Thank for this thoughtful post @Gonbatfire. I think a staking contract is very sensible. I also pitched it in a previous post, so we’re definitely on the same page.
I think your idea of options is interesting, but adds a lot of complexity. If the issue is dust, then I think we should first figure out a possible implementation and whether it necessitates a fix such as that.
With regard to the staking rewards, we diverge quite a bit. This proposal is similar to Tuna’s in that it wants to give away USDC to POOL token holders. I don’t think it’s the right approach for these reasons:
- It’s not particularly future-proof: we may not always have USDC as our main treasury asset.
- Dust problems (might not be worth claiming tiny amounts of a different asset)
- Users are primarily draining the treasury
- Users are not increasing their ownership
- It means we don’t have a natural POOL yield source. It’s a unique dual-token model.
Both of these proposals don’t want to distribute POOL because they worry about sell pressure on the POOL token. To me, that’s an indicator that we need to address sell pressure on the POOL token. If we could do that, then we’d be able to distribute POOL and it would be seen as being valuable.
Here are some benefits of distributing POOL as staking rewards:
- Future proof. We will always have the POOL token.
- Users earn ownership
- Users have the option to liquidate some of their POOL
- No dust problems (a users share of the pot simply increases)
- We have a natural POOL yield source
- We retain USDC in our treasury
Now: how do we mitigate POOL sell pressure? Essentially, how do we allow (and embrace!) people selling POOL to take some profits?
Money markets.
Something that both of these proposals have overlooked is the power of money markets. Specifically, Uniswap V3.
Imagine if, in tandem with the staking contract, governance deploys a concentrated liquidity position of POOL/USDC on Uniswap V3. We’d see:
- Users could efficiently exit from POOL if they want to
- Governance would turn POOL into USDC as the price goes up. Governance could then reposition liquidity to capture some of the USDC for reserves.
- Governance would earn trading fees.
I think it’s time for governance to use its reserves to strengthen the POOL token. We could benefit immensely from this.
I’m going to write up some thoughts I had this weekend. I had an idea related to this…