A- Staking Pool Creation

This is the first of four parts of a community drafted proposal that originated from Discord chat and being moved here-

Purpose: The goal of this proposal is to further align the interest of the stakeholders (capital provider, cover buyers, liquidity provider) and the DAO as a whole by encouraging long term stakeholders. We would like to encourage and attract long term capital and liquidity providers as well as provide additional value and utility to long term stakeholders in USF.

Create a single asset USF pool for long term USF holders that brings value to the stakers in the pool and encourages community involvement including voting in governance as well as promotion of the platform.

A. All users can stake their USF in a single asset pool, and receive sUSF in exchange. The initial ratio of USF:sUSF is 1:1, but will increase over time. (see below)

B. There is a 48h withdrawal delay when unstaking from the USF pool. This is to ensure long term commitment in the face of market moves

C. To start incentivizing the pool, an initial 100k USF allocation for rewards will be distributed over the course of 2 Epochs and be calculated block per block and on a prorata temporis basis based on the percent USF you own in relation to the size of the pool at each block. This initial allocation is meant to encourage initial participation and interest. This may even help convert previous short term farmers into long term investors and community members. (Note: a Long Term Thinker incentive allocation is already planned, this sUSF vault is expanding on the idea)

D. After the initial allocation, this pool will receive a share of the DAO benefits including profit sharing from premiums, fees from short-term holders, and discounts on buying cover (see below)

E. A consideration for this effort should be the priority and amount of dev time that it takes to accomplish this. One option may be a temporary pool with little overhead using a fork to solve immediate problem and then put forth a longer term plan to devote time to customization.

2 Likes

I think we should distribute over (4) or (6) epochs (not 2), so roughly 2 or 3 months, with the premiums starting after, but also a possibility of premium or a bonus for those who staked the longest.

At the very least, I’d move to extend 2 to 4 epochs.

2 Likes

We should not reduce the amount of LP rewards. Lp investors should get more rewards. We should discuss making it attractive to hold a USF token.

I second this.

Extending the rewards into more Epochs will spread out the rewards more evenly and reduce the chances for very early holders to become whales, therefore making it more fair to the community as a whole and give those providing liquidity enough time to finish their current epoch to earn the rewards
before removing the liquidity (if that’s what they want to do.

2 Likes

It may be worth adding that the incentives will not depend on the stakers staying for the entire duration. Meaning that the incentives received during the time in the pool are earned regardless of the length of time.

I don’t see any mention to LP rewards on this proposal or that they will be reduced if this passes?

This is not addressing LP rewards. This was specifically for the staking pool. LP rewards should be an additional discussion, but agree it is important and need additional definition after the current Epoch (5)

1 Like

Plenty of good reasons to extend (I’d push for longer if possible):

  1. News doesn’t spread THAT fast outside of the die hards in crypto, so the longer the rewards, the more investors/stakers we’d attract and convert. This is a new project so people will need time to do their due diligence before committing to buying USF and staking
  2. The devs asked for ~3 months to finalize some features for the official launch. We aren’t in any rush to start collecting fees from premiums before Unslashed insurance really cranks up.
  3. Point D will require some serious thought and may not be appropriate without an official timeline or plan

Questions:
Do we know if there’s a limit on the number of tokens that can be emitted per epoch? ATM, we don’t want to dissuade capital, LP’ing, or USF staking, but encourage all three. We are in the bootstrapping phase so the highest emissions is appropriate ATM.
I would love to see a boost for capital providers and discount for policy holders associated with this pool. Have we drafted anything around that yet? (EDIT: looking at C now)

I think we should distribute over (4) or (6) epochs (not 2), so roughly 2 or 3 months, with the premiums starting after, but also a possibility of premium or a bonus for those who staked the longest.

At the very least, I’d move to extend 2 to 4 epochs.

I agree.

1 Like

I agree with incentivizing over more epochs. We dont know how much fee the DAO will be generating and when, neither do we know how long will it take to dev the fee sharing
In addition, we cannot take for granted at that stage what will the DAO decide to do with the income stream

if we do some math : let’s imagine 1M USF is locked in the USF vault (40% of circulating USF at end of epoch 5). 100k USF reward is a 10% rate. if spread in 1 period (2 weeks), this is 260% APR. 130% if 2 periods, 65% if 4 period. I think this is an ok incentive for a single asset pool with no IL risk at all (and will be much higher at first, with less USF locked).

I suggest 100k USF over 4 period, and putting in the langage that the DAO “intends to” gradually replace it by fee sharing, depending on a future vote and dev capability

2 Likes

I don’t really understand the point of a 48 hour delay.
The cool down period of 48 hours for the capital suppliers makes sense because you want to avoid users pulling out their ETH before an insurance claim is made.
On AAVE it also makes sense because the staked AAVE is used as a backstop in case there is not enough money following an issue with the liquidations.

Given the utility of the USF, I don’t think this is useful. If you want to incentivize users to remain in the DAO, you could maybe implement a lockup period. Users could voluntarily decide to lock up their tokens in exchange for more voting power and/or a greater portion of the protocol fees. Kind of what curve or Barnbridge are doing. The multiplier factor would decrease linearly over time, but the user could decide to renew the lockup period at any time.

for sure the idea of a longer lockdown, incentivized by a higher share of the rewards, was introduced in another proposal.
We split the proposal and as a free standing idea, I agree it doesnt make too much sense. We could remove the 48h lockdown from this proposal and focus on the lockdown/reward relationship in proposal C

1 Like

I stand behind a staking pool creation but I think there should be an objective to having a pool other than reducing circulating supply and filtering long-term holders from traders. AAVE and PERP staking pool works as safety measures, for SWAP it grants access to their launchpad, etc. Is there any scenario where we could need this capital? If it is somewhere and I’m missing it, please let me know.

Without a clear objective on why we need USF locked, and at this stage of the project I feel it would be more significant to have an LP staking pool with voluntary lockup time which would determine a multiplier on the rewards received for “unstaked” LPs. This will help the project’s liquidity and filter at the same time those in it for the long term. It doesn’t have to be permanent, I’m thinking around 6 months until the project gains more traction.

1 Like

Isn’t that contradictory? If there’s a sUSF token users are free to sell it, and in fact there’s no reason for anyone to use USF in this scenario, as it’s better to stake everything and trade sUSF.
For this reason I’m against this as presented. Either a 48h lockup or a token, both make no sense.

Withdrawal delay by itself is an attempt to reduce token velocity which I think is counterproductive, as it makes it less attractive to stake USF and less attractive to hold it in the first place.

1 Like

I get your point and think you are right that both of those together likely do not make sense. I could have worded it better, but the sub points (A, B, C, D) in this proposal were options and ideas around the pool that people discussed in discord and the google doc. This was an attempt to bring all of the initial ideas together.

Once we have enough consensus and discussion around these, I think we would need a new proposal to call out the details of the plan and bring it to a vote.

Apologies for the confusion.

1 Like

I think a good approach would be to list the products / features we can leverage on to design a useful staking mechanism. I’m thinking of what will be available on the protocol in the future such as:

  • Multiple policies buckets.
  • Designing your own bucket by picking individual policies to provide cover on.
  • Protocol fees.
  • % Return (in ETH) for capital providers.
  • Remaining $USF Tokens for distribution.
  • Others (?)

I think listing these features will help us to design a staking mechanism that makes sense and aligns with the protocol’s and community long-term vision. I.e. “Premium” capped buckets for stakers, fee sharing, % return distribution by loyalty system, etc.

We don’t have to leverage of all unless it makes total sense for the protocol vision. But I do think defining properly the tools we are going to have is necessary to design a mechanism better. Will probably make a separate thread later to summarize these.

1 Like

Not sure this would be the case.
sUSF would be worth more than USF because it compounds and benefits from profits from the platform. For people to trade sUSF there would need to be liquidity and there is little chance of that happening if it’s not pushed and incentivised.
A lockup of 48h might be too long, but if it’s 24h or less it would help prevent flash loans attacks

1 Like