Proposal: Staking should not involve a lock up, users should at any time be able to unstake SOV without any penalty. Instead, users earn a constantly increasing multiplier on their voting power, the longer they keep their SOV staked. This gives the incentive not to unstake: you lose the relative premium on voting power if you do.
TL;DR: I believe the proposed model will eventually provide better security and a much more effective way to grow the community and bind it together.
Staking is the gateway to being involved in governance but governance is an essential part of building a community and holding it together. When Staking requires a very high commitment of a new user, this stifles adoption and growth of the community. It should be made as easy and attractive as possible to Stake assets for newcomers, as this helps drive adoption and grow a community. Giving your assets away for some time is risky, and the type of risk that is not very rational for a newcomer to swallow.
This means that, with this configuration, Staking is not optimal as a way to draw in and bind new users, it reduces to a means to reward the already adopted. Locking up assets is a kind of decision that newcomers should not be asked to make.
We currently have a system that imposes (or asks users to self-impose) restrictions of various sorts on the ownership of assets. This doesn’t jive with a system revolving around sovereignty.
Staking is not just a gateway to governance, it is also a means to secure the Bitocracy. A lock-up gives anyone the ability to boost voting power freely. Staking is a game-theoretic defense play. Some party out to influence a vote could always choose to forfeit an investment as the cost of attack and maximize the power of it by locking up for the maximum duration. Any staked SOV that is not staked for the full duration doesn’t maximize its defensive power against any SOV used in such an attack.
You earn a multiplier on voting power over time by keeping your assets staked. Newcomers can just try out Staking at the cost of fees, without being asked to make any more demanding investment than that, and at all times keeping control over the staked SOV. The voting power gotten by the staked SOV slowly increases over time. If things go well, this slowly binds the user more and more to the community, as is fitting. People who have been around longer get relatively more voting power for their staked SOV. I think this is an interesting way to turn governance into ‘good governance’, give more of a say to those who have been around and know the history of Sovryn. These are after all more likely to make better decisions. We are all equal in the face of time. One can no longer obtain voting power by yolo’ing SOV in a three year lock up, one can only build up a premium in voting power over time. Commitment is rewarded, not presupposed. If a long-time committed member faces financial hardsip, they are no longer financially punished for their commitment to Sovryn, being able to unstake their SOV at no financial cost (though losing hard-earned voting power).
With an eye to security, note that the Bitocracy will grow more secure over time if people keep their assets staked. An outside attacker will always be at a disadvantage over each and every SOV already staked (not just the SOV staked for max duration). Any SOV spent in such an attack is weaker than any long-time staked SOV defending the Bitocracy. I think this is a powerful concept, and that security will in the long term vastly outweigh the security provided by the current model.
- Gives users control over their assets at all time.
- Makes Staking less daunting to newcomers, hopefully turning it into a more effective way to grow the community
- Rewards commitment over time but at the same time provides an increasingly stronger incentive not to unstake
- Gives relatively more governance power to those who have been around longer and have experience with Sovryn
- Slowly grows the security of the Bitocracy over time, eventually outrunning security that can be gotten in other ways for the simple reason that time is not something that anyone can buy
- Fewer transactions needed, currently people need to restake when lockup period is over; on the proposed system there is no need for this (= fewer transactions, lower costs in fees).
EDIT (11-2-2022): there is a worry raised by some about weakening the security, especially on implementation (when no VP has been built up yet).
Solution: the earning of voting power should be implemented retroactively. People who have been staking for a year already, immediately receive the voting power multiplier that one accrues over a one year time period. This boosts the security on implementation: currently there is more voting power than staked SOV, and this will equally be the case on the proposed system. Also, it rewards longtime stakers with some very valuable, as is only fair on independent grounds. With this simple solution, the proposed system is not any less secure when implemented.
I know this controversial; I just ask the reader for an open mind, and not dismissing this too quickly.