This post is to seek input to see if there is support for a SIP which would require Sovryn to report certain key metrics to the current and prospective SOV token holders.
Sovryn is an alpha stage project which has issued governance tokens (SOV) in Q1 2021. When staked, the SOV tokens provide the holder the right to vote in the Bitocracy based on duration of the stake. In addition, staked SOV holders are eligible for protocol fee-sharing generated from protocol fees and early unstaking penalties.
Currently, almost 6 months after issuance, token holders and prospective token holders do not have any way to:
- Monitor the fees earned by the platform, the resulting yield and trend
- Calculate their proportional weight for voting and fee sharing
In order to be a legitimate and functioning Bitocracy, these metrics are required.
When the metrics are available, token holders will be able to:
- Better assess the value of their tokens
- Determine if the platform is progressing according to plan
- Propose/Approve additional SIPs to adequately perform their governance function.
In addition, prospective token holders will have at least some basis to determine whether the token makes sense to own and/or stake. Currently, a prospective token holder has no real tangible means to evaluate the token quantitatively, thereby severely limiting demand for SOV.
Until these statistics are available, there will be no material demand for the SOV token.
Sovryn platform should be required to make available on it’s app or website, weekly statistics, including:
Fees earned by the protocol
- Swaps (when implemented)
- Loan Origination
Staked SOV (Voting Weight)
Total Voting Weight
(If this is a significant programming task to automate, it can be eight numbers hand input on a web page or Google Sheet every week until automated as availability is more important than form at this point.)
seems like a great idea. perhaps this could be added into the dashboard submissions from the hackathon winner?
Been asking for this since I joined.
Would certainly be a good move, yes.
I hacked together some data that may be insightful. Keep in mind this is all very rough analysis, but I think it shows how valuable the SOV token can be.
tl;dr - The SOV token can (and already has) generated a lot of revenue. Our top priority should be passing the SIP’s that adds this revenue to stakers. Particularly, revenue share on swaps and removing vesting (meaning still locked) shares from staked SOV fee share. I know these are under development and have been discussed, but the data analysis I did only hammers this point home even more.
I also would really like to see if we can hold off or postpone BabelFish sale until these two changes are implemented.
From my analysis, during the protocols peak months (May and June 2021) the 0.3% fee on swaps earned nearly $500K each month. If we cut 15% of that fee (similar to what SushiSwap does), then those proceeds were allocated to voluntary stakers only; the APY would range from 13% - 20% depending on individuals stake length. That’s pretty solid considering the protocol is in it’s infancy and this doesn’t include any of the other revenue generating activities. This is alone is a worth reason to purchase and stake SOV. This shows the power these fees can generate. Anyone not staking SOV once these all take into effect are losing out on some bueno cash flow.
Here’s the analysis:
- We had to first get a rough idea of how much voting power you receive per $ depending on your staking length. So the table below is data I manually pulled from the staking tab that calculates how much Voting Power we would receive at different stake lengths, then how much that is in dollar terms according to the current price which at this time is $9.70.
||VP / 1 SOV
||VP / $1
Next I identified the Swap Contract (AMM) 0x98aCE08D2b759a265ae326F010496bcD63C15afc from the Wiki. I also confirmed this by tracing my own personal swap. Question for the team: Are there any other contracts that collect swap revenues that weren’t accounted for in this contract?
Then using Covalent Blockchain Data API Reference I wrote a loop that pulled all historical data for this swap contract and consolidated it into one giant file. This data shows a ton, but the most important figures were the conversion fee charged (the 0.3% fee charged on all swaps) and the token that was being swapped to. The conversion fees are denominated in the token user is exchanging to. So rBTC to SOV would pay out a 0.3% fee in SOV. Which means I added up all these fees and converted them to US using the exchange rate on the token being swapped into.
Next we had to estimate the total Voting Power of voluntary staked SOV. I leveraged @CEK 's work here. So this is a major assumption. But assuming his calculations are correct he’s showing that there is approximately 4M worth of voluntary voting power at the moment that would be eligible for fee share after this change is made to the protocol.
- Then using the data from Covalent, the following table is a breakout of revenue collected by protocol by month. The depressing news is swap fees fell off a cliff, but frankly not all that surprising given price action. The interesting part is if we back-tested this data and said for the peak months during May and June what would the APY be for stakers if our proposed changes went through? What I found is very encouraging. The total fees earned since inception through swaps appear to be $1.4M (Column B). If we took 15% of that to stakers it would’ve been $225K (Column C). If we calculate the $ amount of fees earned by month per 1 Voting power (using CEK’s 4M estimate) we get a price per voting power unit (Column D). Columns E then just takes the Voting Power received depending on stake length found in Step 1 multiplied by the $ Earned per Voting Power share in Column C then multiplied by 12 months to get annualized and comes up with the projected APY.
||C = B * 15%
||D = C / 4M
||E = D * .9897 * 12 Months
||E = D * .9278 * 12 Months
||E = D * .6816 * 12 Months
||Sum of USD Token Fee
||Proposed Swap Fee Share
||$ Earned Per Voting Power
||APY - 1 YR Stake
||APY - 2 YR Stake
||APY - Max Stake
If we had a 15% fee on swaps to stakers and removed vesting shares from revenue then max stakers would’ve been earning comfortably double digit APY’s over the past few months.
I feel like this is some pretty solid alpha and we should be stacking and staking. But not many of us read these forums, so hopefully this is some good alpha for those of you that do
Again keep in mind this is a super rudimentary analysis and there definitely are some errors, so please give feedback if the logic and analysis checks out. The intent is just to open up the conversation. We can perform similar analysis on the other revenue generating activities like trading, lending, etc.
I appreciate and value your work very much!
@dseroy some really interesting stats there. I thought the voluntary staking was listed on the stats page in the wiki but I just looked and its not and looks like the error is still there in the reporting so I can’t see total staked either.
4m voluntary staked voting weight seems quite low to me from gut feel, that’s 400k at Max stake to give a 10x. I have no data nor the ability to source myself but I would think it was higher.
@magicmike I agree there is a need to have more data avaliable to current stakers and potential stakers to increase adoption. However my perception is that the team are flat out in delivering / executing Yagos most recent sprint breakdown for the next quarter. Maybe this is more about comms and where this sits vs other things in the priority list.
yep unfortunately i don’t have visibility into how the 4m was calculated.
rumor on the street is vesting vs vested sov stakes will be broken out soon. so we’ll be able to more easily calculate this. we also will
be able to back into it after seeing babelfish airdrop.
As far as the notes about the goverance data request:
I know the team is overloaded delivering all of the development initiatives, I dont dispute that.
My personal view, although I know it’s not shared by everyone, is that certain standards need to be met with the governance function and they can’t mostly take a backseat to other development.
For instance, 6 months into this, and for no one to even know what their proportionate voting power is, is not acceptable. Whenever it is asked, the response is we don’t have that. That is not a serious governance system.
I’m not saying we need some elaborate development for all of this. The output can be rudimentary, or whatever is available, while the permanent solution is being developed.
The things I think are owed to the token holders sooner rather than later are:
Regular communication of:
*Total Voting Power
*Total Staked by Choice
*The Exchequer Committee will publish high level monthly and detailed quarterly reports detailing the use of funds. (See Walker377 request on SIP19)
*The Exchequer Committee will publish transcripts from its meetings at the end of each quarter. These transcripts may be redacted to protect sensitive information.
My goal here is not to roast anyone, but to shine a light on where I, a tokenholder of Sovryn, believe we have a governance gap to close.