Proposal: OOKI Rewards for OOKI stakers

I have received several PMs in Telegram from people who have concerns about this proposal and I just wanted to put my response here so that everyone can read it.

Basically the objections that

  • Giving people free OOKI rewards will lead to selling of the rewards and dump the token price and
  • This kind of rewards will benefit OOKI holders and stakers but it won’t actually help the protocol in every way since the priority for the protocol should be growing usage of the margin trading and lending app (and maybe have incentives for traders etc).

I think both the above points are incorrect - these rewards won’t dump the token price (actually it will increase) and I think it will actually help the protocol far more when the price increases than anyone else (because the DAO Treasury is in OOKI so if the OOKI price goes up, all expenses in USD effectively become a lot cheaper).

Details below:

  1. I think this proposal should come after higher priorities like interest rate fixes, staking portal, Curve liquidity etc but we should do it before OOKI Pro and Permissionless Listing.

  2. I also completely agree that we need rewards and incentives for traders. We can have both staking rewards AND trader incentives - it’s not one or the other (in fact if the staking rewards boost the OOKI price, the trading rewards will actually be cheaper in OOKI terms to pay). Once the staking proposal is approved, we can actually have a proposal for trader incentives and rewards (although that will need a lot more work to design something that cannot be easily gamed and incentivises the right behaviour).

  3. I don’t think we can rely on just share of protocol fees to incentivize people to stake OOKI and lock up their tokens. The fees are currently just too small, and for most people they won’t even be worth the gas to claim until we get to the kind of trading volume that places like Curve and DyDx have, which is a long time away. Also keep in mind that Curve - the biggest protocol in DeFi, which makes millions of dollars in fees per day - STILL gives CRV rewards to stakers. That’s just how DeFi works now and we need to play the game - even more so when we are so much smaller than Curve. We know that staking fees alone won’t bring stakers in to lock their tokens up - this was tried throughout 2021 with BZRX and the amount staked was always a small percentage of the supply compared to the huge percentage of CRV that is staked for example (except when BGOV and PGOV rewards made it worthwhile to stake on BSC and Polygon).

  4. It’s not correct to say the staking rewards will dump the price. I’m not proposing crazy BGOV style APRs - I’m saying 8-10% APR or 15m OOKI per month. The DAILY trading volume on Binance is 300-400 million OOKI (even on a low volume day). 15 million OOKI per month is not even a drop in the ocean compared to 10 billion OOKI trading volume per month in Binance alone. It will have zero effect on the price (even if all of it is sold, which it wont’ be - lots of people will compound it or not claim often because of gas fees)

  5. Fundamentally I think people have misunderstood the purpose of the proposal. Of course it rewards OOKI holders and stakers . But that’s an extra benefit not the main purpose. It’s NOT a free giveaway for stakers with no benefit to the protocol.

  6. The point of the proposal is to boost the OOKI price and create hype. It does this by giving stakers a small incentive - NO INFLATION - to stake and lock up their OOKI and reduce supply in the market , which will boost the price. Look at Cardano - an entire blockchain network that literally does nothing, which reached a $70 billion market cap sustained purely on hype - and the fact that 70-80% of its supply was locked up in staking nodes receiving staking rewards. Or look at the price boost ETH had when staking went live in Dec 2020. I could go on, but I think the impact of staking/locking up a big chunk of token supply on price in crypto is very clear.

  7. And why boost the price you may ask? Well, obviously it’s good for OOKI holders, but from the perspective of the protocol, because of two things:

  • Price pump = hype. Price rise (and giving people free money through staking rewards) is THE best marketing we can get in crypto. Nothing else beats it. We can have a permanent billboard in Times Square and it won’t do 1/10th what being on Binance’s top gainers list and reaching a billion dollar market cap will do. The attention will also draw more traders to come and use the platform - did anyone notice how much DyDx volume jumped when they announced their airdrop?

  • The protocol treasury is 100% OOKI. Protocol expenses are mostly in USD. If we have to pay (for example) $100k in Curve bribes for liquidity, and our token price goes from 0.02 to 0.04, suddenly the cost of Curve bribes has dropped in HALF. All Protocol expenses become cheaper when the token price goes up - you have to sell far less OOKI to pay developers, or to fund trading incentives or whatever. This alone means we will likely save more money than we spend with the staking rewards if price goes up

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This proposal has my full support.

Some very good proposals. I think to attract more investors and to incentives OOKI holders to continue holding is to give staking rewards. The idea of stratifying rewards based on the amount of ooki one holds for staking is the best way forward.

So if there is a total of say X million OOKI rewards for staking in a month, then that will be split based on the amount an individual holds as a percentage within the total staked pool. What I would suggest is to have a vesting release period for the rewards gained from staking, say X% of rewards due every X day/week/month over say 6 months as an example.
This will help to reduce sell pressure if all the staking rewards were released at once but can be a drawback for those who want liquid staking rewards and no lock period.

Alternatively, you could ask holders to deposit their OOKI into a pool and operate a stake and burn proposal. Its a really wild idea but you could ask holders to stake their ooki for a given period and within that period all ooki fees will be burned to match those that are staked, to help increase scarcity and drive up price. Alternatively it can be proposed that the treasury will burn (say a maximum of 10million ooki in a month or whatever can be afforded) 1 ooki in treasury/protocol for every 100ooki staked. Im sure you get the idea im getting at

Thanks for the input! Some very interesting ideas here.

I don’t think we need to worry too much about sell pressure here. The rewards are tiny compared to OOKI’s trading volume - even if all of it is sold (it won’t be), it won’t affect the price.

To put this in perspective - at current prices, 15m OOKI in rewards per month is about $300,000 per month in rewards. Daily trading volume in Binance alone is 400-500 million OOKI - or over $10 million. That is more than $300 million in monthly trading volume.

Giving $300,000 of rewards when there is $300 million in trading volumes will have zero impact on the price - it will be like selling $10 worth of OOKI.

I don’t think we really need to discourage dumping, but if people want that then the best bet I think is to have a very small withdrawal fee for stakers (0.1% or whatever).

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I see, the numbers you quoted make sense, even if ooki rewards are dumped they wont affect price by much.

I have thought of another reward mechanism for staking, which to me seems like it will attract more token lock up in the long haul and therefore help with more hodlers and price.

If stakers are given a liquid staking lock up period, similar to what you see on other platforms, such as X% for 30days, or a better rate for 60days and so on. Difference is ooki stakers can unstake at any time, however they will get less than what they are due for the time they staked, as they didnt complete the staking period. To add to that, anyone who does leave the 30day staking period for example, they incur a small fine/fee for doing so and the remainder of their rewards (that they would have got) can be split between those who stake for the defined period. Ofcourse if someone has staked 100,000 ooki and they only unstake half and leave the other half staked, they forfeit their remaining rewards they would have got for the half they unstaked.

This will attract those that want liquid access with no lock up period, but incentivise long term stakers to generate passive income. Best of both worlds really.

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I love this idea. Sounds it’s attractive.

This sounds like a variation of the Curve veToken model (which gives greater financial rewards and greater governance power for people who lock their tokens up for longer).

I think it’s a great idea and think we should move to a veToken model in the longer term (maybe later this year) but for now I want to start with something similar while we figure out the details of the veToken model

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To update people on this, I have been speaking to a lot of people on Telegram and many people are not very comfortable with handing out rewards from the DAO Treasury without any kind of benefit to the DAO like a lockup of tokens etc.

Some of this was discussed earlier in this thread when we were talking about a possible withdrawal fee for stakers, or having lockup periods.

As a result I am taking all that feedback into account and I am going to propose a revised proposal (will post in a separate topic) for OOKI to adopt the veToken model based on Curve’s veCRV (and many other projects).

This will involve OOKI rewards as proposed here, but also token lockup for greater share of rewards and greater voting/governance power.

This needs a bit more work to design the tokenomics but I will be posting a revised veOOKI proposal in the forum, as well as a proposal to give OOKI rewards for traders who actually use the OOKI product and pay fees (separate proposal).

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