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.
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:
- Reduced dumping of the token. Which means a higher price (or at least reduced sell pressure) which helps keep APY higher.
- 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.
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.
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.
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
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).
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.
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.