While the Sovryn community has managed to ship a plethora of products and features on the Sovryn protocol - leveraged trading, new token listings, origins platform, lending, borrowing, governance, bridging, etc. - there is much to be developed. This is not just from a tech perspective, but from an adoption and user activity front.
Our community of SOV stakeholders has been tremendously valuable over the last 5-6 weeks, with over half of SOV holders having SOV staked in our system.
What they are getting are:
- The possibility of early allocations and/or airdrops from future Origins sales aka quality projects that advance our ecosystem, such as what has been ratified in the Babelfish sale
- Fees generated from margin trading in the Sovryn protocol
This amounted to about $80,000 in revenue this past month, which, if all 9,000 stakers staked an even amount, would receive about $10 each on average.
One can say this is not overly impressive, due to the early stage of adoption that the Sovryn protocol is in.
Currently, the value to the SOV price delivered by the bitocracy stakers is substantially higher than the value they get out of it accrued from fees, which means their staking hinges on long-term faith in the future success of Sovryn, and the chance at early allocations in Origins sales.
But what if we could capture the value they provide early on - not through fees accruing now, but on the speculative belief that in the future (let’s say 10 years from now), Sovryn’s fees will be substantially higher than they currently are, which would lend to greater value capture from staking SOV.
In a nutshell, given that in the future, staking SOV could reap substantial fees that match or exceed the value of staking, there could be a potential way to equalize the value of staking between now and 10 years from now.
One way I’m proposing we do that is through a revenue redemption token that can be stake-mined only by SOV holders. A person who mines this token year 1, though they will not see much revenue initially, could potentially cash in at a later date when the Sovryn protocol has acquired a substantial mass of users and earnings through fees at year 5 or 10.
When the user from year 1 reaches year 5 or 10, they can then redeem their token representing value given to the Sovryn protocol from year 1 at year 5, as opposed to collecting an underwhelming average of $9 a month in the immediate term. This will burn the redemption token out of circulation and fees earned will be released to that user according to the percentage of the token supply vs percentage of total fees.
This could prove to be a better alternative to accruing $9 a month for the immense value of locking SOV out of circulation in year 1 of the SOV token’s existence, as well as being part of bitocracy.
Bottom line: Through a rev-share token, we can create a way to reward early Bitocracy stakers who stake now, for a share from the earnings-generator that the Sovryn protocol may one day become years from now.
The Rev Share Token would be mined on a per-block basis, with weekly unlocks on a per-user basis.
The Rev Share Token emissions will have 5 two-year epochs, with a halving of emissions for each.
Epoch 1 - 2M tokens
Epoch 2 - 1M tokens
Epoch 3 - 500k tokens
Epoch 4 - 250k tokens
Epoch 5 - 125k tokens
Emissions total: 3.875M tokens over 10 years
325k tokens to the team
4.2M RST total supply
By having a token that can be redeemed for a portion of fees accrued over the next 10 years of the Sovryn protocol’s operation, early stakers can benefit from a future value accrual for the value they provide in staking SOV early on in Sovryn’s journey.
This will add another layer of incentive for SOV stakers on our platform, as they can earn a more meaningful reward for the work of staking that is provided.
This token can take a ten-year span, where every two years there is a halving of Rev Share Tokens issued. This will encourage early staking of SOV tokens. In the latter halving cycles, burn pressure to cash in on fees earned will increase, shortening the supply, and potentially creating buy pressure on the remaining Rev Share Tokens in circulation. As Rev Share Tokens get burned and become more scarce, there will be more pressure to stake SOV and mine more Rev Share Tokens.
What this also allows is a gamification between holders of the Rev Share Token that hinges on several moving parts.
- The mining/inflation of new Rev Share Tokens through SOV staking
- New revenue streams and fee volume from the Sovryn protocol
- More SOV staked
- Rev Share Token holders burning their tokens
- Fees accrued by the Sovryn Protocol
- New user intake and product releases that add revenue streams for the Sovryn Protocol
- Fees accrued by the Sovryn Protocol
- SOV unstaked
As you may assume, this is a rough sketch for how this could play out, so feedback is greatly welcome. I can understand thoe who might be wary about minting another token that interacts directly with Sovryn’s Bitocracy, however this could potentially serve as a way to secure our foundational loyalty of Bitocrats who support the SOV token early on in this crucial period. In addition, this would function more or less the same way as simply accruing fees, as burning the token would result in acquiring a portion of fees generated at any moment.