To maximise the interest of stakers in their investment, by requiring them to be present on the protocol at least every 3 months in order to claim their income.
Pre-empt the $ETH revenues that arrive on DEAD wallets so that the DAO can put them to good use.
The first epoch showed that the mandatory quarterly claim had the effect of greatly diluting the ROI of the smallest investors.
Indeed, with modest bags, the obligation of a quarterly profit withdrawal drastically reduces the returns of our investors.
The DAO is not intended to suck returns but simply to ensure that the ETH generated by the protocol are not lost forever on DEAD wallets.
We therefore propose to extend the claim period to 8 or 12 months so that everyone can, if they wish, wait until they have enough in their “yield account” to claim.
After this period, the DAO will exercise its right of first refusal on the rewards as initially stipulated in the 2.0 proposal
If this proposal is accepted, it will allow all forms of portfolios to come and take advantage of the social escrow and its returns without difficulty.
It will therefore be a gain of users, volumes and visibility for Paraswap
If this proposal is accepted, it will be implemented immediately.
Well done @Albist and @stikers for this collaborative effort to encourage small investors to participate in the social Escrow model.
I am also of the opinion that 3 months cap on the claimable period will impact retail investors negatively as a substantial part of their gains would be lost to gas. One of the ways to resolve the problem is to increase the claimable period as you have suggested and I think anything between 6 months to 12 months is reasonable.
Another way to tackle the problem is to give stakers the option to auto-compound the reward in either SePSP1 or SePSP2. While, I understand that this might be a complex thing to achieve from development angle but if it can be implemented, this will further reduce the sell pressure on PSP from GRP and allow retail investors to retain most of their profits.
I agree with this proposal, when we were debating about the launch of PSP 2.0 I was advocating that it was important to increase this limit to at least 6 months for small wallets.
We are not in the case where the tokens distributed are governance tokens and where in the event of a lost wallet this creates a scarcity for the token. This is why it is important not to lock Real Yield in ETH for life in the system for wallets that would be lost.
Also if the expiry is too far away and these wallets are actually lost, the DAO loses the opportunity to use these funds for the benefits of the DAO over this period.
We can initially increase it to 6 months and from here, with the data that we will have collected, see if it’s necessary to potentially extend this limit even more.
I’m in favor with this proposal
I’m agree with the 6 months period and adjust it in 3-4 months with more data.
To add more data about this:
Currently the average revenues per day for the protocol is ~5k$ (epoch 1 + 2 taken in account) - I have skipped the huge revenues generated during the USDC depeg due to the fact it was a specific events.
So based on that a minimum of 10K sePSP2 should represent a Paraboost score % around 0.05% which will generate an average of ** 56$** par epoch. With a current cost of tx to claim around 3-4$ it safe to setup a 6 months period.
At the end the Protocol will lost opportunity until the first dead line (if not updated again), after that dead wallet will lost the earn at every months.
Edit: update math logic (used paraboost score instead of sePSP2 amount)
Nice proposal. It’s a good thing to think about our smallest stakers. I guess we want PSP 2.0 to be fair and to enable most people to take part in the social escrow system.
I didn’t check the figures, but if 6 months means 30% it is still a lot. So why not maybe 8 months !
It seems that the loss funds part (going to DAO after claiming period) will not represent a lot since we’re talking about the smallest stakers.
Excellent proposal, our comunity have many small bags that regarless the daily volume are constantly trading and performing activities on the platform. This proposal align with the Social Escrow spirit.
The positive impact is rather obvious for small holders. Maximising the number of Epochs to be claimed at once by increasing the deadline allows for a better return.
It is also important to ask the question: would this measure have a negative impact on the DAO or the protocol?
- Would it go against the social escrow?
Indeed, being able to “take your time” to claim may allow less active users to still benefit from staking.
However, and this is one of the strengths of social escrow, there are multiple factors that increase (or not) one’s paraboost score.
A user who doesn’t use the dapp very much would already be impacted by his low paraboost score. In my opinion, the duration of the claim should no longer be considered as a control of the stakers’ activity, as the paraboost score (and thus the share of revenues) plays its role.
- Can revenue be lost?
As long as a duration is defined, it is ensured that no protocol revenue is lost.
- Is changing the claim duration easy to implement in terms of work / dev?
This is also an important factor as it could tell us whether we will have the possibility in the future to modulate this duration easily, or whether we have to think carefully about a duration that takes all factors into account.
It is difficult to define a duration like that, the longer it is the better for the small holders. But it is also important to keep a certain agility for the DAO in the recovery of these funds.
I am personally in favour of not proposing more than 2 extension periods in the vote, and rather in favour of 8 or 12 epochs.
However, if there is a consensus around 6 epochs, we could change to 6 or 8. Maybe make a poll to define the right criteria to propose during the vote?
Thanks for the proposal @Albist. I agree with the general principle that retail stakers shouldn’t be penalized (especially if ETH Mainnet gas prices go up again when market conditions turn).
However given the points you mentioned here, I’m not really seeing why we even have a deadline to claim rewards? Based on my experience in other protocols that offer some form of real yield, there is no time limit - those are your rewards for owning the protocol tokens. As you already mentioned, if you don’t bring value to the DAO, your Paraboost already suffers, so you’re incentivized to be active.
Here is a non-exhaustive list of other protocols that give real yield in either stables or ETH where there’s no deadline to claim:
Convex - paid in 3CRV
GMX - paid in ETH
LooksRare - paid in ETH
Since we’re reconsidering the epoch claims altogether, I would argue that we eliminate the deadline altogether and let people claim their staking rewards whenever they want.
I also want to highlight that my data above was at a specific time.
To me the issue with the deadline is that small wallet may not be able to follow volume war neither new deposit. The simple fact that whale just autocompound and use the app will make small wallet Paraboost go to 0
I get the point that DAO get back the rewards from dead wallet and I approve it. I don’t have the details of the architecture behind, but I would prefer a deadline link to use activity. If you do 1 swap you make volume so your wallet is still alive then if you don’t use Paraswap during 6 months then your are loosing your rewards.
while discussing deadline with @stikers who wrote the proposal, we didn’t mention the possibility to cancel it.
Indeed my opinion is that the different parameters of the Paraboost score are sufficient to judge the activity (and rewards) of a staker within the framework of social escrow.
The Paraboost score is for me a strong enough incentive to use the application to increase his potential income.
I think however, given the nature of the rewards in ETH as mentioned by @enerow , that this limit is necessary to avoid the risk of simply losing a part of the protocol income.
We still have little factual feedback / data on chain to know if the rewards that are not claimed are due to lost wallets or to users who have no economic interest in claiming.
Even if it is growing very fast (see TVL evolution), PSP 2.0 is still young!
The idea of this proposal is to keep this delay ensuring the protection of the DAO revenues, while allowing all users to enjoy PSP 2.0 in an optimal way.
Interesting idea to link the deadline with the on chain activity (full social escrow). Like a countdown timer that would reboot after each interaction with ParaSwap.
But you’re the dev, you know more than me about the feasibility ^^
My opinion is that if the duration is considered long enough by the smallest holders to benefit from the staking rewards, there would not necessarily need to go into this detail.
But you are right, the truth about this duration today will probably evolve with the TVL and the ParaWar (Paraboost race).
Thanks @Albist. I think the fundamental disagreement I initially had here was: once the rewards are allocated to our PSP stakers, they are no longer protocol income. They are distributed earnings to us, the stakers (kind of like a dividend).
Upon more research, I did see that different jurisdictions allow clawbacks of dividends after an expiration date ranging from 3-7 years. As an example, here is what Coca-Cola says on their dividend FAQs:
To avoid your account being deemed abandoned or lost:
Cash your dividend checks in a timely manner. Uncashed checks over a specified period of time could result in the uncashed funds and in some cases, your shares, being turned over to the state of your last known residence. Some states may even liquidate your shares when they receive them.
Keep your account current. Access your account on-line or vote your proxy. Ensure that Computershare has your correct address on file. If any of your statements or dividend checks are returned to Computershare as undeliverable, The Coca-Cola Company may be required by law to turn over your uncashed checks and your shares to the state of your last known residence. You can change your mailing address at any time by logging on to your shareowner account at www.computershare.com/coca-cola. Please note, if you reside outside the U.S., your shares and/or funds would be turned over to Delaware, our state of incorporation.
Which is interesting because in this case it’s not the company that takes the dividends back, it’s the state (in the US) which is allowed to take dividends, like New York which takes the dividends after 3 years of dormancy. But I digress.
Having established that there is legal precedent for this kind of stuff, I’m okay with doing a 12-month period for claiming of PSP staking rewards. Would probably push for it to be longer, to be honest, if there are truly small wallets that will find it prohibitive. I believe someone mentioned this on the Discord about a certain country in the Middle East where we had a lot of small retail stakers, but can’t find the message right now.