Scope: More powerful Badger Boost + calculation change: rewards distribution based on Stake Ratios.
Status: Community Review
- Change the calculation for Badger Boost to being based on Stake Ratio Levels
- Establish 20 Levels that cover the range from 0% to 100%+ Stake Ratios, where the multipliers are defined by the Stake Ratio Ranges:
|Stake Ratio||Multiplier||Stake Ratio||Multiplier|
|0% - 0.1%||1x||20% - 25%||400x|
|0.1% - 0.25%||2x||25% - 30%||500x|
|0.25% - 0.5%||5x||30% - 40%||600x|
|0.5% - 1%||10x||40% - 50%||800x|
|1% - 2.5%||20x||50% - 60%||1000x|
|2.5% - 5%||50x||60% - 70%||1200x|
|5% - 7.5%||100x||70% - 80%||1400x|
|7.5% - 10%||150x||80% - 90%||1600x|
|10% - 15%||200x||90% - 100%||1800x|
|15% - 20%||300x||100% - ∞||2000x|
Badger Boost presents a great opportunity for the DAO to optimize the rewards distribution in a way that would align Sett users and Badger & DIGG token holders.
Ideally, we want:
- as many token holders as possible to become Sett users and have skin in the game in the DAO’s products, and
- for Sett users to be incentivized to hold the tokens and have a say in the governance of the products they use.
At the moment, close to 20% of non-native assets in Badger Setts don’t have any Badger or DIGG attached to them.
On the other side of things, only about 17% of circulating Badger and DIGG market cap is accounted for as native balance in the Badger Boost calc.
To converge holders and users I suggest making Badger Boost more Powerful. This means more rewards for the top of the distribution and less for the bottom.
In addition, I suggest shifting to a different method of the Boost calculation, the one that’s based directly on the Stake Ratio Levels. I find this method more scalable and easy to understand and interact with.
In the current model, the distribution is leaderboard-based, and you need to get ahead of someone to get better rewards. In the new model, your rewards would be determined by the Stake Ratio Level that you’re on - and the composition of other Sett users’ Stake Ratio Levels.
If you’d like to dive deeper into the model, here’s the sheet to copy.
Badger Boost is a way to increase your rewards in BadgerDAO Setts, which is derived from your Badger and DIGG balances on Ethereum. The higher the ratio of your native balance (like bBadger or a DIGG LP) compared to non-native balance (like funds deposited into BTC Setts), the higher the rewards you get by using the Badger app.
That ratio is called the Stake Ratio, and the basic formula, introduced in BIP 24, is relatively simple:
Stake Ratio = [$ value of BADGER Balance + $ value of DIGG Balance] / [$ Value of non-native staked sett positions]
In the original Boost formula, the Boost multiplier is based on where your Stake ratio falls in relation to all Stake Ratios. So for example, the top 1% of non-native assets locked in the app with the highest Stake Ratios would have the 2.98x+ Boost if we use a 3x max multiplier.
The original model has some disadvantages:
it doesn’t scale well towards the top
This means that for higher Stake Ratios you need to increase your native balance by a large percentage in order to get a modest increase in the rate of Badger rewards
it creates cliffs around large depositors
For example, one of the largest cliffs is around the addresses with zero balance of native assets (no Badger or DIGG). At the moment, owning even 2 dollars worth of Badger or DIGG would increase rewards by 40% (a move from 1 to 1.40x boost).
it’s not quite transparent for users how the distribution operates
As we can see from the example above, a lot of users have been having an extremely profitable opportunity and weren’t capitalizing on it, so the overall visibility around the boost has been lacking.
it makes it hard to target specific stake ratios at scale
Even if we were to power up the original model by introducing different levels, the Stake Ratio requirements to be on a certain level of rewards would be constantly shifting.
So there would be a “race” element to it, getting ahead of the other users’ Stake Ratios. And not everyone would like to participate in it, as optimizing the rewards would imply active monitoring.
With the new model, we set the multipliers based directly on Stake Ratio Levels.
You get to a certain Stake Ratio, you receive a certain level of elevated rewards on your non-native balance.
So with a 0% Stake Ratio you would get 1x multiplier; with 0.10% it’s 2x; with 0.25% it’s 5x.
And then it scales all the way up to 2000x multiplier for users with 100%+ Stake Ratio (those who own 1:1 native to non-native assets and more). This means that at any point below 100% Stake Ratio one can increase their Stake Ratio - and the multiplier would increase proportionally.
If we base the Levels on Stake Ratios, we avoid unintended cliffs, and you wouldn’t have to monitor other users’ behavior. Instead, you could get to your level and be sure that you’re getting your share of the pie.
Every Stake Ratio level has one final multiplier, which would allow showing APRs per Stake Ratio per Sett in the app. Thus, leveling up should be easy and transparent.
Big thanks to everyone who participated in the topic-specific Discord discussion, and especially to brianmct, who made us reconsider the calculation method for the Boost.