A new staking system was recently proposed in OIP-6. That system introduces claims, which require a user to wait one epoch before claiming their sOHM.
Some concerns and ideas developed around this system. The chief concern I saw was the additional gas cost and friction associated with claims, and the question of whether or not they are worth the added benefits of rebase-manipulation prevention and enabling Hades. There were also several ideas & requests around adding a lockup/multiplier to incentivize longer term holders (this one is nothing new).
I've tried several implementations for lockups/multipliers, and none seemed to work. However, this claim system opens an opportunity to solve that problem.
Terms:
Staking terms are set time periods (in epochs) during which you can earn a multiplier on your rewards. For example, we could have a 90 epoch (1 month) term that gives the staker a 1.25x multiplier on their yield.
The staker would be able to withdraw at any time, but by doing so they would forfeit all of their rewards; if they staked with 10 OHM and later chose to withdraw before their term has expired, they would receive back 10 OHM. This creates a strong incentive not necessarily to get into longer terms, but to abide by the term you chose.
Stakers are incentivized to get into longer terms by the multiplier. This system would not change the rate of reward distribution; the same amount of OHM would be distributed to stakers each epoch. It would, however, change how those rewards are distributed. Those in longer terms would earn a larger share of the pie, as compensation for committing to secure the network via long-term (3, 3). This change in distribution would be represented as a lower base APY (though those with multipliers would likely end up earning more than they are today).
If everyone were to commit to a quarterly lockup with a 2x multiplier, APY would be cut in half but everyone would earn the same ( 1/2 * 2 ). However, if you were the one person without a lockup, you'd earn the 1/2 rate.
This system does not require timeliness in claiming your sOHM. For someone at the base term (1 epoch wait), they could actually come back 3 or 10 or 100 epochs later, claim their sOHM, and have earned the same as if they claimed right when they could've. This also helps with the gas issue; you have the ability to wait until gas is low to put in your claim tx without losing out on rewards.
Staking terms would be set by governance as a variable. New terms can only be applied to new stakers; existing stakers are grandfathered into whatever terms they have.
If we go with this system, I would propose the following:
- Base term: 1 epoch and 1x multiplier (no boost)
- Weekly term: 21 epochs and 1.04x multiplier (4% boost)
- Monthly term: 90 epochs and 1.22x multiplier (22% boost)
- Quarterly term: 270 epochs and 2x multiplier (100% boost)
It is important to recognize that these multipliers are exponential; the quarterly rate must be greater than monthly ^ 3, because otherwise it is more lucrative to roll over monthlies than commit to the quarter.
A quick example:
- Current Epoch: 100
- Current Index: 2
Base Term:
User stakes 20 OHM and receives a claim redeemable at epoch 101. The next rebase brings the index to 2.01. User comes back the next epoch and claims 20.1 sOHM.
Monthly term:
- 90 epoch
- 1.22x multiplier
User stakes 20 OHM and receives a claim redeemable at epoch 190. Over the course of the month index goes to 4 OHM. User comes back at epoch 190 and claims 44.4 sOHM (index increased 100%, user increased 122%)
This has been a tough nut to crack, but this system seems really solid. It works within the confines of equal rebases for everyone, it takes no fees (only forfeiting of rewards), it allows users to retain control over their assets at all times, while adding an extra level of incentives for long term holding. We will do preliminary polling on this here, and if there is support we can take it onto snapshot.