PIP-4: Staking contract upgrade

Author:
Core contributor of PathDAO

Summary:
We propose to
(1) Offer options to lock Staking and LP for higher reward
(2) Lock all rewards from Staking and LP for one year

This will lead to more staked $PATH and LP tokens, with lower sell pressure given the locked rewards

Abstract:
A quick recap on the staking and LP emission schedule from 8th January 2022 12pm EST onwards:

  • From 8th January 2022 12pm EST to 7th February 2022 1159am EST, total staking reward is 3,000,000 $PATH tokens (estimated APR of 100% at current staked amount)
  • From 8th January 2022 12pm EST to 7th February 2022 1159am EST, total LP rewards (on Uniswap V2) is 7,000,000 $PATH tokens (estimated APR of 550% at current staked amount)

Total emission of rewards for staking and LP will be 10,000,000 $PATH per month, to ensure a minimum of 12-month sustainability.

Currently
(1) There is no option to lock staking and Liquidity Provision for higher reward
(2) We do not lock the rewards from Staking and Liquidity Provision, leading to rather high sell pressure

From 8th January 2022 12pm EST onwards, we propose the following:

(1) Offer options to lock staking and LP for higher reward. Details as below:

  • When staking your tokens, you can choose for a certain lockup, ranging from 0 (flexible) to 12 months (locked). The longer your $PATH or LP tokens are locked up, the higher the respective share of the pool and, therefore, the higher your rewards

  • Below you will find a couple of examples of how this mechanism will work. We calculated the differences between locking flexible, for six months, for nine months and for a year:
    - Staker 1: Doesn’t want to lock the underlying tokens and therefore got a weight of 1
    - Staker 2: Locks the $PATH or LP tokens for 6 months and therefore got a weight of 1.5
    - Staker 3: Locks the $PATH or LP tokens for 9 months and therefore got a weight of 1.75
    - Staker 4: Locks the $PATH or LP tokens for 12 months and therefore got a weight of 2

  • Formula as below:

       1 (standard weight) + x/12 (where x is the number of months locked) = time weighted ratio being used
    

(2) Lock all rewards from Staking and LP for one year

  • The countdown of 1-year lock-up period starts upon claiming of rewards
  • Upon rewards claiming, stakers will get an escrowed token
  • The escrowed token can be swapped for $PATH tokens one year after claiming

Note:
(1) From 8th January 2022 12pm EST onwards, the current staking and LP farming contracts will not have any rewards emission
(2) All current stakers of $PATH and LP tokens will need to un-stake from current contracts and re-stake on the new contract
(3) Users will have to bear the gas cost incurred during the un-staking, approval of tokens and re-staking processes

Voting options:
• In favor (Yes)
or
• Against (No)

Rationale:
More staked $PATH and LP tokens, with lower sell pressure given the locked rewards

Budget:
No budget required, apart from migration of all current staked tokens ($PATH & LP) to a new contract

Process:
PIP-4 will proceed in the following manner:

  1. This proposal will be open for discussion until 4th January 11pm EST
  2. After the discussion concluded and any possible adjustments have been made, the proposal will be up for voting on Snapshot. This link will be provided in due course
  3. The snapshot voting will last for 72 hours after it goes live
  4. After the voting concludes and if the proposal is accepted by the token holders, the proposal will be executed
7 Likes

Well done, I totally agree…

1 Like

Generally agree with this, and that this should have been done from when the staring program commenced.

Some small feedback from me:

  1. Consider to reduce the duration of locked up rewards? It is quite a drastic jump from zero lockup to 12 month lockup, so maybe a 3 or 6 month middle ground as a compromise? Merit Circle, BlockchainSpace have 1 year reward lockup, while GuildFi’s is 3 months, but these were all instituted at inception of staking program, not changed half way.

  2. Can we cover gas cost from having to unstake, claim rewards, and restake into the new contract? Maybe an award of a nominal amount of $PATH tokens? The amount to unstake from both single asset staking and LP, and restake, could be ~$100 (4 transactions). This is a small amount for some, but might represent a large % for the smaller token / LP holders.

5 Likes

Firstly, thank you to the leaders at PathDao for hearing our request. This looks like an excellent proposal. I agree that this is the way forward.

As noted by JNg, a 6 month rewards vesting may be appropriate…not because we plan to sell at 6 months, but because it offers something that other projects don’t, which could be another unique point to drive up demand.

Also, the earliest (copper launch) investors will have lost a lot of money due to the sell pressure. I’d definitely suggest an airdrop of some PATH tokens to generate some good will. This can be presented as a bonus. For example, take a snapshot of all staked PATH today, and airdrop say a 5% loyalty bonus to each wallet, much like how MultiVac and other projects do it. It would make sense for the bonus itself to be locked for some time too.

I also acknowledge JNg’s gas fee concerns. Not sure if it’s technically feasible for gas fees to be circumvented though.

3 Likes

I support this and like the specification.
Another element that would be great to also use the lock up variable as a boost for voting power. So a holder who has locked up 100K tokens for 12months has the same voting power as a 200K holder who has not locked up their tokens.

5 Likes

I think the proposal is good for the project but however it’s very unfavourable for small holders like me to go through the bearing of cost of gas for unstaking , approving and staking again. I bought In copper launch at maximum price and since then the price is drastically reduced .

Instead can you not lock rewards for already staked tokens with maximum duration and avoid the need for small holders to bear the cost . Please find a solution so it’s good for everyone and not only for large holders .

Thanks .!

5 Likes

I understand the challenges with gas fees, but automatically locking for the maximum term isn’t going to be feasible / appropriate. If someone wanted to only lock for say 6 months (or anything lower than 12 months), then automatically locking them for 12 months leaves them completely stuck.

Maybe better to automatically stake on a flexible term, then give people the right to unstake and restake (incurring gas fees) on a longer term if they choose to. That choice is pretty important I feel.

This is a good proposal. 1 year indeed might be a lot, but 3 months is too little, maybe 6 or 9 months of lock up?

I do not agree with people asking for more tokens for gas or whatever copper launch. Giving away more and more tokens is not the answer for the price problems.

Also bear in mind what happened to Merit Circle and Binance, where they lock up rewards and give lower APR than if you stake it on Binance, where you can restake for free and for a higher APR. We will have a listing soon and as my understanding we will be given a shit ton of tokens (110k USDC is a lot in PATH tokens right now) for a tier 2 exchange, which essencialy can happen the same to us. Since MC listing on binance they went down 65% in the biggest exchange in the world. Now imagine this happening to us and instead of a huge exchange it happens in a tier 2? Things could get way worst than now.

2 Likes

Thanks for the proposal!

Some notes:

  1. Do I understand correctly that you’re proposing to both lock the principal you stake + the rewards that are emitted? In 1) it sounds like you’re talking about the principal and in 2) it sounds like you’re talking about the staking rewards
  2. I like the weighted model, I would consider not using a linear increase in rewards but a function that uses increasing returns to scale with higher lock up periods, e.g. 1, 1.5, 1.9, 2.5 (or sth similar) to further increase incentives
  3. Can you give an example of this “The countdown of 1-year lock-up period starts upon claiming of rewards”?
  4. How are you planning to inform all the people to migrate their staked tokens?
  5. Could there be a way to compensate migration costs with a 1 day emission boost or sth?
2 Likes

I completely agree on the proposal and locking rewards for the period of 12 months.
There are two feasible option in my opinion:
1- Consider the current staking contract as “Staker 1: Doesn’t want to lock the underlying tokens and therefore got a weight of 1” while the rewards can be locked for the period of 12 months after the 8th of January 2022.
2- If someone chooses to upgrade to Staker 2, 3 or 4 then all the cost related to un-staking, claiming existing rewards, approval of tokens on the new staking contract and re-staking ( these four separate transactions will cost around $160 to $250) should be compensated by PathDAO in the form of Path token allocation upon staking to new contract (a snapshot of staking wallets can be taken before and after).

Also, please keep in mind the copperlaunch buyers who are down bad including myself, I bought at the price of $1.16 and down more than 90% as of now while haven’t sold a single token including rewards and if I include all the transaction costs related to buying Path, staking, un-staking and re-staking my investment will be at 100% loss.

2 Likes

I do feel very sorry for all those who have lost money since copper launch. We can have a discussion about ‘compensation’ for that / gas fees, perhaps best placed for a different thread.

I just want to clarify the tokenomics mentioned by cks. $110k USDC is roughly 1,000,000 PATH at the moment. In the worst case that these reward PATH all get snapped up and dumped immediately, that’s only about 2% of the PATH currently in circulation, so won’t lead to the wild collapse seen when Merit Circle listed. On that basis, PATH listing on an exchange will be far more robust than what MC did.

Do you agree, or have I missed something?

I’m hoping there is more science to the 12 month rewards lockup than just a 12 month lockup? Ideally, it would be timed to end around the time the Path team thinks they would have generated enough value to justify the market prices at the time…

That being said, not sure if 6, 9 or 12 months is the answer but all fine to me.

I do not think we should be compensating gas fees - that is a cost of doing business. We shouldn’t be diluting ourselves even further by giving out our native token to cover “gas” - it hurts all of us, and is a poor use of Path tokens. Path WACC/IRR must be north of 50% - why should we give away that kind of money so easily?

2 Likes

Total daily emissions and unlocks over the next 12 months include way more than just the 10MM tokens/month addressed in this proposal. In fact the sell pressure is coming more from other emissions and unlocks than from the LP or SS rewards that this addresses. Tons of sell pressure till May with 333k/day NFT minters then staggered unlocks from folks pre copper are what’s gonna hurt if not addressed as well. I am not in disagreement about locked staking especially for cex staking and go forward emissions from community reward just think it isn’t what’s created all the sell pressure that this proposal is asserting it will fix.

2 Likes

Very valid points. Any thoughts on how this ‘big picture’ sell pressure can be mitigated?

We’re following in the footsteps of the Merit Circle model, and so the only option is likely to be a PATH token burn and treasury-backed price support for PATH.

Don’t want to make the same mistakes as MC, so maybe a PIP-5 to replicate their token burn sooner rather than later may actually be needed.

1 Like

I am strongly against any proposal that involves spending additional gas fees at this point. Because:

Gas fees of several hundred $ were already spent for (1) claiming tokens, (2) staking (3) migrating funds from staking to LP.

Next (4) Gas fees of few hundred $ will be spent to lock tokens ?
No!

Your project has been released 1 month ago and I have already spent an immense amount of money on just gas fees, because you keep changing/adjusting your tokenomics almost weekly.

My proposal is:

  1. Reduce the APR to limit sell pressure
  2. Burn a good chunk (50%) of your unreleased tokens. Because Fully Diluted Value compared to MCAP is extremely high. Lots of investors feel nervous about that.
  3. Increase buy pressure on your token with added utility and partnerships.
  4. Concentrate on increasing treasury with sound investment proposals.

Thank you and good luck.

I don’t know whether to call the weak hands the “Pedestrian Price Posse” or the “Pedestrian Passive Price Posse.” I’m seeing way too much selfish focus on price/gas compensation rather than valid arguments about what will actually bring PathDAO longevity.

I mean, hell. Let’s just lock all the tokens, including the free ones in your wallet, so that the price never goes down ever, sell 1 token for $300 and you guys can go look at Coingecko and feel good about your paper gains even though you can’t sell anything. The mcap will be like $4 trillion. It’ll be the best investment of your imagination’s life.

Half-serious jokes aside, optionality seems to be the best model to follow regardless of who you’re following. Illuvium, MC, whoever — they all gave everyone a choice for length of lockup and rewarded those who chose to lock up for longer periods. Locking up every freakin thing because “MC fell 50%” is not valid. The entire P2E DAO space took a 50-70% hit from ATHs when BTC dumped over the last 2 weeks.

Price Petunias. Maybe that works.

Stop trying to compensate yourselves $50 for gas. Get over the Copper launch. The “loss” you guys who bought at $.60 or higher have is IMPERMANENT until you sell. If you haven’t sold, you haven’t lost. You have the same number of PATH tokens you had before. What you guys are probably looking for is a short relief pump so you can sell and move on because the false volatility against fiat has drained you emotionally. If you’re in crypto for fiat, get out. Go buy Wal-Mart or some other sideways value stock.

I’m in crypto to help P.E.O.P.L.E. That $50 of gas you want refunded to you should be in the treasury awaiting an opportunity to deploy on behalf of the scholars. You know, the scholars, the ones who will be driving the true value of this DAO? The ones who are WORKING for that $50? Maybe you should be thinking about them. This is how you increase your bag. (And if you’re a scholar and investor, learn to separate the two jobs. Being one thing doesn’t change your responsibility as the other thing.) If you’re really worried about $50, then participate in the Syn City raid or join one of the PathDAO guilds. PARTICIPATE. Drive value. Be ACTIVE. You’re like corrupt legislators voting themselves a raise every year while their constituents starve. I didn’t get into crypto to be surrounded by weak hands who act the same as the selfish sons of ******** already in power at banks and in government.

And you Petunias who want everything locked up for all time, that’s just silly. Stop buying into pumps and then blaming the team because the entire market dumped and you took on some paper losses. If you were really savvy, you’d sell, then buy back immediately to harvest the loss for taxes. I absolutely remember when I was a small holder and I was saying the same stuff in another project, Deus Finance. Difference was, that guy didn’t know what he was doing at all and was just switching contracts and jumping blockchains arbitrarily. Going through that taught me much more than any gas refund ever could have, and learning that patience is why I’m no longer a small holder. Price against fiat DOESN’T MATTER when 95% of the tokens haven’t even been distributed yet. Stop basing your entire governance philosophy around it.

In short, optionality for locks, no compensation for selfish bagholders.

4 Likes

To moderate a little, everyone has valid opinions. It is important to recognise that people have a lot of money on the line here, and gas fees really do start to mount up. At the same time, I agree that a long-term view is needed.

I’d encourage those who have lost money not to panic - the long game may still work out well as long as we collectively make the right decisions. I’d encourage everyone else to understand the strain others are under.

Bringing focus back to this PIP-4, locked staking and locked reward vesting is appropriate, but optionality over term of lockup is important.

PIP-5, etc, can later discuss price support mechanisms (as MC have done, backed by the treasury’s investment returns), or more generally why PATH’s fiat value has fallen markedly despite having similar tokenomics to MC.

Am long on the project - so all good for staking to reduce sell pressure. Hopefully will give you guys time to focus on building instead of spending time on managing price…thanks and good job team!

3 Likes

The more we give our emotion to people (scholars/students entering web3) and away from gas fees, the better we all do. I can appreciate your language, but coddling is actually exactly what we don’t need. Investing properly requires being devoid of emotion, and kowtowing to others’ emotion with an emotion, moderation/acceptance, rather than with logic, only weakens the DAO. Those who do not understand asymmetric risk is in their favor here should be encouraged to leave, because they will eventually become emotional when other problems invariably emerge.

Do not weaken the DAO to refund any gas fees or kowtow to paper losses. Optionality on the locks. Do not complicate the rest. Remember also that more complicated proposals open smart contracts up to higher technical risk. Do you really want to risk the contract over weak hands who should just learn to be more patient investors?

Hey guys, could you clarify which tokens are locked? Is it the tokens you stake (principal) or the staking rewards?

IMO the ideal structure is that the APR is correlated to how long you’re willing to lock the principal. The staking rewards should maybe get a 1-2 month extra lock, but a year is a bit extreme if it’s on top of the principal lock