Staking Reward Token

đź—‚ Proposals đź“‘ Formal Proposals
3

Great topic and overview, thanks @8bitporkchop – this is an important matter as we’re getting close to our IDLE staking program.

Initially, I was personally more oriented towards IDLE as reward token, as it would allow implementing a mechanism similar to how Idle Smart Treasury is currently operating.

I see your point on the weird vibe of staking IDLE to earn IDLE, but I differ on this because in the IDLE staking community discussion we’re talking about market-buying IDLE with WETH, not just giving IDLE from eg Ecosystem/Long-Term fund. A “ponziesque” system would drive its value from the next person paying more for it than the previous one, whose only advantage comes from being early. Staking IDLE to receive IDLE (bought thanks to the inflows created by the protocol) is a totally different scenario, even if this is an endogenous token.

Regarding the zero-sum game, you’re assuming all staking rewards will be traded back again, while we can also expect that community members looking to stake IDLE are also long-term committed to the protocol – the zero-sum game would turn into a positive-sum game where the protocol redistributes its token to active and committed tokenholders, increasing their ownership of the protocol and voting power. Additionally, we could also think to reward stakers with stkIDLE (leaving to them the choice of the locking period), effectively reducing a possible selling pressure.

With that being said, I actually agree WETH would be the asset with the most utility and it would be the best for Idle brand as we’ve built our protocol on top of Ethereum, and we’re part of this amazing DeFi community.

At the end of the day, my view is that it’s not completely a matter of the reward token, but rather a matter of the cash flow generated by the protocol.

I believe this would be a choice that our community should drive, as they’ll be the primary users for IDLE staking. I would suggest spinning off a Snapshot poll about this, gauge community sentiment and then proceed with the most preferred choice.

The possible options for the reward token could be:

  • IDLE
  • stkIDLE
  • WETH
  • idleDAI/idleUSDC (even more stable)
  • IDLE/ETH SLP (Sushiswap IDLE/ETH pool token, increasing market liquidity)

PS: echoing the one-click WETH → idleWETH tool (which I really like), I’d foresee another possible one-click automation (in case we go with WETH staking rewards path):

  • WETH → IDLE → re-stake could be really handy (always bearing in mind possible the gas cost, as I see 3 TXs here, 4 if you’ve never approved Uni/Sushi to trade WETH on your behalf)
11 Likes