[PROP # 16] [Discussion] Lock Staking Rewards for Locked-Up Accounts

[Yishay]

Status

Discussion

Context

In light of the ongoing discussions surrounding Text Proposal #16 which was submitted onchain prior to having proper discussion. The core team recognizes the need to address the proposal intent thoroughly and transparently. To do so we will concentrate the discussion regrading the proposal’s intention in this forum post.

Proposal #16

The proposal states:

#16 Lock staking rewards for locked up accounts

Let's get community support to change the Dymension code so tokens can't be transferred from locked accounts. Locked accounts have a start time when tokens are released, but can still stake tokens and get liquid rewards. For example, VCs have a 1 year lock up on the tokenomics.

It's super important for us as a community that token holders and stakers are on the same page. Trust in how tokens are distributed is key and we need to make sure locked tokens stay locked. Voting on this proposal will show whether you approve or disapprove of this change.

Key Point From Core Team:

• General Feasibility: Team is examining a few feasibility routes addressing the goals described in Proposal #16. However, additional research is needed to guarantee feasibility without compromising safety or damaging any legitimate rights of any DYM holder.

Purpose of This Post:

• Understand the actual intention of the proposal

• Investigate Thoroughly: examine all angles and the potential impact on our ecosystem. The core team is committed to aiding and thoroughly reviewing suggestions and inputs regarding the feasibility and implications of the intention of Proposal #16.

• Community Engagement: We invite the Dymocracy to participate in this discussion. Your input is valuable, and we want to ensure that any future decision made regarding this subject reflects informed and transparent discussions.

We encourage everyone to share their thoughts, questions, and concerns in this forum thread. Together, we will continue to build a robust and transparent governance framework for Dymension.

Thank you

[Blockscope]

Makes sense to us. Rewards from locked tokens should be locked or at least have some vesting/locking constraint even not being the same as the locked tokens.

We think this could be positive for the ecosystem, specially if applied on big accounts, but maybe a drawback for small retail investors (testnet participants for example) that would probably would like to get some profit for their “work” done tu support the network. In our opinion provided value should be rewarded at least to some extent.

We like the proposal but would love to see some edge cases polished to have healthy community and project tokenomics.

[Karan-Samanvay]

Thank you for creating a forum topic, which the proposer should have done in first place. Since the proposer decided to directly post a text proposal onchain without any discussion period on forum, it seems our community has been misinformed OR is in confusion.

To clarify, proposal 16 if passed, will not change anything onchain as it does not have code change included in the proposal. I hope community keeps this in their mind.

To add more context to proposal and our stance with the information already available, SAMANVAY has voted NWV because:

• The proposer did not follow the standard rules of creating a proposal and also did NOT explore the repercussions of the proposal passing when it comes to community, team and project altogether. The rules that core team at dymension and every other cosmos sdk chains follows are as under:

1. If a community member want to propose something, the draft of the proposal should be shared on dymension forum detailing the introduction, scope / intention and execution plan so that community can read and respond with their concerns / questions that they might have in reply. This whole process is to be expected to take 4-5D of duration and is called DISCUSSION PERIOD.

2. After gauging community sentiments on the forum, proposer’s next step is to propose onchain by depositing 1000 DYM and then wait for the voting period to finish.

Coming to why we voted NWV on the proposal:
The reason being, this proposal being non-binding as it didn’t follow the rules. Not to mention,the proposal is vague, biased and proposed based on emotions without any facts to back up the claims made in the proposal. In my opinion, the proposal has solely been made hoping that locking the staking rewards earned by anyone having vesting account ( TESTNET PARTICIPANTS, VCs / PRIVATE SALE INVESTORS, VALIDATORS SALE, ETC ) will help appreciate the token value of DYM.

The proposer did not think of the repercussions that this proposal passing may have on the project by changing the major part of the code MIDWAY. There could be legal and reputational circumstances that core team could face as changing the important part of the tokenomics, when it came to investors was probably NOT mentioned in the legal contract / agreement that both parties have signed.

Taking in the VAGUE proposal wording, it seems like anyone having VESTING account may NOT be able to:
A. Earn staking rewards at all.

OR

B. Earn staking rewards but not able to compound it

Which essentially will dilute vesting account holders allocation and IMO is unfair without the proposer providing facts to back up their claim that VCs / private sale / testnet participants are affecting the price SIGNIFICANTLY.

With that said, I will keep a close eye on how the situation develops with more info coming in and if needed, i will share my stance based on that accordingly.

[iwbinb]

Locked coins can be staked (to protect the network) during the lock-up period, but there should not be any staking rewards.
After the lock-up period, staking rewards will begin.
If this module is successfully developed, it is a great thing for the entire Cosmos ecosystem.

[0xselo]

I wish this offer had never existed. Since it has been published, I believe it is right for us to discuss this issue. My personal opinion is that token sales by VC or validators do not put a heavy price pressure on the price of the project. DYM is just at the beginning of the journey and has not promised anyone that we will go to the moon. I am in favor of withdrawing this proposal, holding a forum discussion, and then turning it into a new proposal after its technical infrastructure is built. By the way, do you have any information about who the bidder is?

[monivong1]

This discussion should’ve been had prior to whoever proposed Prop#16. But here we are. Thank you team for bringing this to light. The individual who proposed for Prop#16 should’ve done this instead.

I think we should let the free market be free market. Letting code to dictate the free market is not the way to go. Agreement has already been made. Everyone should have the freedom to choose in their best interest. We have seen all of this in the real world by creating regulations to restrict the free market.

[AutoStake-com]

I think an Audited CosmosSDK module which accrues vesting token rewards directly into the vesting account balance is a net positive overall for the whole Cosmos Ecosystem.

It would firmly dispel the false narratives going around, and align long term incentives.

Vesting tokens should absolutely still get staking rewards, it is not fair to dilute people’s investments, you must remember that VC’s take on risk investing early stage projects.

This proposal is simply about honouring the social vesting contracts, of which the technical implementation details of the staking module has been sidestepping.

With that being said it absolutely needs to be 100% safe, tested and audited
otherwise it is not worth it IMHO

[BoJack]

The proposal is really interesting! The only thing that worries me is whether it will harm the project in the long term.

What I mean.
If we decide to lock these staking rewards, we will have to unlock them at some point in the future.
Question: Won’t this then be an even bigger problem and put real pressure on the market?

I haven’t made a final decision yet, I want to listen to everyone opinion and make an informed decision.

[pellizzard]

If I ask GPT about vesting in crypto I get something like this:
“The vesting (lock-up) period for a token is the selected time interval during which the tokens are inaccessible. The time is indicated in the contract and the contract restricts any attempt at using the vesting token during the lockup period. This means that the tokens can neither be transferred, staked or used to provide liquidity during the lockup period.”

We perfectly know tho that “the tokens can neither be transferred, staked or used to provide liquidity during the lockup period” is not really true for most (all?) chains… not for Cosmos or Solana chains at least.

Now, in my previous life, I used to be a manager. To sell my shares I had to go through a very complex authorization process that would take some time. In crypto, the regulator is supposedly replaced by code. Code shouldn’t be changed easily but there may be good examples that could be investigated and applied. Somebody from the team could take care of that.

As I see it tho, prop #16 is essentially a signaling proposal. It signals discomfort among the majority of “retail investors”… those who bought at high price tricked by the low MC and who didn’t pay attention to the FDV because at the time nobody really cared. Now that price has fallen sharply they seek explanations and understanding.

Maybe a first step could be some sort of commitment by the team and the VCs not to keep selling and do everything possible to stabilize the price. It’s not many people involved I guess even tho there are over 60 wallets with over 1M tokens atm… A public statement and some clarity on who owns what, financing mechanisms, etc. could restore confidence imo.

[mzonder]

As fo me, proposal looks like a statement, not a proposal itself - no discussing, no investigation etc. Just a statement onchain. And even if we turn a blind eye to the violation of procedure, I strongly disagree with the idea of change agreements and conditions postfactum.

[Nemesis]

I’m currently evaluating prop #16 and its potential long-term impact on Dymension. While I’m not fully versed in all the details, it appears that this proposal could offer benefits to early supporters. However, I believe it’s crucial to have a comprehensive understanding before casting a vote. One aspect that stands out is the management of VC rewards; preventing their daily liquidation could foster a more stable environment for all stakeholders. With this in mind, and pending a clearer picture of the proposal’s full implications, I’m leaning towards a ‘yes’ vote, provided there are safeguards against market volatility.

[arizstemming]

This is one of the cases where it’s hard to find a balance.

1. I wanna make sure that our builders (some are also validators) still have the resources to continue building and maintaining the network (staking rewards)

2. On the other hand, the staking rewards of locked tokens from VCs create selling pressure that demoralize the community holding DYM.

My thoughts are,

• The team doesn’t have an obligation to pump the price
• but the team has an obligation to the investors (VCs).

If we change the code, I believe that may result in a breach of contract between the team and the investors – I have no idea what this would lead to but it will not be good for sure.

This proposal#16 feels like a short term solution to Reduce the supply side but I think we should just focus on Increasing the demand side for the DYM token. I understand that it might be hard to retain users when DYM is continuously going down, but if we let the ecosystem unwrap over the next few years along with the token unlocks I think we will see what this chain is really worth.

Like Cobie said:

You do not have to buy these tokens, even if you think the project is good.
In fact, opting out and protesting with lack of participation seems like the correct response to a lot of recent token launches.
Projects, founders, exchanges, and other market actors will have to adjust their go-to-market strategies if the existing ones are failing, or they are being rejected by the market."

Also side note:
There is no code attached in the proposal - who is going to implement the code IF the proposal passes?? Lmao

[0xFDg]

I am glad that the working group recognizes the need to address the intent of the proposal in a thorough and transparent manner.

The proposal clearly has a provocative and unrealized intent. It has made in a short time so much noise because it is clear from the price action that the issuance of new supply has not been handled properly going to penalize ALL investors who have invested in the last 100 days since launch. The ratio of rewards to stakers and rewards from blocked tokens currently have a ratio tending toward 0.2, that is, for every 100 tokens, 80 do not go to stakers.

Investors bear the business risk and it is okay for them to make profit but, calculating, to date, all rewards issued from locked tokens have largely covered the investment rounding in its entirety. The team, however, must grow the project as well as create a peaceful working environment, so it is vital that they continue to obtain liquidity.

However, seeing one’s investment lose 70 percent of its value within 100 days, despite such a small amount of working capital, is not the right way to do business and enter the free market. You will surely agree with me that the free market, if you behave this way, engulfs you, giving short life to the project.

I suggest, as a first hypothesis, linearly blocking fungible rewards originated from blocked tokens in such a way as to achieve two goals:
1 Give large room for maneuver to the team by allowing them to develop .
2 Allowing future investors to invest.

Ideal in the early stages would be of a ratio of (rewards_stakers)/(rewards_lock) of 1, where fungible rewards, derived from locked tokens, are equal in percentage to those of stakers by adopting as the unlocking of rewards a function such as :

y1 = b + m*t.

y1= fungible rewards generated by the locked tokens.
b = rewards generated by total stakers to date, with a 1:1 ratio.
m = linear unlock factor of rewards within, in my opinion, at least 5 years.

Emphasizing that non-fungible rewards would be unlocked by making them available for demobilization or sale, 5 years from the date of issuance, thus incentivizing the take of these rewards.

I add for clarity: y_tot = y1+y2

y2 = non-fungible rewards generated from the blocked tokens available 5 years from the date of issuance.

In summary, I propose that fungible tokens arising from the stake of locked tokens be equal at the beginning to tokens issued to stakers, with a 1:1 ratio so that total rewards are divided 50% to stakers and 50% to investors in the early stages of the project, increasing linearly with time.

[silent666]

In my opinion, this is a signal proposal with a statement. Even it passes, it is a text proposal, nothing will be changed on chain. It express the opinion of some retail investors.
No matter it pass or no, it worth thinking how to increase the real value of DYM and decrease dump pressure.

Regarding staking rewards for vesting accounts, I believe it would be beneficial to have a module that credits the staking rewards directly to the vesting account. This approach requires further discussion and rigorous implementation.

[sami.cumulo.pro]

Cumulo believes that proposal #16 does not comply with the procedures established by the project itself for the presentation of a governance proposal. That is why we believe that it should be reformulated in time and form. The time dedicated to debate the proposals in the forum is important for the community to vote with knowledge and awareness of the consequences that the implementation of such a proposal could have.

That said, it seems that the consequences of such implementation are not entirely clear so perhaps a more thorough assessment should be made before making decisions lightly.

[AgoraNodes]

We would like to know which accounts exactly in question. Are we talking all vested coins? Those of certain accounts only? Is there a list of accounts in question?

[rbp]

We are happy to see that this issue is being discussed openly. We are supportive of a detailed discussion here, and are open to engaging on specific implementation details if another post is made by the community outlining this more clearly.

Given the vagueness of this proposal and the lack of discussion before being brought to a vote, we have decided to abstain from voting in the current proposal. We also believe that abstaining at this time is in the best interest of allowing the community to control the project - if this is what the community wants, then it should pass.

We see Dymension as one of the most promising ecosystems in crypto and plan to be long term holders, and given that staking income is a small fraction of our total position, we are much more focused on seeing the project flourish, creating a massive ecosystem and successful long-term price appreciation of the token, rather than optimizing for short term liquidity. We are max bullish DYM long term and will act accordingly.

• Rennick Founding Partner @Stratos

[Karan-Samanvay]

From the looks of the wording, it seems ALL vesting accounts.

[Katan]

Well I want to express this, Dymension as every project that want to be considered descentralized belongs to the community, as a community we choose what we want to happen here.

I want Dymension rize, not only in price but in projects inside, right now it’s the easiest way to launch a web3 app but market is fast, cruel and don’t be waiting for a long time to solve technical issues or build great things to solve the web3 objective.

And it’s a business, so let’s forget the dust and focus on things, locked tokens are locked for a reason and it’s the health of the project, that’s what it means to so they shouldn’t be available to use them until the right time, it’s just a bug, even in Camelot you have a 6 months vesting to unstake full rewards or recieve 50% now, we can implement this too for a middle point.

I suggest:

• Rewards can be staked but rewards keep locked until each dispersion time
• Rewards have a penalization for selling now, the rest it’s burned, so everyone wins
• Rewards go to the ecosystem growth and community partitions, reason, if we lost the train all our millions of locked tokens value will be 0, so let’s fuck’ing build with all our weapons and win
• Voluntary burn of rewards of locked tokens and create a bonus for this action like: You burn 1,000 DYM now so you’ll recieve $1,250 DYM in your unlock

See ya

[Thanasis]

I think it was a bit rush proposal without giving the time to community to discuss about this , see pros and cons having as result more Fud and confrontation between people

My main concerns are :

If it is something that would be applied in code without needing lot of resources to be dedicated, not to leave other updates behind cause of this and of course if it is something safe to be done

Regarding staking rewards, even if these people are responsible for the price action ( something which haven’t seen from anyone giving facts), by just locking staking rewards now, would postpone this for some months only.
Dump could be worst with bigger amounts unlock later
So it seems to me like a short term measure

Also I don’t know how something like this could affect more projects to deploy Rollapps on Dymension

Keeping in mind that some of these projects will have also Vcs invested on them so it could be an obstacle

I would like to see the thoughts from team members also and if Vcs would share too their opinion would be even better i think

Waiting till last hours to see as more opinions as i can to decide for my vote