Continuous ESD
Overview
By transitioning our stability mechanism from supply-based to reserve-based we can create a much simpler lock-less continuous decentral bank.
Two Token Model
We will migrate to a two token model with ESDS as the transferrable governance token + seigniorage share, and ESD as the stablecoin. This structure with give us three main advantages:
Decouples incentive to lockup circulating supply from growth.
Decouples governance security from locked up circulating supply.
Enables a smooth issuance reset while maintaining ownership incase v1's peg is not salvageable.
Migration and Issuance Reset
To migrate from v1 to this new model, a series of proposals will be made to pause regulation and bonding in the current DAO. From this we'll be able to solidify the final total supply of v1 ESD and ESDS.
New ESDS will be claimable 1:1 from v1 ESDS and 1:n from v1 ESD where n is the final v1 bonding ESD:ESDS exchange rate.
Once all v1 migration proposal have been committed, governance will be paused to ensure the safety of the migration path as v1 governance power moves to the new model.
Continuity
This model will allow us to remove lockups and even epochs in favor of a continuous system that looks more like Compound. The obvious benefit of this would be greater composability with yield aggregation protocols like Yearn, bringing more efficient market participants to contribute to stability.
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