Proposal: Stake GZIL Fund Assets

Proposal: Stake GZIL Fund Assets

Summary

This proposal suggests staking the GZIL Collective’s treasury (in part or in full) on the Avely node. The goal is to ensure a steady influx of new ZIL (an estimated 9% APY under current conditions), thereby creating sustainable funding for further development of the Zilliqa ecosystem. After the launch of Zilliqa 2.0 and the availability of new staking mechanisms, the proposal envisions transitioning to a liquid staking token by Avely, for even greater flexibility and yield. At this stage, to minimize perceived risks, we propose a traditional form of staking rather than introducing smart contracts for liquid staking.

Rationale

1. Ensuring Fund Sustainability

  • The GZIL Fund aims to support ecosystem projects on a long-term basis.
  • A consistent staking yield will allow the fund to accumulate additional ZIL, thereby providing continuous resources for grants, dev incentives, hackathons, and more.

2. Immediate Yield Generation

  • The sooner the treasury is staked, the sooner rewards start accruing.
  • Any newly earned ZIL can be swiftly channeled into supporting promising development teams.

3. Reliability & the Role of Avely

  • The Avely node has proven its stability and efficiency.
  • A co-founder of Avely co-authored the “Halving Proposal,” which freed up resources that eventually flowed into the GZIL treasury — without this initiative, the fund would not exist today.
  • Staking on Avely supports a proven validator deeply committed to the Zilliqa ecosystem and its growth.

4. Transition to Zilliqa 2.0 & Liquid Staking

  • Once Zilliqa 2.0 is launched and its new infrastructure is in place, we can opt to migrate the staked funds to a liquid format.
  • At the current stage, we propose traditional staking to minimize technical and reputational risks — even though Avely’s Scilla contracts have undergone thorough security audits, some community members may still be wary of smart-contract-based liquid staking. With Zilliqa 2.0, this concern will largely be mitigated, as new staking contracts will come directly from the Zilliqa team.

Proposal Details

1. Staking Amount

  • Proposal: Stake the entire GZIL treasury to earn approximately 9% APY (based on current Zilliqa staking protocols).
  • When we need to fund a new project, we can withdraw the staking rewards immediately and, if necessary, a portion of the staked ZIL.

2. Projected Returns

Below are sample calculations of annual returns at a 9% rate and a current ZIL price of $0.018. For completeness, we also include a scenario where ZIL doubles to $0.036.

  • 100 million ZIL
    • 9% of 100M = 9M ZIL per year
    • At $0.018, this yields approx. $162,000 per year
    • At $0.036, this yields approx. $324,000 per year
  • 150 million ZIL
    • 9% of 150M = 13.5M ZIL per year
    • At $0.018, this yields approx. $243,000 per year
    • At $0.036, this yields approx. $486,000 per year
  • 200 million ZIL
    • 9% of 200M = 18M ZIL per year
    • At $0.018, this yields approx. $324,000 per year
    • At $0.036, this yields approx. $648,000 per year

By staking, the Fund will generate a significant additional budget for ecosystem initiatives.

3. Allocation of Staking Rewards

  • Development Grants: Funding new dApps, protocols, and tooling within the ecosystem.
  • Marketing & Community Programs: Organizing training, hackathons, and events that drive more developers and users to Zilliqa.
  • Infrastructure Improvements: Covering audits, security best practices, and other essential upgrades.

4. Future Transition to Liquid Staking

Once Zilliqa 2.0 is live, we recommend optionally migrating to a liquid staking token (e.g., Avely’s stZIL) so the fund can:

  • Retain liquidity while continuing to earn staking rewards.
  • Efficiently reallocate or withdraw assets for ecosystem needs without forgoing staking yields.

Risks and Mitigations

  • ZIL Price Volatility
    • Market conditions may fluctuate.
    • Staking helps cushion volatility by providing consistent token rewards.
  • Technical Risks
    • Traditional staking on Zilliqa is well-tested, minimizing smart contract vulnerabilities.
  • Changing Validators
    • If the GZIL Collective decides to switch from Avely to another validator, the staked assets can be redelegated.
    • There is no permanent lock-up.

Conclusion

Staking the GZIL treasury on the Avely node is a straightforward and effective way to ensure a steady flow of new ZIL to the fund. This increases the fund’s financial sustainability, accelerates ecosystem development, and does not impose strict constraints on future strategies. After Zilliqa 2.0’s release, we recommend exploring liquid staking to further enhance flexibility and growth potential.

We kindly ask the GZIL community and the GZIL Committee to support this proposal and initiate staking at the earliest opportunity, so the fund can begin generating rewards for the betterment of the Zilliqa ecosystem.

  • Support the proposal
  • Needs revisions
  • Do not support the proposal
0 voters

Deeply against this in every possible way.

Several reasons among many others:

  • These ZILs are meant to be deployed to developers to increase the overall value of the ecosystem. They shouldn’t be stuck in staking.
  • This seems like a cheap completely insensitive way to get more ZILs staked on your node, the collective shouldn’t pay favors. Sigh.
  • Staking at a particular node is funding in disguise through the commission. This proposal provides no information on what those funds would actually be used for.
  • The collective should encourage new development efforts more than anything.
  • The commission should be encouraging efforts on the EVM side, holding the funds in a safe and secure way through Safe, so multiple signatories are required on every movement of funds.

Well, if these funds can be withdrawn upon request to fund any necessary project, I don’t see a problem here.
Why not let these fund zils generate more yield?
Why would Avely SSN benefit from commission? They introduced to idea to make fund happen in the first place. I don’t see why they can’t get rewarded for that is this way.
Put all the funds in a multi signature wallet, stake and have access and ability to withdraw upon request.

Thank you, I appreciate your feedback on our proposal:

The Fund Grows - It Does Not Shrink
Staking increases the GZIL treasury via earned rewards. It does not lock resources away indefinitely: if the Collective approves grants or requires liquidity, the treasury can partially or fully unstake (subject to a short unbonding period).

Commission & Validator Choice
Every validator charges a commission to cover operational costs - this is standard in any PoS system. We suggest Avely because:

We have a proven track record of reliability.
We co-authored the “Halving Proposal,” which freed up these funds in the first place.
We have significantly contributed to the ecosystem (e.g., developing complex liquid-staking contracts) and plan to continue doing so.

Encouraging Long-Term Development
Staking aligns with supporting developers. Instead of depleting the treasury, staking rewards replenish it over time, enabling multiple rounds of funding for new teams, projects, and ecosystem initiatives. With Zilliqa 2.0, liquid staking may offer even more flexibility.

Security and Governance
This proposal does not conflict with EVM integration or multi-signature custody. In fact, we endorse robust governance: funds can be held via multi-sig, and any staking adjustments can undergo proper community voting. Staking simply adds an ongoing revenue stream.

Conclusion
By staking on Avely, the GZIL Fund gains consistent rewards to fund long-term ecosystem growth. We believe this approach best serves Zilliqa by ensuring the treasury remains robust and continually available for developer grants and other key initiatives. We welcome further discussion and thank you for your thoughtful input.

This hides that you stand to benefit directly $13,000 to $52,000 a year by your own numbers.

As someone suggested in the collective’s Telegram chat. The operator where this should happen, if at all, should only be Zilliqa’s own node. This could include a full kickback on the commission received by Zilliqa operatoring it.

Ideally we should be deploying the funds elsewhere though.

We’ve never hidden the fact that our node would earn a commission - this is standard practice in any proof-of-stake network. Every validator, including one operated by Zilliqa itself, would benefit similarly. The key difference is that we’ve consistently shown our commitment to the ecosystem: we co-authored the “Halving Proposal” that created this fund, and we’re again proposing a way to make it sustainable, rather than depleting it.

We believe our contributions - building complex smart contracts, investing in R&D, and actively supporting the community - warrant consideration for staking with us. In return, the GZIL fund gains steady rewards that can be reinvested in new projects. Of course, the community can choose otherwise; we’re simply offering a transparent option we think best aligns with long-term growth for both the fund and Zilliqa and at the same time it will support us too.

The primary mission of the GZIL fund is to support Zilliqa-native projects. Therefore, I am completely against staking on a Zilliqa node and receiving a fee kickback, as this move would not help Zilliqa builders at all. On the contrary, it would introduce a toxic pattern in which the fund’s resources are used in ways that contradict its mission.

Avely is the original (OG) protocol on the chain, so it clearly fits the definition of a Zilliqa-native project. The team has done—and continues to do—excellent work to strengthen the ecosystem. They deserve to have some of the GZIL fund staked on their node.

3 Likes

“They deserve to have some of the GZIL fund staked on their node.”

Noone is doubting that Avely are involved in the ecosystem, but there are many who are. Personally I dont think staking the GZIL fund for ZIL is the right way to go for several reasons. (Certainly not all of it)

  1. You can make more than 8% on other methods elsewhere, and lessen the risk of all the fund being in ZIL if a consideration is to divisify.
  2. Staking it all with 1 SSN doesnt make any sense - you would choose to again diversify this and putting some metrics in place to choose which SSNs you would stake it to. (ie active development, plans for the commission, etc).
  3. Staking it reduced apr by a small amount for other stakers (not much of an issue, but its there.
  1. Our proposal embraces a conservative approach now, but it doesn’t preclude future diversification. We can always adjust our strategy - whether converting some ZIL to stablecoins or exploring other yield avenues - as needed.

  2. Our proposal is fully aligned with the fund’s mission. Staking on our node supports the very project that made the fund possible. Without our initiative, the fund might not exist today, and ZIL could have leaked into the market.

  3. While staking might slightly dilute rewards (which is normal situation), the steady influx of ZIL is critical for funding new projects, hackathons, and other initiatives that benefit both ZIL’s price and gZIL’s utility.

1 Like

The proposal to stake GZIL Fund assets through the Avely node is a forward-thinking initiative that aligns perfectly with the goals of fostering growth and sustainability within the Zilliqa ecosystem. Here’s why this plan is both exciting and sensible:

  1. Reliable Income Generation : Staking through Avely offers a steady stream of new ZIL tokens at an estimated 9% APY, providing a predictable revenue source that can bolster the GZIL fund’s ability to support various ecosystem initiatives.
  2. Trustworthy Partner : Choosing Avely as the validator is a strategic move given their proven reliability and positive contributions to the Zilliqa community. Their track record adds a layer of trust and security to this endeavor.
  3. Future Flexibility with Liquid Staking : The plan to transition to liquid staking once Zilliqa 2.0 launches is visionary. This approach will not only enhance flexibility but also allow for more dynamic use of funds, potentially opening new avenues for ecosystem development.
  4. Risk Management : While market volatility and technical risks are acknowledged, the decision to start with traditional staking minimizes these concerns. Avely’s reliability helps mitigate potential issues, ensuring a secure foundation for this initiative.
  5. Adaptability : The proposal’s flexibility is evident in the option to switch validators if more favorable opportunities arise in the future. This adaptability ensures that the GZIL fund remains responsive to evolving market conditions and technological advancements.
  6. Strategic Growth Planning : By addressing immediate funding needs while anticipating future improvements with Zilliqa 2.0, this proposal demonstrates comprehensive strategic planning. It sets a clear path for sustainable growth, ensuring resources are allocated effectively to support ecosystem projects.

In conclusion, staking GZIL Fund assets through Avely is a well-considered plan that balances immediate gains with long-term vision. It not only strengthens the financial foundation of the GZIL fund but also paves the way for innovative approaches in the future. The proposal reflects a thoughtful approach to leveraging blockchain technology for community benefit, and I fully support this initiative.

2 Likes