Potential SIP: remove the lock ups from Staking, earn VP over time

That is fair, but I’d say that in those special cases where the vote would be close, I think the same concerns arise for the lock-up system (or any other system I could think of). A mega-whale could come in, lock for 2 weeks, influence vote, and then leave again.

Yes I think it is definitely worth spending resources on. The Bitocracy is the beating heart of Sovryn, and ways to optimize it are both important and better done early. I agree that if revenue is pumped high enough, it will be at some point become attractive enough, and stakers will be happy. Sure. But I think that is besides the point, people could be paid to use Internet Explorer and be happy. Doesn’t make it any good.

This proposal came out of a Discord discussion, where (committed and knowledgeable) community members said that staking makes no sense to them. And I agree. Speaking for myself, I would have staked way more than I do now, if I didn’t need to hand over control over assets on a long time frame on the basis of promises. It feels like a Degen bet (and that’s fine, and I enjoy those, but only with 1% holdings). I would increase my stake if there was no lock-up, keeping the revenue as it is now. When staking doesn’t minimize the risk that people are asked to take, then it will struggle to draw in the sort of sensible people that make for a strong community and good governance. Pumping revenue doesn’t help with that, it arguably only makes it worse. Now Sovryn is helped a lot by its vision (managing to draw in sensible people despite hiccups and flaws); but I think it’s crucial that we optimize for good governance. I think the proposal would really improve it.

2 Likes

I really in favor of this proposal.

tl/dr → both staking varients side by side / hardcap on this “buildup” staking model to mitigate attack

I think that for people holding back to stake SOV because they are afraid that they could end up needing the funds and then get this huge slap on the face when they are in a place of need is the real win-over for me here. Sovryn should be for the people and not only for the ultra rich. And the people have sometimes to contend with problems that you can not foresee 3 years into the future, no matter how much they like the project. Just one illness when you are in the US could get you to that place really fast.

I think the flash loan attack could be mitigated by having a hardcap on maximum staked SOV make it low enough that you need way too many wallets to actually overthrow the majority. I would think that over time that hardcap can be higher and higher as the total number of votes go up with people continuously staking.

Also I don´t even see it as an either or. You could run both staking variants side by side. Those who wanna stake 1 billion can still do it the old way - the more whale longterm investor guys. The more cash strapped small investor could choose the other route and build their wealth and voting power over time…

1 Like

The Bitocracy is fundamental to the protocol!

I am strongly against changing fundamental rules of the protocol in favor of short term supporters/thinkers with aversion to skin in the game , or risk!

The Lock up is a filter that separates the ‘‘boys from the men’’ or ‘‘the frail from the strong’’.If you remove that filter you expose the protocol to great risk.
This proposal is presenting a trade-off I, personally am not willing to facilitate.

7 Likes

Well said. The lock-in mechanism is genius, and weeds out this kind of self-serving short term thinking for good reason

6 Likes

I included an edit to the proposal in light of the discussion so far (see EDIT 11-2-2022). I think that any worries about weakening security on implementation are answered by giving people earned voting power retroactively (anyone who has staked for some time already, immediately receives the appropriate surplus voting power). The proposed tweak allows that it is at least as secure on implementation, and will eventually grow more secure than the current system over time.

Thanks for the discussion so far!

I am on your side. The vesting schedule is here to separate the investors from speculators. I will never say yes to such a proposal!

1 Like

Fully agree; changes are not made lightly, at the same time, it needs to have the best possible design that we can think of, precisely because it’s so fundamental.

On the contrary, the proposed model is all about long term support. There would be no longer a shortcut to extra voting power, one can only earn it over a long period of time. There is no way to cheat time. It’s time and long term commitment that “separates the boys from the men”.

In fact, the current model favors those who easily take on insane amounts of risk, as this is a way to additional voting power. This does not select for those with a genuine commitment at all, nor for those best suited to govern.

The entire idea behind the proposal is that short term supporters and “the frail” will be quick to unstake and so never amass voting power. The lock up model doesn’t do any of this; a short term thinker with no commitment has access to additional voting power with the click of a button.

2 Likes

The distinction between these is superficial. People come for the gains, and stay for the ideas. Speculators come to be investors; degens can become the most committed community members. That is by far the most typical trajectory through which communities grow, and the current model doesn’t easily allow for it.

The important thing is that speculators and degens looking for quick gains have no access to additional voting power - that is what matters. The current system doesn’t do this, the proposed model does. Currently additional voting power can be bought; on the proposed model it can only be earned through long term commitment.

1 Like

If staking rewards grow bigger over time that means that in the first year rewards are so low that no one will be interested to stake. The problem is that there will be almost no incentive to stake if the initial return is so low , because you reward the voting power and not the SOV token. SOV token is a tool to get Voting Power.

If fully staked and locked the current model rewards a staker NOW with the future voting power he will get in three years from now(as per your model) and in exchange the staker needs to lock up funds and he promises to be faithful to the protocol , vote on sips that are in the interest of the protocol and secure the Bitocracy for the time he promised.

If the staker breaks the promise then he will accept the slashing penalty which will go to the faithful stakers and increase their Voting power(if staked), So it will basically move power from the bad actors to the good ones and continuously increase security.

The protocol does not impose anything on anybody. It is absolutely optional. I do not see how one could lose its sovereignty by opting in Bitocracy. Staking is voluntarily. All these hurdles actually is a system that elects only the sovryns that are the most competent for the job. The goal is not to have a huge mass of stakers but to have competent stakers. Stakers that do due diligence before committing and are aware of the value Sovryn has.

Question. If we would adopt your model, What stops me from pushing the price of SOV down so much that everyone will unstake and then buy all the voting power I want to so that I kill the project !?

That doesn’t follow. Rewards would grow bigger over time, and that is exactly right and fair, after all, such a person has demonstrated long-term commitment and now has experience and has become valuable to the protocol. The model rewards only actual commitment; not a lockup decision that, of itself, can be made for many reasons other than actual commitment.

It doesn’t follow that staking is unattractive to people just joining; there are all sorts of ways to incentivize this and this is already used in the current system as well. In fact, the proposed model has an advantage here, as it doesn’t need to offset the lockup requirement. For instance: access to a token sale can be given to anyone who has staked for minimum period, whereas people who have staked for a long time can be given the opportunity to invest more during such a sale.

I fundamentally disagree with all this talk of “promises”, “separating boys from men”, “the faithful”. We are not a sect. Rewards should go to those with proven commitment and actual experience, not faith and promises. It is actual, demonstrated commitment and actual experience that leads to good governance, not faith or trust or promises.

Say you are free to chose to live in two citadels. The one is such that, if you want to have a say, this requires you to sign a contract that locks your property, and if you leave before the contract ends, they will keep some of that property. The other country allows you to settle without signing any such contract and you will slowly have more of a say the longer you stay, with your property at all times being fully in your ownership. There seems to me a perfectly sensible concept of “sovereignty” on which these two models can differ in how sovereign its citizens are, regardless of the fact they your free to choose where to live. In fact, how sovereign a system allows you to be probably enters into any deliberation on where to live.

In the current model, it’s the slashing penalty that incentivizes people from unstaking during such an attack; in the proposed model, it’s the voting power earned over time. In the proposed model, the earned voting power is lost forever and one would need to start over to build it up. In the current model, you can take a financial hit to protect yourself from further financial downside. I think the proposed model is more resilient to such a hypothetical attack.

Question in return: what keeps an attacker from locking up funds for the max duration, considering the slashing fee just “the cost of attack”?

Any SOV that is not staked for the max duration is effectively a weakness in the system. The current system allows one to buy voting power. The proposed system only allows one only to earn it. The proposed system seems to me to be far more resilient.

The goal is absolutely to have a huge mass of stakers! This is essential to both the security and value of Sovryn. Adoption is everything. Another goal is to put governance as much as possible in the hands of competent stakers. The proposal helps growing a huge mass of stakers, and it is better at selecting competence and commitment by using the test of time.

This will create power dinosaurs. If I stake now vs someone in 5 years they will never get to have a chance to catch up. The present staker will have the advantage to stake early and buy the token at very low prices. I do not like the ideea.

I get the intention behind the proposal and I see how it might work in theory.

In practice the model we currently have is working. In times of red like these we still have thousands voluntarily staked. I am not sure we would have the same numbers if there was no lock up.
I , myself , was tempted many times to unstake but the lock up stopped me and I am very glad I didn’t unstake.

I understand that people should be free to have access to their funds without restrictions but this should be taken into consideration before you stake not after and if you get to a crisis where you find yourself in need of the staked funds then it is fair to pay a penalty for putting the protocol at risk by unstaking early.

In terms of adoption I tend to agree with @dseroy.

4 Likes

I think the staking system is really good the way it is right now, i see no need to change anything about it.

4 Likes

Speculators are sure to become investors with the lock-in mechanism! The incentive aligns with our core value of long-termism, amongst others. I’m also a very happy existing max staker so I’m wondering why we’re trying to fix what ain’t broken here

Even though you make really engaging arguments and stimulate a lot of discussion for the community, I would also add that looking to divert technical resource from core initiatives during this critical moment as we find ourselves on the brink of a major platform push into the next phase, it undermines any new proposal in the first instance. Even if I agreed with the arguments made (I am strongly against any kind of first-come first-served initiative), it would still be nothing more than a distraction right now.

3 Likes

@Martin_Adriaan you also forget that you don’t have to wait the whole 10 months to unlock your vested assets! you can start claiming 10% every month, which means after liquidity mining for while you will get a stream of unlocking every months. those 10% accumulate over time and you would be unlocking more and more every 2 weeks. I have been doing this for 7 month now and I am unlocking a decent amount of SOV every 2 weeks. I find it misleading to say 10 month to unlock your assets, it is 10% every month.

There is a simple solution to that: the earned multiplier tapers off with longer time periods: the first year gives 2x vote power, the second year 2.5x, etc. You can catch up but not overtake. There are many of these sorts of tweaks that the model could allow.

Many speculators (and sensible investors) will just walk away, unwilling to lock up. The model doesn’t align with long-termism, earning voting power over long-time frames does. The current model selects for risk taking, and irrational commitment (aka faith).

I understand that. This is way we should expect major confirmation bias in a discussion like this. Everyone personally OK with the system will be around to discuss; many who aren’t OK never joined or have walked away already, and have no reason to be on the Forum.

I respect this but disagree; we’re in alpha phase now, and this is the time to doublecheck whether all the current designs are optimal. Above all things, the Bitocracy need to be optimal. I think it isn’t and I think this would be the time to improve, not later.

I made a few serious attempts to introduce Sovryn to people who I thought might be interested. Yield Farming gives locked rewards? No thanks. Staking requires long lock-up to be interesting? No thanks, too risky. Case closed. That’s been my experience. I think it’s naive to say “good riddance, probably short term thinkers”. If an exact copy emerged of Sovryn but with no lock ups and no vesting, I’m confident it would quickly outperform along all dimensions (community growth, security and, yes, also price). I’m not trying to create distraction, just trying to contribute.

Point taken; wasn’t trying to be misleading, just trying to be succinct (at which I clearly suck :sweat_smile:).

2 Likes

I’ll step aside from this discussion now. Any change to the Bitocracy requires high community support and would need many advocates, otherwise it’s ngmi. For all those who chipped in so far, thanks!

3 Likes

Hey, Martin!

I have thought of your proposals more and I do believe that we must allow space for improvement on both staking rewards programme , Liquidity Mining rewards etc.

I think that we should think about changes in case the current models fail. Currently these programmes have not had the chance and conditions to prove themselves and I feel like there is very little evidence to support the Idea that these models are failing.

I feel like we should definitely continue or revisit these subjects in a few months to a year when we will have enough data to make an informed decision. If the data shows failure of these models to achieve what we want then I would definitely support further tweaks of both Bitocracy and Liquidity Mining.
I am really happy that you brought these subject forward. I think we have to be proactive, always anticipate and have a ready solution to any possible problem.

I think we both speak about the same thing.
‘‘Faithful’’ is demonstrated commitment in perpetuity ,‘‘separating boys from men’’ is actually proved competence, at least in my view.

I like to use more abstract terms in my speech because I feel like I can communicate more this way. English is not my native language , so my brain does not understand English! I can use English words to express what my brain thinks but my brain is still wired to think in my native language. So I tend to use archetypal concepts that are universally understood and that way I can communicate more easily and give some depth to my speech.
I understand if you don’t like or agree with my speech but I am not willing to change it just because of that. I am aware that sometimes I might be misunderstood or misinterpreted but I am willing to suffer the consequences.

In terms of ‘‘we are not a sect’’ I think we actually are, whether we like it or not. We are viewed as heretics in the Bitcoin sphere and Heretics in the ETH/Altcoin sphere there is no doubt about that. The quicker we acknowledge that the better would be for Sovryn.

4 Likes

The system is not designed to give voting power retroactively on purpose. Think of Bitocracy as anlogous to PoW vs PoS.

PoW does not reward hashes found in the past, only those found in the future.
PoS, on the other hand, rewards token stake in the past and makes the rich richer at zero cost.

This is a fundamental difference in design philosophy. Forward looking vs backwards looking. Reward capital burned vs capital hoarded.

In Bitocracy, instead of burning capital via mining, we burn liquidity via staking.

4 Likes

Thanks for your response, it’s really helpful to see your thoughts on this.

I’m not yet convinced. I don’t see these analogies. No capital is burned by locking up your SOV in the current system. Locking up is not analogous to PoW. With rewards going to stakers, the rich get richer, also with the lock up system.

One challenge is to avoid centralization of capital. That requires that newcomers find it easy to start staking, and that newcomers get richer quicker than the rate at which the already rich get richer. That is what the proposed system tries to offer: it makes it easy to start staking, and the multiplier builds up quicker in the first periods of staking and then grows at a slower rate over longer periods.

With the lock up system, it is a handful of core community members with high conviction that get richer quickest and hence, it seems to me, there’s a danger of centralized capital building up around a few.

1 Like

Liquidity has monetary vale. Indeed we have seen this in action in Sovryn itself. There were many complaints that people had staked their SOV and where then unable to add it to Liquidity pools where yield was higher.

They gave up, in a very real way, the ability to obtain that yield. Staking has a cost, this is where it is analogous to PoW. Staking for longer has a higher cost and receives higher rewards - again analogous to PoW. Bitocracy is PoW. The work here is the activity of staking - and eventually the plan is to make earning through staking dependent on voting as well.

That said, we do need to find a path to making it more attractive for new participants to enter. One way that I could suggest, just to start eliciting some out-of-the-box thinking: What if there was a way you could stake without the timelock, to a delegate. This delegateDAO would stake a set of tokens into perpetuity (these tokens could be gifted from the Adoption fund. The delegateDAO would then hold a lottery between (short term) stakers and distribute the value earned as winnings.

3 Likes