Proposal: OOKI Rewards for OOKI stakers

Introduction

I’ve been thinking a lot about tokenomics and how to make it more attractive to hold OOKI. A big part of the reason for the price trending down since the Binance token launch is that there’s no reason to hold OOKI and no use for it (yet).

This is a proposal to introduce OOKI liquidity mining/rewards for OOKI stakers (in addition to the share of platform fees that is already planned).

I know OOKI staking is coming - that’s the first step for sure. But unless we have a really dramatic jump in platform usage and trading volume with Curve liquidity (also coming soon), it will not increase rewards for OOKI stakers much - they will have a share of fees but it will be a very small amount plus it also doesn’t help that the returns (based on fee sharing) are unpredictable and depend entirely on platform usage, so returns in future are difficult to calculate.

Proposal

Basically I think we need to juice OOKI staking with OOKI reward emissions the way Curve does. Even the most successful of all DeFi protocols - Curve - rewards CRV holders with CRV emissions (till 2026 I think) in addition to fees - even though they make a TON of money in fees, they pump it with token emissions and we should do the same.

I don’t think we need to go crazy with the emissions like with the aggressive BGOV rewards from last year That’s not sustainable. I mean much lower steadier amounts that we can keep up for years, which the DAO treasury can afford.

For comparison I think Curve CRV rewards (not including platform fees) are only around 3.2% APY (not APR!). And that’s for tokens staked and locked for 4 years (it’s much lower if you lock your tokens for shorter periods).

Now we are not Curve and our platform doesn’t generate those kind of fees but something like 5-10% APY is more than good enough IMHO.

I’ve done some calculations and the DAO can easily afford this over the long term from the treasury.

If we take high numbers for our assumptions - let’s say 10% APY (around 9.5% APR) targeted in USD terms, and we assume that fully HALF of the OOKI circulating supply gets staked - around 1.7 billion (it will probably be less - Binance alone holds a lot more than half of circulating supply and they are unlikely to stake - they do that for very few protocols).

On that basis at current prices the staked tokens will be worth around $50 million which means we need to pay about $5m in OOKI per year (actually a bit less with APY but let’s keep it simple here), This is roughly about 13m OOKI per month at current prices which is nothing compared to the benefits it will give.

For comparison remember that about 70m OOKI vests into the treasury each month (from vBZRX vesting - the treasury has something like 350m vBZRX) - this is less than 20% of that, plus there will be other revenue sources for the DAO like Ribbon Finance option selling (see separate proposal on the Forum).

Of course this cost will go up slowly as more vBZRX vests into BZRX and then OOKI and the staked amounts increase in line with the circulating supply increasing but the treasury is the biggest beneficiary of this and not all the vesting tokens will be staked - we’ll need to either stop this program or fund it in some other way when vBZRX finishes vesting in 2024 but that’s a long way away and the program can be modified in a year or two if we think it won’t be affordable later.

Proposal Benefits

I think there are huge benefits to this approach:

  1. OOKI already has a use case (governance plus fee share) but this will massively improve it and give people steady returns/passive income and make OOKI 10x more attractive to hold and let people calculate their returns better.

  2. Very easy for devs to implement - we already have an OOKI staking portal coming soon. Just need to add OOKI rewards to it - very similar to what was done with BGOV last year. Most of the work for this was done with BGOV/PGOV last year.

  3. Easily affordable by the DAO (see above).

  4. Locking up a big chunk of OOKI supply reduces what’s available in the market and is likely to result in a sustainable price increase (unlike the temporary pump from the Binance listing). It also means everything else is cheaper in OOKI terms - if we save more than 10-15m OOKI per month on other expenses because of this, that alone could mean this program pays for itself (so for eg if OOKI price doubles, then we only need to pay half as much in OOKI terms for Curve bribes, or a Tokemak Reactor in future, or any other expenses the DAO has, because most expenses are denominated in USD etc).

  5. It will generate a lot of hype and marketing - best marketing we can have is giving people a strong financial incentive to hold OOKI (and passive returns/income) and publicizing that.

In the longer term, we can consider some further modifications and adopting a Curve-style veToken model with enhanced rewards/fee sharing and voting rights for people who lock their tokens up for longer periods (up to 4 years). The economics of this will take time to work out (and also longer to implement in the staking portal) so I suggest that we take lessons learned from these rewards and plan a longer term move to the veToken/veOOKI model in a few months - many other DeFi projects are also in the process of doing this.

Conclusion/Proposal Summary

NOTE: Although I have written the above proposal on the basis of 8-10% APY, in practice the best way to do this is for the DAO to allocate a fixed amount of OOKI per month for OOKI rewards, not to target a specific APY in USD terms - because that’s the only way the DAO will have certainty and clarity on what it is spending.

It works out to almost the same amount of rewards, but just calculated in a different way. The DAO can allocate 10-15m OOKI per month for OOKI rewards, and the APY will depend on the amount of OOKI staked (also of course, only staked OOKI can vote in governance - this was the case with BZRX before and I assume it will be the same with OOKI staking).

So if only a few people stake OOKI, they will receive very high OOKI rewards. If around 50% of supply is staked, then about 8-10% APY in OOKI. I doubt more than 50% of circulating supply will be staked.

My recommendation is that the DAO should allot between 10-15m OOKI per month for this (out of the 70m OOKI vesting into the treasury each month) and commit to this program as a pilot for 6 months and then decide whether to continue it or not.

  • 10-11m OOKI per month - very conservative and steady and leaves plenty of OOKI for other expenses
  • 12-13m OOKI per month - mid-level figure
  • 14-15m OOKI per month - aggressive/high levels of rewards.

We could also consider starting off with a high level of rewards (14-15m OOKI per month) and reducing it to 10-11m OOKI after the first 1-2 months or something like that.

Another point to consider is imposing a small withdrawal fee to withdraw OOKi from staking (very small - 0.25% or 0.1% or something - small enough that it will be profitable to stake within a few days or a week) - the idea is not really to make money or penalise people for withdrawal with such a small fee - more to just make people think twice before withdrawing on a whim.

What does everyone think? Both in terms of the proposal in general, but also specifically:

  1. How much OOKI to allot per month?
  2. Should we have a withdrawal fee?
  3. Any other ideas/suggestions to improve the proposal?
18 Likes

I approve this proposal, great work Badri!

Let us get this thing going. Badri as always, great work.

First of all great proposal, i’ll support it!

About your questions:

  1. The amounts you described are okay. I’ll prefer an agressive method(14m ooki) for two months and after that we do the steady and sustainable method (11m ooki) till january 2023. When we are close to this date we can discuss the future of this plan.

  2. To answer this question, I need to know the payout method. Is the payout daily, weekly or monthly? If the payout is daily, I think a withdrawal fee isn’t necessary. If the payout is monthly i think a withdrawal fee is certainly necessary, because a whale can deposit it at the end of each month and simply withdrawal after the payout. In this case and an suggested 8% APR (= 0,66% per month), the withdrawal fee should be at least 0,33% in my opinion.

  3. As I said the proposal is well explained and I agree the DAO needs to commit on a fixed amount of ooki instead of commiting the APY.

3 Likes

I really like this proposal, im not an expert but it sounds like it can attract people to stake their ooki and can increase the ooki holders in feuture

I support along with CryptoSteve’s modifications

Supported - I will certainly steak all my OOKI if this comes into effect.

Thanks for the support everyone! Just on this question:

-Withdrawal method will depend on what the devs think is feasible to implement, but with BGOV, the rewards accrued every block and could be withdrawn at any time (PGOV had a lockup for a few months but I don’t think that is necessary with rewards at this level - it’s more of an issue with very high rewards to prevent dumping). Which means the view seems to be (because withdrawal can be any time and rewards accrue every block) that a withdrawal fee is not necessary?

One other thing to mention I forgot in the main post, just in case it wasn’t clear:

This proposal does not involve inflation or minting new OOKI tokens. The total supply will stay fixed at the same level (circulating supply will increase slowly because of vBZRX vesting of course) and rewards are paid from the treasury using a small part of its reserves/income.

So far, the opinion seems to be something like:

-14m OOKI rewards for the first 2 months, then 11m OOKI per month and the DAO can decide whether to continue/change/stop the program after 6 months or 12 months
-No withdrawal fee, rewards accrue every block and can be withdrawn any time (although because of gas fees most people won’t withdraw that often).

I agree. Have no idea to answer your question but hope the staking comes as soon as possible

This proposal has my support as long as it doesn’t take away any time from our devs that should be working on completing more important features like PL or OOKI PRO.

I understand this is a more longterm strategy but the dev team is small and they can only handle x amount of work.

  • In this case I agree there is no need for a withdrawal fee. I agree on all other things you said in your proposal and reply.
  • I dont think there isn’t much dev work required to achieve this proposal, since they did it before. Maybe a dev can confirm this.

The proposal is very nice. But i have just one small suggestion - In order to increase number of holders and stakers the reward distribution must not be based on total amount staked/ percentage of the pool. It should be like if u hold Ooki u get similar rewards.

Or better yet make rewards in proportion to sizes of Ooki holders. Eg. 1million to 0.1million Ooki holders, 0.09999 million to 10K Ooki holders, Below 10K Ooki holders. So in those brackets people will get same Ooki rewards despite the volume they are holding. Giving more reason to others too to hold. And don’t give 10%APY. 8% is more than enough.

Thanks for the comment!

  1. I only gave 8-10% APY as an illustration, but the proposal does not actually have a target APY. The proposal only says that x amount of OOKI will be given as rewards each month (around 10-15m OOKI per month). The APY will depend on the amount of OOKI that gets staked - it will be around 8-10% if 50% of OOKI staked, but it could be a lot higher or a lot lower depending how much is staked (of course, the more OOKI gets staked, the more the rewards will drop in APY terms because more people are sharing the same rewards - on the other hand, the more gets staked, the less supply there is to sell in the market so price should go up).

  2. I don’t fully understand your other point. You’re basically saying that OOKi stakers in different “bands” should get the same rewards right? So all stakers with 1 million + OOKI will get the same rewards (whether they have 5 million or 10 million)? And everyone between 500k and 1m OOKI will get the same, and so on? I don’t understand - what’s the benefit of doing it this way versus just giving people a share proportionate to their share of the staking pool?

This is amazing :clap: proposal and this will make ooki a great project :+1:

thanks for you input, but i think this doesn’t make any sense. i simply make hundreds of wallets to get the best out of it.

Besides that, I think in Badr’s proposal everyone gets the same APR, so thats equal in my opinion. if we assume the 8% APR, it is more than fair if someone who invested 10.000$ in OOKI get a reward of 800$ in OOKI in the end and the one who invested 1000$ in OOKI gets a reward of 80$ OOKI in the end. In al systems it works like this.

At last, the APR is not fixed. the monthly amount of OOKI is fixed. The 8% what we mentioned is fictional and assuming if 50% of all OOKI tokens where staked. To clarify this more for you:

  • if there is less then 50% of the supply is staked the APR should be higher
  • if the price of OOKI goes up, the APR should go up
  • If the price of OOKI goes down, the APR should go down
  • the more people stake in the pool, the APR should go down.
  • the less poeple stake in the pool, the APR should go up.
1 Like

I really like the idea. I think the general target would be: generate some more money/value to be distributed to the ones who stake. This could also mean we diversify the treasury and distribute the earnings the way we do with fees.

This is going really well - looks like there’s a lot of support and consensus for this Proposal, with a few changes as discussed.

I think we can leave this topic open for discussion for another couple days or so and then move on to the voting stage.

The devs are busy with other urgent priorities now including interest rate changes to the lending pools and improving liquidity through Curve for the trading platform etc (which are the key changes needed to draw more users to use the trading platform), so they may not be able to get to implementing this proposal immediately, but I’m sure they will get to it as quickly as they can after it is passed.

1 Like

I like the proposal in general. just small note from dev perspective we have to do:
Part 1:

  • dynamic interest rate
  • dex selector
  • scale to other blockchains/l2

Part 2:

  • go persmissionless
  • 20x leaverage
  • multichain fee controller
  • and other changes

So Part1: is soon … like very soon. Part 2 is yet in unknown territory.

looks like we have to prioritize things in Part2 and how all that fit with new tokenomics if we were to do that.

I support this proposal. I am in favour of increasing rewards for Ooki stakers and to have happy and satisfied Ookinauts staking on our platform. This way we can provide our Ookinauts a calculated percentage of earnings and the rewards do not entirely depend on the platform usage. It will provide steady passive income and will make Ooki a lot more attractive to hold. The strong financial incentive to hold Ooki because of the passive income does make a good fit in the Ookiverse we are building ! So yes, i am supporting this proposal !

It looks to me like there’s a lot of consensus about this proposal, so can the team please put the proposal up for the first stage - Snapshot voting?

If approved, the dev team will implement it but they have a number of other urgent items on their list right now as Roman pointed out so it may not be implemented immediately - they will have to complete the work on the interest rates, the Curve liquidity etc first.

The proposal text will be as follows (including the comments given above by various people):

Proposal to Give OOKI Rewards for OOKI stakers

Under this proposal, the DAO Treasury will pay rewards in OOKI to stakers of OOKI on the staking portal (in addition to the share of fees from the trading/lending platform), to increase OOKI holders incentives to hold the token (in addition to governance and fee sharing) and lock up a portion of the supply. This will have a range of benefits from marketing to price support and indirectly making all other DAO expenses cheaper in OOKI terms (as explained in detail in the original proposal).

The proposal says that OOKI stakers will be paid OOKI rewards on the following schedule (to be shared between all stakers according to the size of their stake):

14 million OOKI per month in the first two months of the program
11 million OOKI per month in the third and all subsequent months

There will be no withdrawal fee and stakers will be able to withdraw their stake and rewards at any time.

This proposal does not involve inflation or minting new OOKI tokens. The rewards will be paid from the DAO Treasury’s reserves and ongoing revenue/income.

The DAO has the right to revoke, cancel or amend this program at any time, but it is currently intended to run for at least 3-6 months. The long term goal is to move to a Curve-style veToken model, which will include OOKI rewards for stakers, but also much more.

2 Likes