Seamless Protocol

Summary This proposal suggests that the Seamless DAO allocate $4,600 in SEAM over 4 epochs (epochs run 1 week long) to bribe voters on Spectra to vote on Seamless WETH Pool, resulting in SPECTRA emissions being allocated to Seamless Pools. The goal is to attract more liquidity to the underlying Seamless Vaults via the Pools deployed on Spectra, helping Seamless 1) establish a strong presence in the growing Yield Token Splitting market; 2) drive more capacity into Seamless WETH Morpho vault and therefore the Leverage Tokens. About Spectra Spectra is an EVM-centric decentralized protocol that splits yield on yield-bearing tokens (PT/YT). Spectra operates across multiple chains and provides opportunities for protocols seeking to deepen their liquidity by offering fixed rate yield (PT) and variable yield/points (YT) products to DeFi users. More details can be found here: https://www.spectra.finance/ Context and Motivation Seamless has recently launched two Pools on Spectra pointing to the Seamless Vaults: Base: USDC Pool Base: WETH Pool Deploying on Spectra is part of a broader strategy to tap into the Yield Token Splitting market while fueling liquidity for Seamless's native leveraged and structured products. To bootstrap liquidity and enhance visibility of these new Seamless Pools on Spectra, it is recommended that the DAO incentivize veSPECTRA voters with bribes to vote on Seamless Pools, ultimately directing SPECTRA emissions toward these Pools. This proposal specifically targets the WETH Pool on Spectra as it will grow ETH liquidity in the Seamless WETH Morpho vault that is critical to scaling capacity for the recently launched Leverage Token product. The DAO can explore incentives for the USDC Pool or other pools to be created at a later time. How Voting & Bribing Works on Spectra: Spectra uses epoch-based voting (weekly). veSPECTA holders vote to direct emissions toward specific pools. Protocols offer bribes (in stablecoins or other tokens) to encourage voters to support their pools. Pools that receive votes receive a proportional amount of SPECTRA emissions to boost APY on those Pools, attracting more liquidity and participation. The following Bribe Program is proposed: Bribe Amount: $1,150 per epoch (~10% of average total bribes over the past 10 epochs) Duration: 4 epochs Total Budget: $4,600 Token: SEAM Target: Seamless WETH Pools on Spectra Note: Spectra contributors have signaled the readiness of allocating $1,500 worth of SPECTRA emissions to help bootstrap the Seamless WETH Pool. Proposal Details DAO to approve the proposed $4,600 budget to bribe Seamless WETH Pools on Spectra. Core contributors to execute bribes for 4 consecutive epochs. DAO to receive a post-campaign analysis from core contributors. DAO to decide on whether to extend, modify, or discontinue the bribing strategy.

Summary: This proposal requests DAO approval on several key items ahead of the upcoming launch of Leverage Tokens (LTs). These include the pre-authorization of DAO ownership for flagship LTs deployed by core contributors and permission for the strategic allocation of incentives under the framework established in GP-7: Expanding Protocol Reward Categories. Motivation: Leverage Tokens are a major product expansion for Seamless that encapsulate automated, looped leverage strategies. LTs represent the logical evolution and enhanced version of ILMs. To ensure the smoothest rollout possible, the DAO should pre-approve ownership and rewards logic for strategically significant deployments managed by core contributors. Proposal Details: 1. DAO to Accept Ownership of Core-Deployed LTs Although any user may deploy LTs permissionlessly, core contributors are expected to launch several flagship strategies that represent the protocol's standards for safety and performance. * This proposal requests that the DAO automatically accept ownership of these LTs to simplify lifecycle management and make them eligible for protocol-level incentives and front-end display. 2. Reward Allocation In December 2023, the DAO approved [[GP 7] Expanding Protocol Reward Categories – Increasing Token Emission Budget for Seamless](https://snapshot.box/#/s:seamlessprotocol.eth/proposal/0x113a9f75eb623fcccdc2b4400ecb0e125b95c0085bf0c8b44c5f136b27c29c2d). It is now proposed that the DAO authorize core contributors to allocate emissions from the GP-7 2025 budget toward Leverage Tokens, as follows: Primary source: “3m SEAM tokens allocated for future ILM, vault, or strategy launches.” Extraordinary sources: * “3m SEAM tokens for Legacy TVL Incentives” (given the sunset of the Legacy platform). * “1.5m SEAM tokens – Uncategorized: reserved for unforeseen opportunities, product launches, airdrops, community marketing, etc.”

Abstract The Seamless protocol has grown from its origins into a dynamic ecosystem centered on borrowing, leverage, and accessibility. This proposal outlines a pivotal shift: migrating liquidity from the legacy platform to Morpho Vaults. This move optimizes borrower value and supports community expansion, aligning with Seamless’s vision of a streamlined, 'platformless' future. Benefits of Migrating to Morpho Vaults Morpho Vaults provide a permissionless, efficient platform that unlocks significant advantages for borrowers. Key benefits include: Significant Liquidity Growth: Morpho Vaults (supporting assets like USDC, sBTC, and WETH) have achieved $70M in Total Value Locked (TVL) within the past month, dwarfing the legacy platform’s $15M. Improved Borrower Access: With no permission barriers, Morpho enables broader participation, empowering more users to tap into borrowing opportunities. Cost Efficiency: Unlike the legacy platform, Morpho eliminates third-party service fees and resource-heavy overhead, making borrowing more affordable. Support for Innovation: Morpho paves the way for cutting-edge products, such as Leverage Tokens outlined in the 2025 Product Roadmap, offering borrowers greater flexibility. Challenges of the Legacy Platform The legacy Seamless platform, originally built on an AAVE V3 fork, fueled early success but now poses obstacles to progress. Its limitations include: High Fixed Costs: Monthly maintenance expenses of $29.8K USD (totaling $443.7K annually) burden core contributors and drain resources. Resource Demands: Engineering focus is consumed by upkeep rather than innovation, stalling development of new features. User Impact: These inefficiencies limit user yield opportunities and impose tighter borrow limits, reducing the platform’s competitiveness and appeal. Sunsetting the legacy platform is a critical step to remove these constraints and refocus efforts on Morpho Vaults. Proposal Summary I propose a community vote to migrate liquidity from the legacy platform to Morpho Vaults and, over the next 2-3 months, sunset the legacy platform and ILM v1.0. This aligns with the protocol’s roadmap, freeing resources to prioritize a near-term launch of Leverage Tokens and realize the community’s vision. Here is the suggested plan: Snapshot Vote: Gauge community support for this migration plan, authorizing subsequent on-chain votes without additional discussion periods. Phased Sunset: Over 2-3 months, pause deposits, phase out rewards, and guide users to Morpho Vaults (for legacy liquidity) and Leverage Tokens (for ILM v1.0 users). Migration Bonus for ILM v1.0 Users: Since Leverage Tokens are not yet available but on the near-term horizon in the coming month or so, I suggest offering a migration bonus (potentially an airdrop) for loyal ILM v1.0 users who redeposit into Morpho Vaults until Leverage Tokens launch. The DAO can determine the details through discussion or a future vote. Consideration for Legacy Users: Morpho Vaults have excellent rewards and serve as a direct alternative for legacy platform users. Goals and Objectives Resource Consolidation: Redirect engineering efforts and SEAM rewards to the protocol’s core mission of borrowing and leverage, emphasized by Leverage Tokens launching this/next quarter. Maximize DAO Value: Simplify operations, reduce fixed costs (e.g., third-party provider fees), and improve community outcomes. Ensure a Smooth Transition: Reward loyal users, especially ILM v1.0 users impacted by the sunset, through suitable incentives and clear communication. Proposal Details Here is a rough (draft) timeline for the migration and sunset process, spanning approximately ~3 months beginning mid-March 2025: Legacy Liquidity: Users will see UI banners encouraging withdrawal and redeposit into Morpho vaults (with a clickable link provided). ILM v1.0 Users: With Leverage Tokens (ILM v2.0) not yet live, I propose a migration bonus, such as an airdrop, for users who redeposit into Morpho vaults within 1 month of the proposal, should it be approved, with a random snapshot to be taken by DAO to inform rewards, until v2.0 is available. The DAO will refine these specifics through discussion or a future vote. This timeline is flexible, aligning with approximate dates while offering users a clear transition path. Technical Details Smart Contract & Backend Actions GOVERNANCE: Prevent new deposits via setReserveFreeze(asset, true); allow withdrawals. GUARDIAN: Stop on-chain rewards with setEmissionPerSecond(asset, 0). GOVERNANCE: Disable reward emissions using Aave’s RewardsController; later vote to clawback surplus SEAM rewards.

Summary This proposal aims to address procedural gaps by introducing a ‘fast-track procedure’ for the DAO to promptly respond to high priority items. These measures aim to enhance the DAO’s agility and security protocols. Context and Motivation The “Formalizing Governance Processes for Seamless Protocol” was the first step in addressing lacunae within our ordinary governance structure. However, it introduced a 15+ days governance usual process. In order to allow the DAO to address urgent situation the [GP-2] Addressing Urgency: Unveiling the Fast-Track Procedure, reduced the governance process to less than 7 days. The [GP-4] Governance Reform Proposal removed the off-chain (Snapshot Labs) component for certain categories, thus significantly reducing the general governance process to 7 days. Therefore, it was decided to discontinue the “fast-track procedure”. Since April, it has become evident that the DAO occasionally needs to act more swiftly than the traditional 7-day governance process allows. This is particularly crucial in situations such as adjusting interest rates and refreshing rewards, where timely decisions can significantly impact the system’s efficiency and effectiveness. Additionally, quicker action may be necessary when addressing security concerns or integrating new partnerships. To maintain our agility and responsiveness, it is essential that we explore mechanisms that enable the DAO to make decisions more rapidly when the situation demands it. Specifications We currently suggest two ways to initiate the fast track process for General Proposals (i.e. those that do not require an onchain component) and Protocol Changes Proposals: Scenario 1: Initiating Fast Track at the beginning of the governance process The fast-track proposal is slated for an on-chain/off-chain (for those proposals that do not require an on-chain component) vote within 24 hours after its publication on Discourse. For a proposal to qualify for this expedited on-chain vote, it must garner explicit support from a majority of Discourse Level 2 users. Scenario 2: Initiating Fast Track AFTER the normal governance process has begun A fast-track proposal can be initiated at any time after the normal governance process has begun if it garners explicit support from a majority of Discourse Level 2 users Please note that the Fast Track Procedure shall not be applied to Governance Changes Proposals.