$USF Utility Discussion

This link attempts to map out (a) user roles to (b) desired behavior, (c) provide incentives/punishments (a tokenomics term) to guide that behavior and then (d) lastly, offer $USF utility to further enhance that behavior.

There is lots to discuss around the minutia of the actual decision for the utility, but this is a general framework that can guide our overall $USF tokenomics.

The results of this thread’s conversation may or may not impact the already written A-D work of the community thus far, but the point of this particular thread is to flesh out and build

$USF UTILITY → USER ROLES in the eco system.

One hang up I already have is a hunch that we should provide some risk to the staking pool. It has been discussed that the staking pool be a backstop for an undercollateralization event (and I am a proponent of this) which is similar to what AAVE does.

"In the instance of a Shortfall Event, part of the locked AAVE are auctioned on the market to be sold against the assets needed to mitigate the occurred deficit. "
https://docs.aave.com/aavenomics/safety-module

In short, the staking pool (currently) has little to no risk. I think we should change this, since stakers will be accruing $USF for staking.

Here is the link to the sheet and input is welcome:

1 Like

Thanks for putting this together. I think this is helpful to see the big picture!

What is the rationale for wanting to add risk here? I am not opposed to it necessarily, but in most cases, I feel like these users have either earned their USF previously, so they took on risk or market bought USF and are locking it up for x period of time (in which case there is an opportunity cost) to be in the pool. I see the pool as a continued investment of capital over time for the potential rewards of sharing some of the profits of the protocol. I think by adding a timing component, the opportunity cost will deter short term folks.

I think a few folks mentioned complications or preferences to not go with this model. @Marh originally commented in the google doc, so maybe he has more detail on his opinion.

It’s more of a gut feeling around “nothing is free” and “high rewards are high risk.”

It’s fair that maybe the risk came earlier in buying or liquidity mining, but still, it’s an opinion that I think it’s important to have some risk, some balance.

At the very least, the rewards schedule has to be less than what LPers receive, otherwise LPers will pull LP and stake.

I understand the backstop idea isn’t liked by most, including marh, and that’s fine. The details are an aside to the broader picture i would like us to agree on that there should be some risk somewhere in the ecosystem for these players, EVEN IF it’s just a lock up period.

A lockup period would have the risk that if the market goes down, they can’t unstake and sell.

Again, my point is just balance. Anyone with incentives should have risk somewhere. Lockup seems the simplest.

Want rewards? Lock your stake. You can vote without lock, but can’t earn unless you lock.

Thoughts?

2 Likes

Yes, agree with balance and the locking was the “risk” I was thinking of as well. I like this approach.

Any thoughts on my mention on discord about locking USF to move between discreet tranches? This would allow people to use USF to reduce risk associated with their capital. My suggestion is that USF that is locked for this purpose would not also earn anything because it is being used to change the risk profile for a given capital provider. I would envision a certain number of tranches and you could lock some amount of USF as a bid to fall into a particular tranche. As the EPOCH gets closer to starting the tranches eventually are locked for that EPOCH and the risk of your capital is locked (in the sense that you can’t add more USF to move to a different tranche after the EPOCH starts. You can then move to the next EPOCH and repeat. The USF will rank relative to the amount of capital so the ranking would be something like ETH value of USF/ETH so a unitless percentage ranking.

3 Likes

Could this be tied to our current Loyalty levels (or do you envision it standing alone)? Thus far we have proposed a loyalty level program that offers various incentives in the platform, but I can see this be it’s own ‘loyalty’ tier or integrated (?)

My personal thought was as a stand-alone ranking as users staked rather than loyalty tiers. I think the loyalty aspect could be integrated as a “multiplier” (1.0x, 1.1x, 1.2x,…) onto the staked USF. I wouldn’t want to overcomplicate things but I am sure there are lots of ways to implement the basic concept.

2 Likes

I like the idea. I think it has a lot of potential and could provide utility to USF and benefit to holders/stakers.