Reward rate as it pertains to the rebase rate

Martian1026

I believe we need some type of definitive methodology around how the rebase rate is calculated every epoch. Currently the reward rate is what is used to determine the rebase rate, and the actual reward rate itself is determined by the leadership committee. I feel that if the amount of money in the treasury vastly increases above what is "necessary" to maintain the current APY, then bonus rebases or one time large rebases should be given more frequently.

I propose we figure out:

What APY we wish to target.
Set a strict reward rate % that's pegged to the treasury balance.
Come up with a "day" threshold that if the protocol has enough money to maintain the APY past this amount, then one time bonuses or larger rebases are given. For example, if there are currently 250 days of "guaranteed rewards" in the protocol at a certain APY and we agree that we need only 200 days of guarantee (this is the number we have to figure out) then we can give one time bonuses and rebases to holders. This threshold number can be voted on or set by the leadership committee.

The key of course is to give these "bonuses" without jeopardizing the future ability to pay the APY. Lets have a discussion and figure this out.

Happy to hear any further thoughts.

Jawesome

I don't think we should give bonuses because we have enough money to provide more rewards. We can use that to have a longer runway of rewards instead.

Martian1026

Jawesome Agreed but what is "enough" money? 200 days of guaranteed APY or 1000 days? Lets get some clarity around that number.

Zeus

Here's a framework I created that goes along with this: https://olympusdao.medium.com/a-governance-framework-for-staking-rewards-5182e33f9c77

I totally agree on hard rates, though I don't think that one-off bonuses are ever a good solution (we will just pump and dump before and after). I also think we should remain cognizant that even if we can, doesn't necessarily mean we should. Frontloading those rewards incentivizes short term behavior, while what we are trying to do is incentivize long term behavior.

Also, on the note of consistency and strict rewards, the lack of this is mainly due to constraints on the contract. By using total supply for its calculation, the rewards are constantly growing at a rate that far outpaces circulating supply. This does need to be corrected for, otherwise our runway would still be less than a month. A new contract will be deployed shortly that uses circulating supply, which means we can set a steady rate that will persist over time.

Let's use this as an opportunity to determine what that rate should be!

TheCommenter

Very good take , agreed that stakers dilution has to be addressed.
But a healthy and steady growth is here my preference.
Waiting for actions from Zeus ,mentioned above , take place, and then we should move on with Setting numbers !

Cartesius

Agree with the spirit of the proposal in its goal to get clarity around the framework for this. The article Zeus shared seems to provide a reasonable basis from which to direct the conversation.

My personal focus is on Longevity over short-term Compensation.

Longevity: Rewards are constrained by treasury inflow and are therefore scarce. The protocol should be tuned to withstand periods of inactivity and decline. Ample reserves also increase investor confidence which helps increase reserves.

I think 9 months is a decent target runway now but would prefer we extend the runway to a year as we mature.

Coud

9 months is a great number to target, then we can increase apy after this is met

xh3b4sd

I kind of miss a problem statement to begin with. The proposal is only based on opinions. We could maybe frame a problem statement around the lack of transparency and guidance, or future commitment. I would then support e.g. agreeing on a runway that the treasury should be able to maintain for a particular APY. But then we would also need to address how we would operate in a scenario of treasury "excess". I agree with @Zeus that we should not implement one-off bonuses because they introduce unnecessary complexity to the system and thus add attack vectors for malicious actors.

CMill

Asking for clarity, but would an increase the treasury by offering bonds tied to other stable projects like RAI (_3DAI) help this issue?

Dystro17

In terms of bonuses, I think they should be limited only to special ohmies. In order to become a special ohmie you need to stake your entire ohm balance, without taking any profit for two whole werks( or one month depending).

These rewards could be displayed on the discord, as a badge of honour for special ohmies. Thus we have two tiers of ohmies, the ones that talk the talk and the ones who walk the walk. The latter are rewarded and commended, the former shamed and shunned 😜.