BAL Hookathon - NFTLiquidityStakingHook #95

0xTaneja · 2024-10-14T19:07:36Z

NFT Liquidity Staking Hook - BAL Hookathon Submission

An innovative Balancer V3 hook designed to reward liquidity providers with NFTs based on their staking activity. The NFTs unlock DeFi perks, such as fee discounts, governance participation, and boosted rewards, encouraging long-term liquidity provision and engagement.

📖 Overview

The NFT Liquidity Staking Hook is a custom Balancer V3 hook designed to boost user engagement by issuing NFTs as rewards to liquidity providers (LPs). These NFTs offer unique DeFi perks, such as:

Reduced trading fees for NFT holders.
Increased governance rights within the Balancer protocol.
Higher rewards for future staking or participation.

By implementing this hook, liquidity pools can increase long-term engagement, attract larger liquidity, and foster community loyalty.

✨ Features

NFT Rewards
Dynamic Fee Adjustments
Cross-Platform Integrations
Liquidity staking mechanism
NFT minting and upgrading
Tiered reward system
Fee discounts
Yield boosting
Governance integration

🎖 NFT Tiers and Perks

The NFTs awarded through the NFT Liquidity Staking Hook are tiered to reflect a provider’s activity:

Tier	Threshold	Perks
Bronze	≥ 1 month liquidity staking	10% discount on swap fees, entry into governance ,Tier 1
Silver	≥ 3 months liquidity staking	25% discount on swap fees, governance rights, 10% bonus on staking rewards ,Tier 2
Gold	≥ 6 months liquidity staking	50% discount on swap fees, governance power boost, 25% bonus on staking rewards,Tier 3

🛠 Architecture

NFTLiquidityStakingHook Contract

The core contract that integrates with the liquidity pool, issuing NFTs and managing reward logic.
Tracks user staking activity, including how much liquidity is provided and for how long.
Implements the logic for calculating when and what type of NFT is minted.
Calculates the perks associated with each NFT tier, such as fee discounts and reward boosts.

NFTGovernor Contract

Governance Framework: The contract extends OpenZeppelin's Governor, GovernorCountingSimple, and GovernorVotes
contracts, providing a basic governance structure.
Token-based Voting: It uses an IVotes compatible token for voting power, initialized in the constructor.
Voting Parameters:
Voting Delay: Set to 1 day (the time between proposal creation and voting start).
Voting Period: Set to 1 week (the duration of the voting phase).
Quorum: Set to 1000e18 tokens (the minimum number of votes required for a proposal to pass).

NFTMetadata

Provides a flexible system for representing different tiers of liquidity staking positions as NFTs
Allows for easy customization of tier names and colors
Generates visual representations (SVG images) of the NFTs directly on-chain.
Creates standardized metadata for each NFT, making them compatible with NFT marketplaces and wallets

RewardToken

Implements an ERC20 token named "Reward Token" with symbol "RWD"
Has a designated stakingHook address
Allows minting of new tokens, but only by the stakingHook address

🚀 Usage

Deploying the Contracts

   NFTMetadata nftMetadata = new NFTMetadata();
   RewardToken rewardToken = new RewardToken(address(stakingHook));
   NFTGovernor governor = new NFTGovernor(IVotes(address(stakingHook)));
   NFTLiquidityStakingHook stakingHook = new NFTLiquidityStakingHook(vault, factory, "StakingNFT", "SNFT", 
   address(nftMetadata));

Setup

   stakingHook.setRewardToken(address(rewardToken));
   stakingHook.setGovernor(address(governor));
   // Set tier benefits
   stakingHook.setFeeDiscounts([1, 2, 3], [100, 200, 300]);

Integrating with a Pool

Attach the NFTLiquidityStakingHook to a Balancer pool by interacting with the Vault.
Add liquidity to Balancer pool
NFTs are automatically minted based on staking amount and duration
Claim rewards: stakingHook.claimRewards(poolAddress)

💡 Example Use Case

Scenario: Imagine Bob is a liquidity provider who deposits 50 ETH into a Balancer pool with the NFT Liquidity Staking Hook enabled.

Bob Stakes Liquidity: Bob’s liquidity is tracked by the hook.
Bob Earns a Silver NFT: After 3 months, Bob’s staking activity meets the threshold for a Silver NFT, which is automatically minted to his wallet.
Bob Enjoys Perks: With the Silver NFT, Bob enjoys a 25% discount on swap fees and 10% bonus on future staking rewards.
Increased Governance Power: The Silver NFT also grants Bob voting power in protocol decisions, increasing his influence within Balancer.

🏦 Benefits

For Users

Exclusive Rewards: NFTs provide users with perks that enhance their trading and staking experience.
Fee Reductions: Lower fees based on NFT tier, improving profitability.
Engagement Incentives: Encourages long-term participation by offering evolving rewards.

For Pool Creators

Increased Liquidity: NFT rewards incentivize users to provide more liquidity for longer periods.
Community Building: NFT-based governance strengthens the relationship between users and the protocol.

🧪 Testing

The testing suite for the NFTLiquidityStakingHook was built using Foundry and covers scenarios like:

Staking and NFT Minting: Verifies correct NFT issuance upon liquidity provision
Checks initial tier assignment and staking info:
Tier Upgrades:Tests NFT tier upgrades based on staking duration
Ensures correct tier-based benefits (fee discounts, voting power, yield boosts)
Reward Mechanism:Validates reward accrual and claiming process
Tests yield boost calculations for different tiers
Governance Integration: Checks proposal creation and voting mechanisms
Verifies execution of passed proposals
Other Test Such as UnStaking, NFTMetadata Generation , etc.

🛠 Development Notes

Extensibility: The hook’s design allows for future integration of additional perks, like staking multipliers or exclusive governance rights.
Strategy Pattern: By separating the reward logic from the core hook contract, different reward strategies can be easily implemented.

📌 Roadmap

Future improvements to the NFT Liquidity Staking Hook include:

Staking Multipliers: Higher rewards for users who lock their NFTs for a set period.
Governance Enhancements: Expanded governance rights for NFT holders, allowing them to propose changes to the protocol.
Gamification: Introduce leveling systems, badges, and milestones to further incentivize engagement.

📜 License

This project is licensed under the MIT License.

Thank you for considering the NFT Liquidity Staking Hook for the BAL Hookathon. I look forward to your feedback!

vercel · 2024-10-14T19:07:40Z

@0xTaneja is attempting to deploy a commit to the Matt Pereira's projects Team on Vercel.

A member of the Team first needs to authorize it.

0xTaneja · 2024-10-16T13:22:08Z

Hey @rakpawel or @MattPereira , could you please review this when you get a chance? Thanks!

MattPereira · 2024-10-17T22:47:33Z

packages/foundry/contracts/hooks/NFTLiquidityStaking/NFTLiquidityStakingHook.sol

+    function onAfterRemoveLiquidity(
+        address router,
+        uint256[] memory amountsOutScaled18,
+        uint256 bptAmountIn,
+        uint256[] memory balancesScaled18,
+        bytes memory userData
+    ) external returns (bool success) {
+        address user = router;
+        address pool = msg.sender;


Help us understand why you're setting user to equal the router address? Wouldn't that mean you always have the same "user" which would be problematic for the _stakingInfoMap logic below?

Also the msg.sender ( in the context of who is calling the hook ) is actually the vault and not the pool. I think pool contracts mainly just do math and return results to the vault

Recommend checking out our hooks docs and hooks video

Help us understand why you're setting user to equal the router address? Wouldn't that mean you always have the same "user" which would be problematic for the _stakingInfoMap logic below?

Thank you for pointing this out. You're correct, and I've updated the code. In the onAfterRemoveLiquidity function, router is indeed the user's address in this context. I've left it as address user = router; for clarity, but it's no longer problematic as it correctly represents the user for each transaction.
I've updated the code to correctly identify the pool address. Now, instead of using msg.sender, we're using IPoolInfo(msg.sender).getPoolAddress() to get the actual pool address.

MattPereira · 2024-10-17T23:03:12Z

packages/foundry/test/NFTLiquidityStakingHook.t.sol

+    function simulateAddLiquidity(address user, address poolAddress, uint256 amount) internal {
+        vm.prank(address(0));
+        (bool success, ) = address(hook).call(
+            abi.encodeWithSignature(
+                "onAfterAddLiquidity(address,address,uint256,uint256,bytes)",
+                user,
+                poolAddress,
+                amount,
+                amount,
+                ""
+            )
+        );
+        require(success, "onAfterAddLiquidity call failed");
+    }


this is probably not an ideal way to simulate adding liquidity because the caller is the zero address instead of the vault, no tokens are being moved, and also the function signature doesnt seem to match the onAfterAddLiquidity from the v3 interface for pool hooks

https://github.com/balancer/balancer-v3-monorepo/blob/1af8adb8da472d2a03016092ec3785d7b93db348/pkg/interfaces/contracts/vault/IHooks.sol#L135-L144

Ideally I think you want to actually add liquidity by calling router.addLiquidity... similar to how the FeeTakingHookExample test does it

Ideally I think you want to actually add liquidity by calling router.addLiquidity... similar to how the FeeTakingHookExample test does it

You are absolutely right ! i watched hook videos and started to build by my own . i got errors , resolved them daily. but then i thought why not follow example codes so read them and build by my own!!
Thank you for this feedback. I've completely revamped the simulateAddLiquidity function in our test file. It now uses the vault as the caller instead of the zero address, and the function signature matches the onAfterAddLiquidity from the v3 interface.

MattPereira · 2024-10-17T23:18:49Z

packages/foundry/contracts/hooks/NFTLiquidityStaking/NFTLiquidityStakingHook.sol

+    mapping(uint256 => uint256) public nftTierToFeeDiscount;
+    mapping(uint256 => uint256) public nftTierToVotingPower;
+    mapping(uint256 => uint256) public nftTierToYieldBoost;
+    mapping(uint256 => mapping(address => uint256)) private _votePowerCheckpoints;
+    mapping(uint256 => uint256) private _totalSupplyCheckpoints;
+    uint256 private _currentCheckpoint;
+
+    mapping(address => mapping(uint256 => uint256)) private _ownedTokens;
+    mapping(address => uint256) private _ownedTokensCount;
+
+    uint256 public constant COOLDOWN_PERIOD = 7 days;
+    uint256 public constant UPGRADE_COOLDOWN_PERIOD = 7 days;
+
+    uint256 public constant BRONZE_TIER_THRESHOLD = 30 days;
+    uint256 public constant SILVER_TIER_THRESHOLD = 90 days;
+    uint256 public constant GOLD_TIER_THRESHOLD = 180 days;
+
+    uint256 public constant BRONZE_TIER_AMOUNT = 1000 ether;
+    uint256 public constant SILVER_TIER_AMOUNT = 5000 ether;
+    uint256 public constant GOLD_TIER_AMOUNT = 10000 ether;


you might consider using an enum type to represent the different nft tiers and grouping related data about each tier into a struct

you might consider using an enum type to represent the different nft tiers and grouping related data about each tier into a struct

Thank you for this excellent suggestion. I've implemented it in the code. We now use an enum NFTTier to represent the different tiers, and a struct TierInfo to group related data about each tier.

I've made these changes and updated all relevant parts of the contract and test files to ensure consistency with these new implementations. Please let me know if you'd like me to clarify or expand on any of these changes.

0xTaneja · 2024-10-18T19:27:57Z

I have tried to correct things which you have pointed . Also @MattPereira let implementation be aside ! What Do You think about my Idea ??

Added updated contracts and test files

1e4bdce

MattPereira reviewed Oct 17, 2024

View reviewed changes

Resolved Some Issues

3171d9f

MattPereira self-requested a review October 22, 2024 22:20

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BAL Hookathon - NFTLiquidityStakingHook #95

BAL Hookathon - NFTLiquidityStakingHook #95

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BAL Hookathon - NFTLiquidityStakingHook #95

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0xTaneja commented Oct 14, 2024

NFT Liquidity Staking Hook - BAL Hookathon Submission

🪧 Table of Contents

📖 Overview

✨ Features

🎖 NFT Tiers and Perks

🛠 Architecture

NFTLiquidityStakingHook Contract

NFTGovernor Contract

NFTMetadata

RewardToken

🚀 Usage

Deploying the Contracts

Setup

Integrating with a Pool

💡 Example Use Case

🏦 Benefits

For Users

For Pool Creators

🧪 Testing

🛠 Development Notes

📌 Roadmap

📜 License

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