We’d like to share some more details on the upcoming staking program as well as give some thoughts on the thought process behind things and then answer all of your questions!
We structured the design where stakers are able to stake PERP and receive sPERP in return. sPERP is a non-transferrable ERC20 token and is only used to represent your share of the pool
As is before, stakers are able to share in a percentage of the protocol’s trading fees as well as receive rewards from the unlocked DAO treasury fund (see https://gov.perp.fi/t/proposal-unlocking-perp-tokens-for-growth/245?u=tongnk for more details)
Once staked, the tokens are locked up and there is a 14 day cooling off period to withdraw. During this period, tokens do not accrue any rewards or fees. For example, if Alice initiates withdrawal of tokens on the 1st, she will not receive any rewards from that point in time. She is then able to withdraw the tokens on the 14th.
Proposed Initial Values
Initial Fee Split
For the initial fee split we would propose a 0% to start with. The reasoning behind this is that we’d like to continue to build out the insurance fund first and then after we reach a good level of stability then look to start increasing this value. (For those interested we are working on a report with Delphi Digital which defines what a good level of “stability” looks like and will share with the community once it is finalised.)
To compensate we would then like to propose having increased rewards
We are proposing to have 150K weekly PERP distributed to stakers - this is >1M USD at the time of writing. Tokens are vested for 6 months
Similar to our liquidity mining proposal, we would also propose to have this staking program run for a period of 3 weeks as a trial and may modify or extend after seeing the results of the program
Having talked to members of our community it seems that I should have provided some more information around why we are proposing a 0% fee.
As you may know we are currently working with Delphi Digital. As part of their initial recommendations based on modelling, they are suggesting that the insurance fund balance should be at least 5% of the open interest.
Open interest currently sits at around 32M meaning we should have about 1.6M in the insurance fund. The Insurance Fund balance is around 1.2M currently so we have about a 400K shortfall. This is also one reason why we wanted instead to have this as a 3 week trial. Ideally the insurance fund continues to grow and once it surpasses the 5% mark then we as a community should look at increasing the fee split to greater than 0%
Will also note that we chose to have the 150K PERP which is at the time of writing >1m in USD. This is significantly larger than the fees of the last 7 days (~300K) and we wanted to make it this way as we know that the community was looking for a higher fee split.
Again, this is all up for discussion but wanted to clarify a little bit more around the thinking and reasoning