Introducing the Citadel DAO
Citadel is a treasury DAO aiming to be the largest community owned Bitcoin position in the world. The treasury and protocol will be governed by the CTDL token, with a predominant Bitcoin treasury actively earning yield and shared with long term CTDL holders.
It will leverage unique funding mechanics to accelerate the continuous growth of its treasury while using the power of BadgerDAO’s tried and tested vault strategies to optimize its yield.
To ensure it can create sustainable yield on its Bitcoin positions it will hold not only Bitcoin, but also yield influence assets across DeFi (eg. Convex and BADGER). This enables Citadel to wield large influence across multiple ecosystems and fight for Bitcoin to get the yield it deserves.
Citadel will grow to become the people’s Bitcoin whale with the intention of supporting the creation of Bitcoin-focused products not just in DeFi, but also Bitcoin core development which is drastically underfunded.
Citadel DAO: Breaking New Ground
Treasury DAO’s have yet to be fully explored in our space. Imagine a DAO focused on building a large treasury, having the community govern its influence, developing autonomous ways for that treasury to be productive and sharing the rewards of those activities with long term holders.
For DAO structures like this to work they need sustainable models that align users with the health of the protocol and the ability to accelerate treasury growth.
This is exactly what Citadel DAO is attempting to do with innovative new mechanics.
The Citadel Protocol
Accelerated treasury growth is critical for Citadel to be successful. To provide sustainable yield to long term holders of CTDL, it will put a large treasury to work and increase significant influence across different DeFi ecosystems.
Yield for CTDL holders over time should be driven by the productivity of the treasury and its returns rather than strictly emissions. Those rewards also should be in the asset holders believe in long haul, BITCOIN.
In designing the protocol mechanics, our goal was to make the dapp the most attractive place to trade for CTDL while enabling continuous treasury growth. Here is how it works;
With a very similar experience to making a trade on a decentralized exchange, with 1 click users can swap Bitcoin or yield influence assets for xCTDL (interest bearing Citadel) at a discount to the current market price.
We call this “funding” and it’s the main source of treasury growth.
The amount of xCTDL that can be swapped for is limited by the predefined 10 year token emissions program and distributed per epoch based on specific metrics that dictate the health of the protocol.
CTDL and xCTDL are standard ERC 20 tokens.
HODL or Deposit
In exchange for swapping assets into the treasury users receive xCTDL which is accruing CTDL emissions under the hood. This is almost like a user’s ticket to enter the Citadel before they can receive all the benefits of being behind its glorious walls.
With its fixed controlled emission rate, xCTDL will aim to have a targeted APY over its 10 year program starting in the mid 3 figures while bootstrapping a treasury and making its way down to the mid double digits over that timeframe.
To further align the protocol with its holders while ensuring transparency amongst all participants, xCTDL will have a vested exit. Upon withdrawal it will activate a vesting period, during which the user will receive their CTDL linearly until the period ends. Meaning at any time users can withdraw back to CTDL while limiting short term arbitrage opportunities, large supply shocks and helping all other users clearly understand when others decide to give up their ticket to the Citadel and plan accordingly.
Users that already have CTDL can also come to the dapp and deposit for xCTDL.
When users are ready they can join the Citadel and receive the full benefits of aligning with the peoples Bitcoin whale for the long term. Inspired by veTokenomics and the Convex protocol, users can lock their xCTDL for 21 weeks to receive:
- A boost multiplier on their accruing CTDL emissions (ex. 2–3x the yield of just xCTDL)
- A share of the BTC acquired through funding
- A % of yield earned through the active treasury
- The ability to participate in governance
Any protocols looking to influence how the Citadel treasury is put to work, which assets to acquire for the treasury, how to allocate its yield influence and overall any governance proposals can bribe vlCTDL holders through our partner platform.
As time passes and the Citadel emissions program reduces its targeted distribution yield rates, a self perpetuating flywheel will start where the % of total yield received by lockers primarily comes from new BTC entering the treasury and the yield generated on that treasury. This will create a sustainable model for those to live in the Citadel for the remainder of time.
In future articles we’ll take a deep dive into the protocol mechanics, fixed controlled emissions program, tokenomics and locking mechanics.
Our Built-In Yield Engine
Actively putting a treasury to work is harder than it seems. Many protocols are limited by how resource-intensive this process can be to manage and maximize returns while community members demand transparency in how this treasury is controlled.
Citadel’s secret sauce? Having a built-in partner-first yield aggregator through the Badger vault system, making the treasury productivity transparent, non custodial, verifiable and automated. Badger has extensive experience creating yield strategies that Citadel will utilize to ensure all the assets in the treasury are actively earning yield.
** Diagram above outlines the initial treasury optimization game plan which will evolve and adapt over time with new automated strategies and influence from governance**
Treasury productivity and yield aggregation will be synergistic. As new assets are added to the treasury, Badger will ensure there are complimentary vaults launched so it can start earning yield immediately. An example of this is a CTDL/WBTC Curve V2 pool that could be created shortly after launch. Badger can launch a CTDL/WBTC CRV LP vault that Citadel can deposit into and earn interest bearing CVX and CRV. The synergy goes the other way as well. When unique BTC vaults launch at Badger, through governance Citadel can offer the ability to add those vault tokens to its treasury and further build Badger protocol owned liquidity.
For those unfamiliar with how the Badger partner first yield strategies work, instead of selling rewards earned from farming other protocols like Convex, they either stake or lock them to earn even more yield and distribute interest bearing assets to users.
Why is this so important for Citadel? The rewards earned by Citadel’s BTC treasury are also yield-influencing assets so it can vote to drive even more underlying yield on its Bitcoin deposits.
An example: Citadel deposits BTC into the ibBTC Badger vault and earns BADGER, bveCVX, and bcvxCRV. The BADGER will give Citadel a higher boost on its BTC yield in the Badger dapp and the bveCVX will vote to drive more underlying yield on the ibBTC CRV pool. This will enable yield to scale with treasury growth and create a unique flywheel.
More BTC = More Yield Influence + Boost = More Yield on Treasury
This flywheel will make Badger and Citadel dominant forces not only in the Curve wars but subsequent ecosystems that have a fight for yield influence in the future. The same approach can be applied to ensure BTC yield across all of DeFi is properly represented.
It’s critical when launching a DAO that the governance participants, and in turn the community, have a shared value and belief system, working together towards a common goal with vested interest. We did just that in bootstrapping the launch of Badger and we plan to do it again with our unique partner first launch of Citadel.
Our goal is to have a completely fair and transparent launch while distributing ownership of Citadel to not only users that participate early but to a select group of DAO’s/dapps across our ecosystem who have an influence over Citadel.
We call this launch the Citadel Knighting Round.
Over the course of multiple days users will be able to swap WBTC, ibbtcCRV Badger vault token, CVX and/or bveCVX for xCTDL.
Only users who qualify for the whitelist can participate in the launch event. The whitelist will be a combination of actions users have taken in the Badger ecosystem and in our partners dapps. These qualifying actions will be revealed 1 by 1 as we get closer to launch.
So what is the knighting round?
There will be a fixed pool of Citadel tokens that will be distributed to the partner DAO’s/dapps. They will be the knights of the Citadel.
But how does that pool get split amongst them?
That’s going to be up to the individual participants in the launch event. At the point of participation they get to choose 1 DAO to give their vote to. At the end of the event we will tally the results and distribute the Citadel proportionally to these DAO’s.
These DAO’s will then have the ability to shape the direction of Citadel along with driving proposals that help Citadel the protocol evolve but also can directly help their interests.
We’re exploring collaborating with a bribing platform to make it easy for partners who’ve shown interest in incentivizing users to vote for them in the launch event.
Further details of tokenomics will be discussed with the community prior to finalization and shared before launch.
Badger is a Bitcoin-focused DAO. We like the coin. There is no better asset for the foundation of a treasury protocol that can thrive for years to come. This will be a key differentiator of Citadel.
Citadel will enable users to swap for xCTDL using both tokenized and Native Bitcoin through the Badger bridge. Similar to how users can deposit in the Badger vaults with native BTC today to earn yield. This is an attempt to bridge the Bitcoin community that wants additional utility on their assets.
After the launch event the community will begin introducing other treasury assets users can swap with that either are BTC LP’s or have yield influence. Of those the first will most likely be BADGER so Citadel can get a boosted yield on its BTC deposits in the Badger dapp.
With the goal of maximizing yield on the treasury as much as possible, it’s important that Citadel has influence around how BTC gets yield across different ecosystems. Outside of Badger there are no protocols or entities that own large influence that are voting to ensure BTC gets its fair share of yield. That will change in a big way with Citadel since that directly impacts the returns on the treasury.
Also, Citadel will be on a mission to help fund Bitcoin core development along with new BTC focused products that can expand its utility across DeFi. As one of the largest BTC allocators across DeFi, it will work to open up opportunities to grow the utility of BTC across the ecosystem.
By holding a mix of BTC and yield influence assets Citadel will have both a rock solid treasury reserve, and the fuel to grow it.
Citadel x Badger
Citadel is launching as a sub-DAO incubated by Badger. It will have a stand alone dapp, but also functionality within the Badger app. Badger will receive a share of the Citadel token supply at launch which includes earning a share of Citadel revenue.
The CTDL token will govern the protocol parameters and its treasury. Outside of the already discussed synergies of a treasury DAO having a built in yield engine, Citadel will be as instrumental for Badger as Badger will be for Citadel.
Citadel is expected to become the:
- Largest BTC depositor in the Badger app (ensuring sticky TVL and sustainable revenue)
- Largest holder of the Badger token (accumulated through treasury accumulation and yield earned on BTC deposited in the protocol)
- Largest locker of the BADGER token (when vlBADGER launches this will enable Citadel to increase its boost/yield on its BTC deposits)
- Largest depositor in the bveCVX vault (allowing for sustainable yield on BTC in the Curve/Convex ecosystem)
This will be the self-perpetuating flywheel for our ecosystem. One that will create close alignment between both DAO’s while progressing the evolution of Bitcoin in DeFi.
What to Do Next
If you’d like to start contributing to the DAO join the corresponding channels in discord, introduce yourself and find a way to help out. There will be a variety of RFF’s (request for feedback) around fundamental protocol decisions prior to launch for the community to weigh in on.
Future articles will provide more details on the launch plan, whitelist qualifications, partnerDAOs, the Badger-Citadel synergy, and how to participate in the launch.