uCR & UBQ Economy-Wide "Risk Premium"

[0x4007]

Overview

Objective

• The purpose of this smart contract is to allow talent to convert their cash (intended for base payroll) into uCR and/or UBQ.

Benefits

• We can incentivize talent to leave cash equivalents (e.g. USDC/DAI) with us to reduce our burn rate.
• We can skip negotiating the uCR/UBQ compensation with talent during the hiring process and have them handle it permissionlessly via this contract.

Specification

The contract should...

• be pausable.
• be manually topped up with UBQ and uCR for security reasons.
• have a token acceptance whitelist (we can start with USDC, DAI, LUSD)
• have a risk premium getter/setter for UBQ
• • this should be defined as a separate smart contract to allow for algorithmic risk premium
• have a risk premium getter/setter for uCR
• • this should be defined as a separate smart contract to allow for algorithmic risk premium
• automatically transfers to the Ubiquity Treasury

Draft Contact Methods

setTreasuryAddress(address treasuryCalculator) onlyTreasury // treasuryCalculator should query the [manager contract](https://etherscan.io/address/0x4DA97a8b831C345dBe6d16FF7432DF2b7b776d98) for the address of the treasury
getTreasuryAddress() returns (address)

setGovernanceTokenAddress(address tokenAddress) onlyTreasury
setGovernanceTokenRiskPremium(address riskPremiumCalculator) onlyTreasury
getGovernanceTokenRiskPremium() returns (uint256)

setCreditTokenAddress(address tokenAddress) onlyTreasury
setCreditTokenRiskPremium(address riskPremiumCalculator) onlyTreasury
getCreditTokenRiskPremium() returns (uint256)

depositForGovernanceTokens(uint256 amount) pauseable // transfers UBQ to caller; transfers deposit to treasury.
depositForCreditTokens(uint256 amount) pauseable // transfers uCR to caller; transfers deposit to treasury.

freeze() onlyTreasury // pauses all

Context

I was thinking we could assign an economy wide "risk premium" for uCR. This can represent the rate we pay it out. e.g.

"2" means 2 uCR = 1 USDC
"1.5" means 1.5 uCR = 1 USDC

(This also can apply for UBQ.)

• I think it makes sense to think in these terms because now that it is a full blown bear market, perhaps the risk premium should be something higher, like "5"

• Would be amazing to set at the smart contract level, that way the talent we pay out can decide on their own how much they want to gamble. They could, for example, be always paid the base rate of USDC/DAI, but then have the ability to deposit into the smart contract to mint uCR. If the risk premium is 5, then $1000 of USDC will mint 5000 uCR.

• This way we no longer have to negotiate this, as the worker can decide how much risk they want on the fly.

• Theoretically we could do the same for UBQ.

Algorithmic Risk Premium (UBQ)

Another interesting idea is to algorithmically define the risk premium by calculating ETH price from the peak.
If ETH peak price was the following according to CoinGecko:

All-Time High
$4,878.26 -76.0%
Nov 10, 2021 (7 months)

Ethereum Price
$1,168.76

4878.26 / 1168.76 = 4.1738765872

Risk premium could be 4.1738765872 for UBQ.

I think the risk premium for alts should be a function of the entire market. I also think that UBQ risk premium should consider the UBQ market price (Uniswap etc) although this is more exploitable due to its smaller liquidity compared to ETH

Algorithmic Risk Premium (uCR)

This should be a function of the TWAP and consider how often we go above peg.

• The idea is that if we're constantly above peg, and uCR is redeemable most of the time; a reasonable person should conclude that the risk (and its associated premium) should be lower for holding uCR.
• If we're in a situation like we have been, where its been a long time since uCR has been redeemable, then its risk premium should go much higher!