UniStaker

Uniswap V3 protocol fee collection and reward distribution via UNI staking.

Introduction

The UniStaker system allows for the distribution of Uniswap protocol rewards to UNI token holders who stake their tokens and delegate their governance voting weight. Rewards are sourced from the permissionless collection of protocol fees. Here, we briefly introduce properties of the system

Fee Collection

The first iteration of UniStaker allows Uniswap Governance to enable and manage protocol fees on Uniswap V3. If Uniswap Governance chooses to upgrade to these contracts, it will retain the right to set protocol fees on Uniswap V3 Pools but it will not control the fee assets themselves. Instead, the revenue generated by the fees is trustlessly distributed to those UNI holders who choose to delegate and stake their tokens.

Governance Delegation

UNI holders who stake their tokens do not lose their ability to participate in Uniswap Governance. On the contrary, stakers are required to delegate their governance voting weight, either to themselves, or to another entity who can vote on their behalf.

Rewards Accumulation

Rewards do not accumulate to stakers in the fee tokens. Rather, rewards accumulate in a token defined during the deployment of the contracts in this repo. The fees accrued by each pool are continually auctioned to any entity who is willing to pay a fixed amount of that token to the staking contract in exchange for the fee tokens accrued by a given pool.

Staking Mechanics

The core staking mechanism is directly inspired by the Synthetix staking rewards model. Stakers earn a share of rewards proportional to their share of the total UNI staked. Stakers only earn rewards while their tokens are deposited. When a staker deposits, they earn a share of the ongoing reward distribution. When a staker withdraws, they stop earning rewards.

Stakers may designate an address which is the beneficiary of their staking rewards. This means an address can earn rewards on behalf of the original depositing address of the UNI tokens. The address which performs the deposit retains the right to withdraw and update the staking position.

Stake is tracked on a per-deposit basis. Stakers may add to or withdraw UNI from a given deposit balance, or may alter the governance delegation and reward beneficiary associated with that deposit. A given address can have any number of deposit positions which are each tracked and managed independently.

Adoption Path

To take effect, Uniswap Governance must successfully pass a vote to upgrade ownership of the V3 factory to this system. Once transferred to these contracts, ownership cannot be revoked. While Governance may continue to adjust fee levels and rewards parameters, it irrevocably relinquishes the ability to claim the fees earned for itself. These would forever be distributed to UNI stakers.

The staking system allows for other contracts to be added as revenue sources for staking reward distribution in the future.