Hello
Below is another governance proposal which is complimentary to the other governance proposal currently active: “Orca token revenue share model”. These could be considered as complimentary to each other and reviewed jointly but voted on separately. Seeking feedback from the community.
Summary
Complimentary to the recent governance proposal for 50% of Orca’s fees generated being distributed to ORCA token holders, this proposal if passed, would allocate 25% of Orca’s Treasury fees to a loyalty program for liquidity providers (LPs), fostering long-term alignment with the protocol. Fees will fund open-market ORCA buybacks, which are locked until September of each year and distributed as 1-year staked ORCA to eligible LPs during “Orctober.”
Eligibility requires consistent liquidity provision (e.g., 3+ months in key pools or other criteria), with rewards proportional to contribution. Paired with the existing 50% revenue share complimentary governance proposal for token holders currently under consideration, this leaves 25% of fees for Treasury needs.
The initiative targets LP loyalty, complementing investor-focused revenue sharing, and creates a flywheel where staked ORCA generates additional returns for the LPs. No new ORCA is minted, ensuring supply neutrality. The primary goal is to encourage loyalty of LPs to the Orca protocol.
Description
Orca’s Treasury currently collects 0.10% per trade from Constant Product Pools and ~0.05% from Whirlpools (assuming a 0.25% fee tier). This proposal redirects 25% of these fees to a loyalty pool for LPs. Funds will be used monthly to buy ORCA on the open market, accumulating in a smart contract until September 31st. During “Orctober” (annual distribution in October), purchased ORCA is redistributed to eligible LPs as 1-year staked tokens, financially aligning them with the ecosystem.
Eligibility requires LPs to provide liquidity for at least 3 months annually (or other criteria), measured by time-weighted liquidity contribution. Rewards are calculated pro rata: (Individual LP Contribution × Months Active) / (Total Eligible Contribution) × Locked ORCA Pool.
For example, with $50M daily volume, Treasury fees are ~$37,500/day; 25% is $9,375/day, or ~$3.42M/year. Assuming ORCA at $2, this buys ~1.71M ORCA annually. An LP contributing 1% of eligible liquidity for 12 months might receive ~17,100 ORCA, staked for 1 year.
Implementation requires a governance vote to adjust fee allocation and deploy the buyback/distribution contract. The Treasury retains 25% of fees (if the other governance proposal passed that includes the 50% revenue share model) for development and other needs. Staked ORCA from this program qualifies for the existing revenue share, amplifying LP incentives. Buybacks occur via automated market operations, with transparency via on-chain data
Motivation
Boost LP Loyalty
LPs are Orca’s backbone. This model rewards consistent liquidity provision with staked ORCA, encouraging LPs to stay through market cycles and deepening pool stability.
Complement Investor Incentives
Paired with the 50% revenue share for token holders, this 25% allocation creates a dual flywheel: investors see high APY, while LPs gain locked ORCA that earns revenue share (~81% APY at $50M/day volume). This aligns both groups with Orca’s success.
Supply Neutrality
Using buybacks instead of new issuance prevents dilution, potentially tightening ORCA supply as 1-year locks remove sell pressure. Market purchases also signal demand, potentially increasing ORCA’s price.
Sustainable Funding
Retaining 25% (~$3.42M annually) of Treasury fees ensures resources for growth and operational needs.