From its beginnings as a less resource-intensive alternative to mining, where funds are locked in a wallet to support the security and operation of a blockchain and users earn rewards, until 2021, staking has gone a long way.
Staking in DeFi can add valuable utility and promote long term sustainability and incentivize the entire IDLE ecosystem for their commitment.
The Idle community in the past has voiced their opinion that staking should be added to IDLE (here Staking Model, and here Tranches + Staking) and the Idle team has listened and included it in the 2021 roadmap (here).
As of today, the pilot league committee has made the decision to include Staking in their budget and as it always will be, it’s reaching out to the community for feedback.
The pilot league committee is looking for a staking framework that can provide users with many valuable features and allows its loyal hodlers control of the future of the Idle protocol.
Idle stakers will determine the structure of upcoming projects, shaping and growing the protocol. Staking in Idle will address the biggest common problem with past staking experiments: no meaningful use for staking tokens meant that after the lock-up period farmers just pump and dump to the next project.
For these reasons, the pilot league committee would like to introduce for discussion with the Idle community the Curve staking model and build a lot of innovative features that are unique in the DeFi space.
How the Curve staking model works?
As Davide already explained in the comments of this post (New Distribution & Staking Model) the Curve model introduces a staking mechanism that aligns incentives and streamlines collaboration between the IDLE team, Idle community and other participants.
In is initial analysis Davide pointed out some of the main benefits of the curve staking model:
- Token holders that want to join the Governance lock $IDLE for long periods and have full voting power;
- Token holders that prefer a balanced strategy between funds availability and Governance participation have reduced voting power (short locking period);
- Token holders interested in $IDLE Liquidity Mining get a reward boost by locking tokens (or the opposite situation, investors that do not hold enough $IDLE get reduced incentives);
- Token holders that are not interested in the Governance prefer funds availability, therefore have no voting rights.
By now it starts to seem obvious why the curve staking model provides a very good starting point that marks excellent reference points for Idle. The challenge now becomes how IDLE could improve the given model and add innovative features that can even further incorporate the Ethos of the Idle ecosystem.
For that, the Pilot league Committee as always is looking to kick start the conversation with the Idle community. Idle is built by the community and for the community.
To kickstart the discussion, I would like to propose the following improvements:
- Staking a certain amount of IDLE will boost voting power on snapshots
- Staking can give “priority access” to new strategies/assets/protocols. For example, when a new strategy or new asset or a new lending protocol is added to IDLE, access for the first 2 weeks will only be granted to users staking a certain amount of IDLE.
- Add an unstaking 5-day cool-down period. For stakers that want an immediate exit, they will be able to do so for a 5% fee, otherwise after 5 days there is no fee.
- Offer discounts on all (present and future) Idle’s commission(s) fees (performance fee and management fee) depending on how much tokens the user is staking (tier discounts).
- Mint an exclusive IDLE NFT only for users that stake for a long period(s?). These NFT’s will be like “gift vouchers” with no immediate value. It will be the community who will later decide what these NFT’s will be used for (example: an IDLE Airdrop). Let’s name these NFT’s in a fun way and to come up with some cool memes.
This is the beginning of the discussion that will determine how staking in IDLE will be implemented in a future IIP. The staking model has been created to reward loyalty and not to add financial incentives that promote or incentivize price speculation. It’s also important that the final staking framework does not add any inflation to the IDLE protocol. The three macro focus areas of the staking model will be: the list of features, the technology and the economic model.
The Pilot League Committee is looking forward to listening to the feedback from the community and starting the implementation after consensus has been archived.