Thank you again to the DAO Core Contributors for another important governance discussion. We also believe that the staking pools have been an important feature for the Merit Circle community since November, and should continue to be so. While the DAO continues to invest and build its own products, the staking pools have served as an important part of the MC token utility, and are something which the vast majority of community members have participated in.
In their current state, these staking pools were only intended to last 12 months and so naturally, the community has already started discussing what changes they believe should be made. This discussion has likely been amplified due to market volatility.
Our thoughts and responses to the DAO Core Contributors questions are found below:
Would you like to see a single-sided MC staking pool next to the LP pool?
Yes. We believe a single-sided MC staking pool should remain in place. We recognize some community members would prefer not to LP stake their assets, and so an option should remain for them to stake without pairing their assets.
What asset would you prefer as an LP pairing asset next to MC; ETH, WBTC, USDC or something else?
Our choice would be a USDC pairing. Since November we have seen the price of Ethereum drag the USD price of MC both up and down due to the LP pairing. There is a large amount of uncertainty in the macro market, and it is unclear how the ETH 2.0 merge will affect the price of ETH. Having an ETH pairing exposes MC LP stakers to double the amount of risk, when compared to a USDC pairing. If Ethereum performs poorly, it makes it very difficult for the MC token to do well. While it is still likely the price of MC would move in accordance with the wider market, a USDC pairing would allow the MC token to move without the direct influence of the price of Ethereum, and thus lower risk for LP stakers.
What weights should the LP pool have?
We are happy with the current 80/20 split between LP and single side staking. We would also ultimately only want one LP pool (USDC pairing).
What is the preferred platform for LP tokens? (currently uniswap v2 50/50 LP tokens)
Our preference is still for keeping liquidity on Ethereum. It is still the most secure, reliable and decentralized layer 1. We are open to future bonuses or incentives taking place on chains such as Moonbeam or Avalanche, but the main liquidity, and staking, should remain on Ethereum.
How long would you want the locking periods to be?
We have been happy with the 12 month lock for maximum bonus with the MC/ETH pair. If a USDC LP pair was created, we could envisage locking up to 48 months for maximum bonus, but this would obviously need a larger rewards pool. LP stakers could likely be tempted to stake for longer than 12 months on a USDC pool, as it would only require them to be long on MC, rather than long on both MC and ETH (double risk).
Should the staking subsidy be fixed or partly variable?
The usual staking APY should be fixed, as it currently is. However, bonus APYs can always be introduced for varying amounts of times, for instance as community event rewards. These could be funded through the community incentives DAO wallet.
What % of DAO revenue should go to staking rewards? (currently everything used to build treasury, re-invest and buy back and burn $MC)
This is likely something that requires a lot more thought, and likely its own proposal. We would need to see the math behind the DAO’s revenue, and how much would be needed to sustain an attractive staking program.
Should the DAO, outside of locked MC, also distribute ETH, WTBC or USDC from revenue to stakers with longer locks?
Our initial thoughts are tentatively against a revenue distribution of this kind currently, but if it is something that the DAO wants to introduce, then it is something that will need its own separate proposal. The amount of thought and consideration this particular topic would require is worthy of its own proposal, and is too long to be discussed as part of 8 other questions.
How long should staking rewards be locked for?
We are happy with the current 12 months from the moment of claim.
We look forward to seeing the official proposal from the Core Contributors regarding this complex topic. We anticipate that once the Staking V2 proposal is released, further discussion and debate will take place, before the proposal is finalized.
Signed with left paw,
Sad Cat Capital