[Temperature Check] BSN Emissions for Stakehouse
Introduction
This Temperature Check will outline a method to create emissions of the BSN tokens for early adopters of Stakehouse LSD Networks. It is in the best interest of the DAO to distribute tokens to those who support its protocols.
Motivation
Stakehouse LSD Networks is the first protocol owned entirely by Blockswap DAO. Therefore, the DAO should support its wider adoption as 53% of all BSN tokens are owned by it. One of the simplest and most time-tested protocol adoption and token distribution strategies has been through emissions for protocol participation. It makes sense for the DAO to allocate tokens to those who stake ETH using Stakehouse LSD Networks.
Objectives
- Increase the protocol adoption rate by incentivizing Stakehouse LSD Network participation.
- Find value-aligned DAO members who have a vested interest in Blockswap DAO protocols.
Structure
When discussing the structure for token emissions, it should be broken down into categories. Stakehouse LSD Networks has three staking options, Protected Staker, MEV Stakers, and Node Operators. We can utilize these segmented user groups when determining separate parties vested in the same interest. When thinking about these groups it is important to take into consideration the amount of ETH required, current token holders, anticipated risks, and the future of Blockswap.
In brief, below are the user segments.
Node Operators - are required to provide a 4 ETH bond to receive 50% of the revenue from the MEV payouts pool proportional to their ownership of that pool. Node operators have complete autonomy so rewards should be treated on a sliding scale based on staking rewards generated.
MEV Stakers - can stake any amount and receive the other 50% of MEV Revenue based on their proportion of the pool. There are 4 ETH per validator in this segment. MEV Stakers do not operate a validator and should receive rewards as they become available.
Protected Stakers - receive 100% of the staking rewards from the 32 ETH validator to only 24 dETH. This represents a 33% increase in rewards over the Ethereum Deposit Contract rate. Protected Stakers do not operate a validator and should receive rewards as they become available.
Emissions Rate
The BSN DAO should consider emitting 100,000,000 tokens to the first 1,000 validators staked in Stakehouse LSD Networks. This would represent roughly 3.8% of the DAO’s tokens. 1,000 validators is a significant number as it will provide ample liquidity for dETH to become integrated into DeFi protocols. This would represent under .2% of all staked ETH as of March 8, 2023.
Below outlines a front-weighted distribution of BSN tokens. The intention is to encourage early adopters and aid to soften the perceived risks of being the first few users in a groundbreaking protocol. Tokens will be distributed after each group has been completely staked. The first validator staked in each group will be given a higher weight of rewards than the next validator. This campaign can run for 120 days.
- Group #1: Silverbacks
- Validators: 10
- Percent of allocated BSN: 10%
- Group #2: GMI
- Validators: 90
- Percent of allocated BSN: 40%
- Group #3: GMers
- Validators: 200
- Percent of allocated BSN: 30%
- Group #4: Rockets
- Validators: 300
- Percent of allocated BSN: 15%
- Group #4: Decentralizooors
- Validators: 400
- Percent of allocated BSN: 5%
Each one of these groups can then be broken down into subgroups based on their level of participation listed above.
- Node Operators: 40%
- Rewards will be based on performance accruing staking rewards.
- Vested for 90 days after the threshold has been reached.
- MEV Staking: 20%
- Target distributing BSN within 2 weeks of the threshold being reached.
- Directly proportional to their percentage of the pool.
- Protected Staking: 40%
- Target distributing BSN within 2 weeks of the threshold being reached.
- Directly proportional to their percentage of the pool.
Here is what it looks like put together.
More Details
Qualifying will require a user’s tokens to be staked in the Ethereum Deposit Contract. That means that a simple deposit shall not qualify unless the ETH is in a validator. These tokens can be made available via a UI by the DAO. The DAO will empower Blockswap Labs to facilitate, execute, and communicate the deployment of these emissions.
Summary
- The DAO allocates 100,000,000 BSN for the first 1,000 validators.
- The emissions program runs for 120 days after implantation. Afterward, any unallocated tokens will revert back to the DAO.
- Rewards will be assigned retroactively; Validators that are staked prior to the implementation date will still qualify for BSN rewards.
- BSN tokens are given in proportion to the percentage of ownership of the MEV and Protected Staking and are scaled based on the performance of node operators.
- Each group must be completed in its entirety or else rewards will not be distributed.
- Validators will be ranked in the order they are staked in each group. Example: the first ETH staked as a protected staker in the first validator will receive more rewards than the second even if they are in the same group.
- The DAO empowers core contributors Blockswap Labs to outline, create, develop, deploy, and provide support, etc for these BSN emissions.
Conclusion
This is a Temperature Check to gauge community interest in creating BSN emissions for Stakehouse LSD Network users. Scaling the emissions to favor the first few validators and varying the rates for each staking pool could yield better results. All feedback is welcome.