Folks Finance Redeem Period- Governance Period 9

With the end of another Governance period a window to redeem your gAlgo for Algo opens, known as the redeem period on Folks Finance. When users participate in an Algorand Governance Period through Folks Finance’s Algo Liquid Governance, they send their Algo commitment to Folks and in turn receive an ASA (#793124631) gAlgo in a 1:1 ratio.

The redeem period for the beginning of Governance Period 9 (GP9) is currently open, but will close at 11 am EST on October 7^th, 2023. There is a countdown on the Liquid Governance page that makes it clear when the period will close.

This redemption period is crucial if users intend to use the Algo equivalent of their gAlgo in the next Governance Period. The redeem period also helps gAlgo maintain its peg with Algo.

Why a Redeem Period

Due to on-chain technical limitations, a given gAlgo’s origin cannot be tracked. This is relevant because at the same time Governance Period X ends, Governance period X+1 begins. If the redemption period of Governance Period X overlapped with the commitment period of Governance Period X+1, a user could theoretically commit Algo in the new period (thereby guaranteeing themselves rewards) and then give back his/her gAlgo in the old period; stealing from other users at no cost to themselves. Therefore the redemption of old Algo and the commitment of new Algo cannot overlap.

Source

How to Redeem gAlgo

To redeem your gAlgo is a straight forward process.

Note, if you provided gAlgo liquidity on a decentralized exchange (DEX) you may want to consider removing liquidity to redeem your gAlgos.

Pre-mint Mechanism

If a user wishes to participate in Algo Liquid Governance for the following period they can pre-mint their gAlgo. You won’t receive your gAlgo until the redeem period closes. Your gAlgo will automatically be sent to your wallet.

The pre-mint mechanism allows users, who have not yet minted gAlgo or wish to increase their commitment, can avoid the one-week waiting period by pre-minting their gAlgo. Once minted, gAlgo tokens are automatically locked and will be sent to users after the redemption period closes. During the commitment period, users can still choose to un-commit and receive their Algo tokens back.

Advantages of Algo Liquid Governance

Algo Liquid Governance provides several advantages to users who want to participate in the governance process of the Algorand Foundation. These include:

1. Guaranteed Rewards: Users who commit their Algo by minting gAlgo are guaranteed to receive rewards during the governance period.
2. No Obligation to Vote: Users are not required to vote on governance proposals to receive rewards.
3. Dual Voting: Users can express their voting wishes for both Algorand Foundation proposals and Folks Finance Governance proposals.
4. One-to-One Ratio: gAlgo is pegged at a one-to-one ratio with Algo on Folks Finance, ensuring that users can redeem their tokens for the same amount of Algo during the redemption period.
5. DeFi Boost: The Algorand Foundation incentivizes DeFi platforms by allocating 20 million Algo to be distributed as a governance incentive.
6. Leverage: Users can leverage their commitment by up to four times by using gAlgo as collateral to borrow Algo.

DeFi Boost

I wanted to make a special note for the DeFi boost to Governor’s rewards.

In GP6 Governors passed a measure, Measure 1, which boosted allocation to DeFi rewards by 5MM, from 15MM to 20MM Algo. These additional rewards historically have led to a significantly higher reward APR.

Past Governance Reward APRs

Note DeFi rewards were not introduced until Governance Period 5, with the passing of 2 measures in Governance Period 4.

Governance Periods	Standard Reward APR	DeFi Reward APR
Period 1	14.05%	N/A
Period 2	10.02%	N/A
Period 3	7.96%	N/A
Period 4	7.73%	N/A
Period 5	6.76%	14.01%
Period 6	5.59%	15.36%
Period 7	6.27%	16.35%
Period 8	4.17%	18.35%

Read more about how Governance reward rates are calculated in my blog post Calculating Governance Rewards.

Governance Period 4 Measures

1. Designating 7M Algos from the Q4 2022 governance rewards to DeFi governors.
2. Allow DEX Liquidity Providers that contribute Algos in pools to participate in governance for Q4 2022.

The first measure enables Folks Finance to offer a higher reward rate than the standard governance platform that soft locks your Algo commitment.

Accessing your Governance liquidity comes with many advantages, but some of the most appealing draws are additional rewards, ability to redeem at a 1:1 ratio, and voting on Governance measures and Folks Finance Governance proposals.

Now, Folks Finance has implemented the ability for Liquid Governors to be an xGov through their platform. Read more about the xGov program and how to participate through Folks Finance on my blog post xGov Program Overview.