Foundational Concepts
The following section explains the foundational concepts at a high level to help you understand how revenue sharing vaults work. We will dive deeper into how each of these relate in the next section.
$TEMPLE is the primary token of the Temple Protocol. Buying $TEMPLE and staking into the Temple Core vault is how you can participate in the revenue-sharing of the Temple treasury yields. The Treasury is well-diversified into a number of curated DeFi investment strategies selected for their yield, quality, and liquidity. The guiding principle of the Treasury is to target a comfortable middle-ground between inflationary stable coins and hyper-volatile degen tokens.
Intrinsic Value (IV)
Every $TEMPLE token is backed by a certain amount of FRAX or similar stablecoin. This is called the intrinsic value (IV) of the token. The IV value is also the AMM price floor, i.e. the price at which the protocol will buy TEMPLE tokens on the AMM from sellers (and burn them) against its stable reserves. It is equal to $0.65 as of this writing.
The overarching concept of Temple Core is simple: TempleDAO earns revenue which is then distributed to $TEMPLE holders in the form of more TEMPLE tokens.
The Temple Treasury is comprised of assets that fall into three main categories:
- Primary assets: $FRAX, $FEI
- Strategic assets: $FXS, $CRV, $CVX
- Temporary assets: varied, earned from investments, and converted to one of the above
Primary assets are utilized in Temple’s primary farming strategy, which reflects the ethos of TempleDAO on the whole– safe, low risk. Strategic assets are utilized in reinvestment strategies, which provide additional layers of revenue generation. Temporary assets held may come from vote bribe collection and any yield earned which doesn’t fall into the primary or strategic asset categories.
The primary farming strategy is the baseline or default revenue strategy for yields that eventually gets distributed to $TEMPLE holders.The strategy currently involves depositing $FRAX into the FRAX3CRV pool on Curve Finance and staking the Curve LP (liquidity pool) tokens on Convex, earning $CRV and $CVX yield in addition to LP provider fees on Curve.
Over time, the primary farming strategy will include more investments.
As mentioned above, the primary farming strategy generates yield in the form of $CRV and $CVX. The reinvestment strategy goes a step farther by locking $CRV and $CVX in Convex, earning an additional layer of yield on top. This is achieved by selling half of the $CRV tokens into $cvxCRV and adding liquidity to the cvxCRV/CRV Curve pool to earn more $CVX and $CRV. The $CVX yields are locked on Votium and delegated to receive bribes. The reinvestment strategy is applied to multi-month vaults, explained below.
Under the Temple Core model, $TEMPLE holders earn a share of revenue by locking their $TEMPLE into vaults. These vaults are available in varying lock term lengths to suit users with different investment horizons.
Vaults operate on a monthly schedule regarding revenue allocation, regardless of how long individual users lock for. Revenue earned is allocated to the vaults at the end of each month. However, what happens after that allocation depends on the lock term length of the vault.
The revenue that the Temple Treasury generates via the primary farming strategy and reinvestment strategy.
The amount of base revenue “owned” by each vault, based on weighting.
A mathematical factor increasing base revenue share for vaults of longer duration.
The amount of revenue an individual user receives from a vault at the end of each vault term.
The shortest duration that a user can lock $TEMPLE is one month. At the end of the month, revenue allocated to this vault is liquidated to $TEMPLE and distributed to users locked in the vault during the applicable lock term.
Multi-month vaults will have $TEMPLE locked for multiple months. At the end of each month, revenue allocated to these vaults will be reinvested on behalf of the vault (reinvestment strategy) for the duration of the lock term length.
Initially, Temple Core will launch with the one-month vault option. Soon after, the team will roll out multi-month vaults.