BIP 2: 2/3 of new emission vested for 6 months

BIP | Badger Improvement Proposals
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Category: Emissions
Scope: 1. Secure the value of the token 2. Require Liquidity providers to take a long term approach to Badger DAO by only releasing one third of new emissions to Liquidity miners on request, with the rest (two thirds) available to be claimed six months after they would otherwise have been due.
Status: Rejected

Overview:

The largest challenge new liquidity mining events have is high emissions leading to tokens sold, leading to a lower price which is bad for everyone. So far we have somewhat escaped this due to the promise of the $DIGG airdrop.

This BIP proposes that whilst the emission rate doesn’t change the time at which rewards are taken is. This idea comes from the Sushiswap protocol which suffered from the same “high emission, lower prices” problem but delivered an eloquent solution which so far hasn’t had any negative unintended consequences.

A user liquidity mining badger tokens would receive 1/3 of their reward when claiming and 2/3 after a full 6 month period from when they were originally able to be claimed.

This achieves two things:

  1. Reduced dumping of the token. Which means a higher price (or at least reduced sell pressure) which helps keep APY higher.
  2. Forces only those interested in long term support of the project to be involved. We are forcing people to at least have a financial interest for 6 months after their withdrawal of liquidity.

Details

Credit for this section goes to the Sushiswap vesting FAQ, as I have changed small details only, to give greater detail on how the scheme would work.

Vesting

What share of my $Badger rewards is vested? 66.6%

For how long are my $Badger rewards vested? 6 months from the moment they are earned. So if you earn 10 $Badger today you can harvest 1/3 immediately, and the remaining 2/3 after 6 months of waiting.

Must I stay staked in to receive my vested $Badger rewards? You can unstake at any time. Your vested (locked up) yield will still be available to you when their lock-up time is over.

When can I collect my vested $Badger? They can be harvested 6 months from the time you/your pool earned the rewards.

Implementation

Business and technical requirements
Subject to approval there is work that would need to be done to bring this to a reality. 1. Technical 2. UI 3. Communication

  1. Technical
    Solidity Code would need to be amended, added and tested. Sushiswap team have open source code and have already been helpful to some of our team. I believe we can “stand on their shoulders” for much of the work. Another area that I don’t believe Sushiswap team have decided upon is the claim method after the 6 month period. We would need to decide this too, but again could watch to see what they do and what trade offs they accept before we make our decision (given they are much further down the road that we are).

  2. UI
    Unfortunately Sushiswap have not been able to directly develop a display of vested Sushi. A third party developer has. Clearly, having a display is of use to every user and should be implemented at or shortly after launch of any change. The only other UI change is to highlight the change in policy.

  3. Communication
    I believe this is the easiest section. Following a full discussion here, a note on the UI and an announcement from the team and we should be set(t).

The above Technical work could be handled by our core team but I believe that we should use the Treasury to fund the work. I propose 150 $Badger be paid for a tested and audited code that can be merged (all costs beared by the developer). This can again be discussed below.

Thank you for reading and I look forward to your thoughts, observations, comments and decision.

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Hey @bberry259 - thanks for putting together this BIP. I’ve put together a template to be leveraged for BIPs here: About the BIP | Badger Improvement Proposals category. As to set a good precedent for our future BIPs, please edit your post using the template. You can also see @Spadaboom’s BIP 1: Badger Emissions for Week 2 as an example for the template.

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I do like this idea, as I don’t plan to sell much of the Badger I make in rewards.

But what about vesting 50% and making 50% available to claim? Im not sure how that affects the mechanics of the vesting model but just an idea.

I believe that 50/50 is a good middle ground, especially since we are asking for the vesting to be for 6 months. To some that can be a bit of a long time and I think being able to exchange some BADGER for other tokens as a hedge is part of the value this project gives its users.

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I second this, 50/50 is a good middle ground.

Also not to be gloom just cautious, but in 6 months the eth space may look radically different.

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Like the idea in principle but I also have another question.

What is $BADGER ? Is it a governance token with 0 values ? Or is it a token with a value and the goal is to have the higher value ?

It’s still the very beginning of the project. Maybe we should take our time. TBH if we reduce the emission I don’t think it’s a bad idea.

I guess it’s fair if people want to increase the price of $BADGER. But then what is the utility of it ? I see $BADGER as a governance token, and in the future when TLV will increase it’ll be like $FARM, $YFI , $CRV… a token allowing staker to gain fees from the protocol. So the value of $BADGER is not directly it prices. But the “power” and advantages it gives you when if you keep it

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What would be the plan for harvesting the vested coin? SushiSwap is still working through this to be gas efficient. I believe they are looking into either an airdrop style or a claim/harvest style claiming of the vested tokens. Being gas efficient is the key though

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Alternative vesting model


If we were to introduce a vesting schedule, I’d suggest altering the parameters in the following way:

  • 50/50 unvested/vested rewards

  • Gradual distribution of vested rewards

  • 90 days vesting schedule

In practice, it would mean that if you got rewarded with 90 vested Badgers, you could claim 1 Badger per day. By the end of the month, you would already have 67% of your overall reward, in 1.5 months - 75%.

Six months seem a bit too discouraging for me.

Arguments against vesting


The thing is, people already are quite engaged with the multiplier staking system.
And I’d say that it does more good for the DAO than vesting would.

With staking we reward people who choose to stay with BadgerDAO for the long term with 100% of the Badgers they get from Setts.

We also reward people who choose to move 100% of their rewards to provide liquidity on the Badger/WBTC pair on Uniwap.

Vesting overall is not quite cohesive with these two options: we prevent the maximum immediate commitment by choice too, not just immediate dumping.

There is also something good about being able to display real APYs and not imaginary.

And we’re not stuck with the actors who would otherwise leave us.

Vesting also complicates different possible community-building programs, as it becomes hard to distinguish between holders and non-holders.

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Some really good points both ways!

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Great points @Mr_Po. Not only do we have the multiplier but we also 1) have withdrawal fees, 2) we’re currently have the best yield in DeFi for BTC on Ethereum, and 3) we show promise in what we’re building. For these reasons, it seems we’ve managed to increase velocity of new TVL and manage/reduce velocity of exiting TVL.

However, I do see benefit in a gradual distribution over 90 days with 50/50 vested/unvested to reduce selling pressure and to keep folks engaged on longer time frames. The only concern I have is how this would impact our current Sett strategies (some involve selling 50% of your reward to increase the underlying principal asset.) If we can come up with an elegant solution addressing these concerns, I’m open to this BIP, but as the BIP is currently written, I am against the proposal.

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I would hold off on messing with emssions personally, and would be voting against this proposal as it stands.

I am not opposed to changing emssions, but this is a HIGHLY sensitive area, it can make or break a project. I would personally like to see some extremely through analysis with data to back supposed claims of changes. Would not be opposed to some of the Funds that acquired badger through the airdrop and didnt dump to provide feed back here.

For reference, delphi digital re-crafted CVPs emissions and Liquidity mining after buying into the governance after receiving an airdrop as an early tester.

We don’t have to have this of course, but as a community would want to model proven emission schedules and sink some deep thought into the effects of the change.

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to me it just doesn’t feel needed to be changed at this point, theres been well crafted ideas incentivizing holding and its worked thus far.

I do think its good to plan ahead and start discussion on what changing emissions would look like?

If vesting is chosen, I personally like the by block method rather than “unlock dates” with demand for badgers products the continual suppression of reward selling by block would most likely be soaked up.

All in all, creating a good sink for the token is always more important than vesting and it looks like what we currently have is working thus far, maybe exploring things like this and other needed/useful products with revenue streams is more important?

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Agreed. Focus of discussions should be on new product development. Within the next 2 weeks, I’d then suggest we discuss how we begin slowly/gradually tapering off emissions to a more sustainable amount rather than having an abrupt stop. Overall agree; I’d prefer our time and efforts applied to nailing down our product strategy and emissions strategy to be sustainable.

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Hi, @bberry259! We have a similar BIP regarding vesting future rewards. Mine is on the ARCHIEVED category now, #liquidity-depth-for-digg-tokens.

This is exactly the same vesting parameters and schedule I proposed for a strategy using LP as Sett (vaults). Hence, I support this BIP moving forward.

What I wouldn’t concur is the above argument. 6 months to cliff vesting. To me, this is far-stretched and only incentivizes those with huge capital where they won’t rely on their reward to be fully vested by end of the 6 months.

What I propose is to rather to do a continuously vested 2/3 rewards where these will be unlocked from a block to block basis. Else, do a daily or weekly unlocking. Cliff vesting only ushers a pre-defined date where community can expect a major dump when these tokens be fully vested on a scheduled date. Just my 2 badger. :badger: :badger:

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I would support that with block to block kris. easier to soak the sell pressure than a weekly, daily dump

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Great discussion on this. So far consensus is that nothing should be done right now, if at all.

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So far, our price chart looks very healthy and all the staking mechanisms seem to work out great. I see no need to mess with vesting schedules and would prefer discussing token utility instead.

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I disagree. If this proposal is implemented, the visible APY of Bitcoin-related pools will be lowered by 1/3, resulting in a risk of TVL decline.

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I think the time should be 2 months

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I don’t think vesting is the solution. $BADGER token should have a sort of income (like $SUSHI) to be held by investors. Vesting will probably just shift selling. Giving the token a real value, will make people keep it.

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I’m strongly against to vest LPs earnings. That would just delay the fair market price discovery and won’t improve the token price in any way in the medium and long term.
Adding value/utility to the token does, not artificial economic sanctions…

less government, more free market, that’s what defi is about right?

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