BIP 000X: FISH Governance Staking Rewards

We have to determine first few things before moving forward with this proposal.

  1. Set some clear rules for governance - voting power parameters and penalties for early unstaking.
  2. What amount of the LM pool we want to use.
  3. Vesting rules for Staking Rewards.
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Should voting power be linear with amount of FISH held or be slanted to favor those with more stake? Maybe there is a way to use a dynamic scaling of voting power that shifts with the size the community.

I think early on it may make more sense to have those with more investment to have more control since the community is more vulnerable, but then as infrastructure gets laid down for babelfish, scaling should be more linear.

Maybe there could be a sort of “gamma correction” parameter on the voting that is based on the numbers of stakers?

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Perhaps it’s not the best place to convey this concept, but consider the possibility of issuing NFT rewards for voting behaviors. I understand @Hyde raised a concern about issuing rewards for the act of voting, but I rather love this idea.

To me, I will stake a bitocracy and NEVER vote or pay any attention to what the protocol is doing UNLESS I have a reason to vote. That means either I’m a heavy wallet, or I get rewarded for voting. I don’t think it would effect the outcome of votes (since all would be rewarded for votes regardless of how they are cast).

Since the AMM introduces risk, it will need to provide a greater percentage reward than our governance staking. However, we’ve been discussing the need for incentivizing governance participation… and it’s simply not sustainable to issue large FISH rewards for staking FISH in our governance. Eventually, the protocol will run out of FISH and people will stop participating in the governance at that time.

I imagine a more sustainable model, in which we are able to generate consumable & liquid value in the governance rewards by issuing NFT art, and NFT in-game assets & power-ups for BabelVerse. BabelVerse would feature an ever-growing FISH “community chest” which pays out FISH rewards for arcade high scores & completed educational modules in FishToshi’s Dojo.

BabelVerse can provide the parallel community & economy to construct our governance in an innovative & immersive way.

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I think I would agree a bit with @Hyde on the NFTs at least in the long run because it might make the system dependent on the ability to keep attracting people with NFTs for participation. If the community gets tired of too many babelfish NFTs or NFT popular oscillates it could effect the voting protocol. But maybe NFTs could be used as an initial incentive for participation. Or maybe there could be some standardized not, like an I voted sticker.

It seems like voter participation may be one of the largest hurdles to defi because it is not really that good in democracy in general. Maybe we can look into reasons people in the community don’t vote? One thing with defi voting is that some people may not understand the concepts enough to feel comfortable making a decision. Maybe the BIPs can have simplified versions to put things in laments terms (like a tldr but with analogies)? Just some thoughts. We could probably have a much longer discussion on voting participation.

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@Illusivegoose as always, great thoughtful perspectives here. I really appreciate your insights. Rewarding governance participation with FISH tokens would be a huge sybil attack vulnerability. That’s why I thought we could experiment with the idea in a “sandbox” like BabelVerse with blockchain assets that only have utility within our community.

Of course, the same problem of sustainability of governance rewards issuance applies to NFTs as well as FISH tokens. However, we haven’t fully explored consumable rewards that give in-game benefit of single-use or limited number of uses. That’s enough of me derailing this thread with NFT talk :slight_smile:

So… on the topic of pure FISH governance staking rewards, why don’t we just conceptualize of this question in simplest terms… “Staking vs Liquidity Mining? 1 FISH to spend. How do you allocate it?”

[5% Staking / 95% AMM]
Reflects the value of having a staking governance which doesn’t represent an actively voting community engaged in a meaningful DAO governance process… just HODLers looking for some passive income. DeFi lives on liquidity. We can’t deny this.

[10% Staking / 90% AMM]
Heavy rewards for market makers in the earliest stages of development are critical because Impermanent Loss can be brutal with upward price movement. We’re in a period of slow growth, in which we require a ton of community participation & we need to support the risk-takers making the first FISH market on Sovryn.

[20% Staking / 80% AMM]
Attractive staking rewards which also reduce sell-pressure & provide opportunity to capitalize on quadratic voting parameters to create staking structures emphasizing a heavily time-weighted curve in which perhaps as much as 75% of staking rewards are committed to stakes in excess of 1 year, with the majority allocated to those staking for 2 or 3 years. I am much more comfortable allocating a larger percentage to long-term HODLers with a thoughtful rewards vesting schedule.

[30% Staking / 70% AMM]
A very healthy reward ratio for governance stakers IMO… probably not practical to compensate governance staking this high.

[40% Staking / 60% AMM]
Not reasonable. Not enough incentive to assume market maker risk

[50% Staking / 50% AMM]
Not reasonable. No incentive to assume market maker risk

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  1. Set some clear rules for governance - voting power parameters and penalties for early unstaking.

Voting power & staking rewards should emphasize quadratic voting to heavily reward long-term HODLers in an unprecedented way. Perhaps 42% of staking rewards are reserved exclusively for stakers locking tokens for over >2 yrs (or something to this effect). I don’t like penalties for unstaking. I prefer to just forfeit rewards that I would have otherwise earned.

  1. What amount of the LM pool we want to use.

I began exploring an answer to this question in a prior comment on this thread. I’m not sure I understand the question. The token emission schedule doesn’t explicitly account for governance/staking rewards. I propose that of the 40% of total supply (168 Mil FISH) designated for “Liquidity Mining Fund”, we allocate somewhere between 10-20% (16.8-33.6 Mil FISH) for staking / governance rewards.

Since we’re forking Sovryn’s Bitocracy, our concern should be learning from the Sovryn community’s experience with it… lots of complaints about the staking rewards being negligible (hopefully people feel a little better about that now that they’ve got some FISH to show for it!) so we should try to increase staking / AMM rewards ratio relative to Sovryn.

  1. Vesting rules for Staking Rewards.

I’m for liquid staking rewards paid out regularly… monthly perhaps. Larger passive income for larger and longer stake.

It is possible that without a penalty, users could gamify collecting staking rewards by long-term staking before a scheduled reward payment and then unstaking to put their FISH to work in an AMM? Or are the staking payments relative to when an individual starts staking?

I think this sounds reasonable. I have a question. Sovryn’s rewards come from the fees collected from the AMM right? But Babelfish has a limited fund so rewards should eventually run out. Is it the plan to have yield from the collateral to eventually generate the rewards for staking/liquidity mining? I think I may be a bit confused on the liquidity mining part of the Babelfish protocol.

I agree with this.

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I am also for liquid staking rewards. Penalties may be too harsh and may deter people from even staking. Losing staking rewards should be “penalty” enough.

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At the beginning I would like BabelFish to be focused on forwarding yield from collateral for Insurance. At later stage - it could be used as part of the rewards for staking. It all depends on what the Community will decide.

Nice idea, but what would prevent people from unstaking and staking again - each month?

Penalties on Sovryn are used as an additional reward for those who stake as initially stated.
Loosing staking rewards - yes. Maybe in this case staking reward proportional to the time of staking of a person which decided to unstake earlier, could be added to the staking rewards pool.

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Yes I like this idea. It would definitely help build up our staking rewards pool.

Do you mean that instead of immediately receiving the staking output of the claimed staking period, people would stake FISH and the staking rewards would slowly increase the longer they left it in? I think that sounds like a cool idea, which might discourage people from staking and unstaking frequently.

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Th

There are many ways - like paying 50% of the reward periodically - every Month or Quarter - and rest being held until the Staking period is over. That might be better to prevent early unstaking and if it happens - then 50% would be added to the Staking rewards pool.

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I think this sounds good. How is a staking period defined? Will it be based on voting cycles?

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I don’t think that on voting cycles - as there is no such thing. It is voted once a proposal will be ready to vote on.

I think that it could be done in a Monthly or Quarterly manner. That is something that we have to give a deeper thought. :grinning_face_with_smiling_eyes:

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So we are looking for staking system without penalties and you can unstake anytime. Hmm I think penalties of some form should exist.

Should be some form of an agreement, like I am going to stake for 3 months. If I succeed to hold for 3 months I can also have a bonus reward for being a patient boy.

I will have liquid rewards from pools (maybe need another BIP) and I can unstake if I want to before the 3 months. However, if I unstake before the 3 months I will have a penalty.

Now lets say that your stack is 100 FISH, and you agreed to stake for 3 months. You get APY of X%. You get rewards in every integral (this can be every two weeks or monthly).

Your reward lets assume was 15 FISH so far and you want to unstake before the agreed date. The sooner you unstake the bigger the penalty, up to 90% of your rewards (Imagine if you agreed to stake for 3 years and you want to unstake on the first month of your agreement - don’t expect to be rewarded for that).

The formula is:
TOTAL REWARD = STAKED FISH + (FISH REWARDED - FISH REWARDED X PENALTY PERCENTAGE)

Your reward let’s assume was 15 FISH and your penalty is 30%. So you decided to unstake early. that means the formula result gives: 100 + (15- (15*30%)) = 110.5 FISH Instead of 115 FISH of the FISH you got so far. The remaining 4.5 FISH are shared to those who have completed at least 50% of their staking agreement. So the more patient you are, the more rewarded you become.

You can only unstake once per month and only if you notice that at least 30 days before. So your stack does not yield any rewards for a month.

You can only unstake on every integral and you can extend/increase stack anytime you like.

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What would prevent people from early unstaking? Smaller reward? Lack of reward? Or loosing some % of their staked amount of tokens? What would work better?

We have to find a proper carrot and stick method.

Staking is like making an agreement. If You agree for staking - You do it for a reason - to be rewarded. If You break conditions of the agreement - You should not be rewarded. In normal practice it is also agreeing on some penalties if one of the sides does something beyond that what was agreed on.

What I am thinking about is maybe for long term stakers - paying liquid rewards every 3 or 6 Months - but with every next period - rewards would be higher - so that would encouraging for to stake for the agreed time. Or maybe 50% of the rewards would be held until end of staking.

So let’s say - You stake 1000 FISH for 1 Year and Your reward is supposed to be 200 FISH. 50% would be held until end of staking and rest would be distributed to the staker every 3 months. 1st month 16,667 FISH, 2nd month 33,333 FISH, 3rd month 50 FISH and 4th month - end of staking - 100 FISH.

Staking shorter than 3 months - would be rewarded after end of staking. If someone would unstake earlier - he would not get anything - and this reward - calculated at the date of early unstaking would go for reward pool.

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I wouldnt be interested in staking, where you can claim anytime, but the money you receive will be available at the end of the month for example. I am unstaking to make some changes, maybe I find another opportunity to invest in. Time/liquidity is what counts. This could apply only on the principal, but staking rewards can be with linear vesting.

Definitely unstake anytime, get your principal immediately or after confirmation time at least. No penalty at all, just focus on that, longer you are staking, the bigger is your reward and possible weighted value of your voting power - that are 2 reasons to stake longer.
I think Sovryn staking is fine in terms of voting, but there is just a very small reward compared to other incentivized pools like Lending and AMM. And I think you should take it as a example of bad tokenomics when focusing on how to gather liquidity to a governance token. Just make the staking reward so appealing, that you wouldnt think about unstaking. How high the reward can go to retain longterm sustainability? I would focus on this.

Innstead of giving money to those AMM pools, - massively like 80% of rewards or something like that that. Maybe I just do not understand the incentive, when there is already more than 4m USD in liquidity in the Sovryn AMM pool FISH/rBTC without any incentive. I would be glad to hear some opinions on this.

Give more to stakers generally (high yield will attract more people), make principal available anytime, vest the reward, mildly incentivize AMM and Lending pools. Reward could be set to 50% for 1 year (12 month) staking, 25% for half of the year (6 months), 12,5% for 3 months, 6,25% for 1,5 month, 0,75 and so on. You can teach about bitcoin halving with these figures. But call it fish doubling :smiley:. Counting for each day, multiply the months by 31. You can set a marketing to talk about 50% APY, but it will be for 372 days. :cowboy_hat_face: It is similar to SOV staking but more rewarding stakers than liquidity providers.

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Maybe NFT’s issued after certain timeframes such as staking for 6 months or 1 year, etc

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I like this idea. Maybe we can also have the yield starts smaller and increase in later months of staking (giving the same overall APY) but incentivizing remaining staked to capitalize on the bulk of the rewards?

I agree, this might be the best for stabilizing short term stakers, but I wonder if leaves the protocol vulnerable to stakers entering just to vote and then unstake? Would this partially neglect the voting power of staking (though I think long term stakers would get more voting power per FISH right?)

With this, is the purpose of staking to lock people’s financial interest into the prosperity of the protocol so they make decisions on the best interests of the protocol? If so, then penalty-less unstaking lowers the bar for those whose financial interests are not aligned with the protocol. This could be worth considering.

I am in support of a token loss from early unstaking because I think it will discourage unstaking more than loss of potential gains (easy come easy go). I also think that this will provide more rewards to stakers, further incentivizing staking.

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I think the purpose of staking is to acquire voting power based on how locked into the protocol you are. This makes sure that you have the protocol’s best interests. Because of this, I think there should be a penalty for withdrawing because it is more important for the operation of government to be controlled by people who are strongly aligned with the protocol then it is to maximize participation in staking.

No one has to put all of their FISH in staking to participate so even if yields are not very competitive with AMM and Lending pools, it does not mean the no one will participate. For example, if every FISH holder just put 1% of their FISH in staking, then we would have 100% participation in the community. Do anyone here have all of their money in one asset/lending pool, etc…?

Also, when comparing staking to other sources of income, I think it is important to consider other benefits that staking provides, such as voting. Staking also may have fewer risks that other sources of income through FISH. For example, I think AMMs can have losses through price fluctuations in the various currencies. (I may be wrong on this, because I am still learning about AMMs)

Does this make sense?

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