitica curating it for the Lazy Summer Protocol vaults, while the selection of strategies (to be then assessed by BA) is curated by the Lazy Summer DAO.

18

Voting period has ended for [SIP #9] Turn ETHx and USDCx into yield for the DAO.
The proposal passed with 98.4% votes FOR.
Results available here on Snapshot.

Screenshot 2025-10-14 at 11.52.05 am
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2 Likes
19

Damn, I am sad that I missed this vote, and that my ideas were used with a different LST.

What’s being mentioned here, is what I was talking about back in July of this year here: SUP Transferability: Planning Discussion - #27 by pete

No dev work would be needed from Superfluid to enable yield forwarding on a SUP, all that would be needed is for a DEX pool to be deployed that is SUP/superOETHb. superOETHb yields are usually 2x that of ETHx

2 Likes
20

Security Review update

As part of the next steps under Security review, audit is now complete for SuperToken yield backend support and its Aaave and ERC4624 backend implementation.

Copy of the audit is available here.

Team will now proceed with next steps towards deployment.
Will update on that here when its completed.

1 Like