Title
Cancel all future V2 & V3 staking rewards and unlock all V2 stakers
Authors and contributors
Me
Status
This proposal has been subject to 14 days discussion, together with the initial discussion post that can be found using the following link: Cancel all future V2 & V3 staking rewards and unlock all V2 stakers
The vote is live here: Snapshot.
Summary
- Cancel the remaining V2 staking program.
- All stakers will be unlocked from their current positions.
- Accrued rewards will not be affected and will be able to be claimed.
- Remaining tokens from the V2 staking program to be burned.
Specification of the proposal
The previous post in the ādiscussionā section of the Governance forum received positive feedback from the community. This post, on the other hand, is in the āproposalā section and will undergo a voting process at the appropriate time.
I am proposing the immediate cancellation of the V2 staking program, considering the substantial rewards distributed in V1 (100 million tokens) and the existing V2 rewards (30 million tokens). With the belief that sufficient rewards have already been provided to stakers, I suggest discontinuing the issuance of further rewards. Additionally, I propose that all stakers be promptly āunlockedā from their chosen locked period. It is important to note that all accrued rewards in V2 will be retained, and they will no longer be subject to the 1-year vesting period, allowing stakers to claim them immediately.
Taking into consideration the remaining duration of approximately 4 months for the V2 staking program and the estimated number of tokens (10,000,000) yet to be distributed, I propose the immediate burning of these tokens. Since these tokens would have been allocated to stakers over time, eliminating them through burning ensures their removal from circulation. I am proposing that these tokens are burned as they would have been distributed out to stakers anyway.
To clarify, if this proposal is approved, all existing rewards accrued in V2 will be retained by stakers and no additional rewards will be distributed. Furthermore, the proposal suggests that all stakers will be āunlockedā from their chosen lock periods, granting them the freedom to use their assets as they see fit. This proposal aims to halt future reward distributions, while allowing stakers the flexibility to manage their assets according to their own preferences.
The immediate unlocking of all staking positions and rewards in V2 may result in increased selling pressure in the short term. However, this proposal takes into consideration the potential long-term benefits of unlocking currently locked MC tokens and stopping ongoing reward distributions. With Beam expected to launch in the fairly near future, such MC tokens could play an important role in validating transactions and securing that network, in addition to finding other use cases on Beam. While there may be initial selling pressure, it is expected that the tokens will find a more important use case in relation to Beam soon compared to under the current staking program on Ethereum.
It is worth considering that while this proposal cancels the current V2 staking program and stops further rewards, it does not preclude the possibility of implementing a new staking program or exploring alternative options in the future. The potential inclusion of validators on the Beam subnet as an alternative option is an interesting prospect, although its confirmation and implementation are yet to be determined.
Motivation
There has for a longer period been negative sentiment regarding current staking on Ethereum. The proposal to cancel further rewards in the V2 staking program reflects the view that stakers have already been adequately rewarded for minimal effort. Staking on Ethereum in its current format has limited use cases for the Merit Circle ecosystem, whilst staking on Beam (through proof-of-stake) will serve the important role of validating transactions and securing the blockchain. Halting the ongoing staking v2 will make available MC tokens that enable community members to a greater degree participate in the various activities expected to occur on Beam.
The proposal to immediately stop the V2 staking program and unlock all stakers provides an opportunity for individuals to assess their commitment to the DAO. By allowing stakers to freely decide whether to continue supporting the project or sell their holdings, it will hopefully leave the DAO stronger in the long term.
It could be thought that it is unfair that 4 year stakers will have had a greater multiple APR than 1 year stakers, and while that may be true the stakers that locked for 4 years showed a greater degree of support to the DAO so they deserve the extra MC tokens they will have accrued.
Rationale
The potential drawbacks of implementing this proposal is the possibility of increased volatility and selling pressure in the short term. It is true that some stakeholders may choose to sell their unlocked tokens, but as I stated before, I think this will be an opportunity for individuals to assess their commitment to the DAO, and believe that these MC tokens will find a use case (whether itās on Beam or otherwise) for the greater benefit of the Merit Circle ecosystem, compared to if the current v2 staking (or any future iteration of it) would continue.
Additionally, by reevaluating the tokenomics and addressing the current challenges, the project can position itself more favourably for future market conditions, particularly when the sentiment turns bullish.
Community Concerns
From the initial discussion post, there were a couple of main concerns that arose:
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Sufficient Liquidity - with the āunlockā on the LP stakers this could reduce the liquidity on Uniswap. As per the latest treasury information on the website, the DAO holds $1,519,677 with uniswap providing sufficient liquidity.
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Using a phased vesting period for existing V2 rewards - Considering the time and resources required for coding, auditing, and peer reviewing a contract that would be needed to implement a phased vesting period, it may not be the most efficient use of resources, especially considering the impending launch of Beam. Additionally, gradual vesting may not necessarily deter stakers from selling their rewards if they have the intention to do so. Also, if people are going to sell their rewards then they will do so whether they are vested gradually or all available immediately.
Budget
No budget apart from the devs spending time to cease staking and unlock everyone.
Poll
Are you in favour of this proposal?
- Yes, I am in favour of this proposal
- No, I am not in favour of this proposal
Copyright
Copyright and related rights waived via Creative Commons CC0.