Incentivize the Apes

Incentivize the Apes

In an effort to better incentivize long term SEFI holders and ensure diamond hands continue to harden, I propose a plan to create new SEFI Staking pools, and each will offer different APY. The current SEFI staking pool boasts 49% APY. A few new SEFI staking pools would need to be created and returns would be taken from the original SEFI Staking pool. These new pools would require lock up periods.

Scenario: SEFI STAKING original pool APY decreases and that extra SEFI is fed to the diamond hands who lock up their SEFI. The longer the lockup period, the greater the rewards. All SEFI Staking pools would continue to have the ability to participate in governance.

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What APY would you suggest for how long a lockup period?

FYI the actual current SEFI APR is at 42% the past few days, probably because more have staked SEFI.

The question isn’t “What APY should a pool have”, as that’s not something anyone can directly control, but rather “what the proportions between reward rates between the various pools should be”.
For example (and i stress, for example) you could have 4 different lockup periods of 0, 7, 14, and 28 days, with reward ratios of 1x, 1.2x, 1.5x, and 2x. The APY per pool will depend on the amount of capital locked in each one.

Other than this I mostly support this idea. As a proposal it needs to be fleshed out with who/what/when sorts of details, as well as making informed decisions on what the various pools should look like.

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Agreed. I was thinking of reward ratios. As far as time period, I’m a proponent of longer wait periods (90/180/360+ days) in order to justify a 2x rewards ratio. Obviously, that would mean that the SEFI staking pool rewards would decrease significantly. The people that would be most affected would be the more transient SEFI holders. It may incentivize those individuals to LP for greater rewards once SEFI staking rewards are diminished.

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I don’t have an APY suggestion, more along the lines of a ratio. Lock up for a year and get 2x rewards. Rewards would come from SEFI staking. More transient SEFI holders would experience a rewards decrease. This may push more traffic to LP pools. This would create a strong base of dedicated SEFI holders who truly want to shape the governance of Secret Swap.

As you say this may push more people to LP instead of stake. Obviously we’ll have to see how the new 25% quorum works in the near future. But this could exacerbate the issue of reaching quorum on proposals.

Additionally, to make the incentives lucrative enough for people to want to stake, we’d have to re-distribute all the pool rewards. What would you propose this distribution look like?

I would want all SEFI staking pools to maintain voting power. We may lose some stake in the original SEFI staking pool, but locked up pools would also be able to participate in governance. In my opinion, those who lock up their SEFI for longer periods of time have a greater inclination of future protocol success. They would be more likely to participate in governance. I honestly thing that reaching quorum would be easier.

This would only come from the SEFI staking pool. Rewards may have to drop by 50% or greater in order to pass on those rewards to SEFI locked pools. I don’t have any hard numbers in mind at the moment.

The crypto Guy at Coin Bureau talks briefly about Polkadot’s governance, where the tokens with a longer lockup period have a significantly higher voting power. It’s worth watching for a minute at 9:47:

Like with SecretSwap, there’s a council in Polkadot which balances out the governance.

For now, we should have something simpler and faster than the Polkadot governance, because development needs to move quickly, but the idea of greater voting power for a longer lockup might be a good one.

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I agree here. Definitely an interesting concept that could bring some value.

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I’ve been mulling this over and having some conversations with people about how this could work, be sustainable, and work with voting. I am particularly interested in giving people with long lock-up periods more voting power, however I’m also nervous about people who want to stake and forget about it for a long time negatively affecting quorum. Here are some thoughts I have:

  • Is there a way for the rewards in this higher pool to be CONDITIONAL on governance interaction?

I understand that currently a no-vote is more likely to help something succeed than an abstain, however with this and other governance involvement incentives, quorum will be very likely to be reached, so votes could genuinely reach quorum and not pass, and that could happen often.

  • Part of the sefi buyback could be added as rewards for this pool

Prop-14 is still live at this point, and while I’m a huge supporter of it, I think that I and most involved believed that eventually governance would change at least a percentage of the burn to something that incentivizes stakers. This could be a neat way that doesn’t dilute rewards from other LP pools, and isn’t uncommon from other AMM’s.

  • What if you had to have 300,000 SEFI IN THIS POOL to make a proposal?

Those of us that will do it will still gladly help out others, but it seems like a fair barrier of entry that doesn’t raise the cost of doing so.

  • A lengthy lockup combined with governance incentives (and dis-incentives) would protect us from a currently available attack vector

Right now one ONLY needs SEFI staked and voting at the time of tally. If a bad actor were to accumulate SEFI and propose a mal-intended proposal, they, or any group could flash buy SEFI to reach quorum immediately before tally, and then sell it right back. While they’d accrue slippage, if this were a competitor, or one with other alignments than SEFI’s long-term success, or even a wealthy party that wanted to burn the Swap down for no other motives, this would be strongly negated by Proposal #15 combined with strengthened governance power, as well as especially having proposals coming exclusively from that pool.

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Interesting perspective. Quorum may need to become more fluid over time. It would be nice to see percentage of SEFI used to vote after each proposal regardless of whether it passed, so we could accumulate some data and figure out how to distinguish between long term/short term SEFI hodlers. Either way, I think distinctions need to be made sooner than later and incentives need to grow for those who are ready to test their mettle.

" If a bad actor were to accumulate SEFI and propose a mal-intended proposal, they, or any group could flash buy SEFI to reach quorum immediately before tally, and then sell it right back. "
One avenue that could be explored is determining when SEFI was actually held. Perhaps, the base SEFI pool that’s allowed to vote works in a similar to fashion to SCRT (21 day lock period). This gives an individual base returns and voting ability. Long term pools could be built off that base, but require much longer wait periods. However, votes would be only be tallied from SEFI that exists in that base pool (21 day lockup period).

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The proposal is resubmitted to governance now, but it’s still not clear what are we voting on. There is only a vague (even if not bad!) idea with no specifics such as number of new pools, lockup periods and multipliers, as well as expected impact on existing no-lockup pool.

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Thanks for your input. I’m not sure to be honest. I think that reducing regular staking APR by 5-15% and adding it proportionately to the pools with longer lockup periods (3 months, 6 months, 9 months, etc.) would work. I don’t know the limitations of this smart contract or what the team feels comfortable in changing. Even if it is a much smaller change, it would make staking in the base SEFI staking pools that much more exciting.

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We had an excellent discussion on this in our SecretSwap Committee Meeting today. While it isn’t necessarily enumerated here in the proposal, ideas we have behind a separate staking pool could/would include:

  1. Higher staking rewards
  2. Higher governance power
  3. Also earning tokens other than sefi that we negotiate as ‘syrup pools’ that want to be listed on SecretSwap

Further reasons for wanting this beyond simply locking up and rewarding long term stakers, is that this would help to better incentivize governance power, and better direct syrup pools to active members, as applications (including but not limited to the lottery) will be built to utilize the sefi staking pool.

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Is there any way to take continuous retrospective snapshots to determine sefi holdings prior to governance? Because if you’re invested in the project long term i’d say you should have limited voting power relative to how long you’ve held sefi for (you can increase holdings prior to governance and receive increased power, but you also need to show a steady uptrend to receive that increased power to prevent flash purchases)

I hope this makes sense, as I would assume that people who suddenty go deep into sefi wouldnt normally be looking to get immediately involved in governance without being uninformed or a malicious actor.

Thoughts?

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