Staking "Plain Vanilla" Plus vXTK

XTK Value Prop

XTK’s value is derived from the ability of it’s owners to earn management fees on the various protocols under management. Therefore, it is normal to assume that “plain vanilla” version of staking, would take the form of XTK owners, staking their tokens in order to earn management fees on their % of ownership in a pool. However, below is a list of ideas that tries to increase the value further by adding more nuance and competition into the mix:

Term Locking & Inflation

Inflation helps motivate XTK owners to lock up their tokens and boost it’s value… Those who do, will get a larger percentage of the network over time and those who don’t will get diluted… In order to encourage long-term locking of value, we could introduce term-locking which would follow an exponentially increasing inflation schedule:

Lock Term Inflation APY
6M 50%
1Y 65%
2Y 85%
3Y 110%
4Y 140%

Inflationary XTK can be claimed at any time, and is earned based on the elapsed time since the last time of claim. The claimed tokens are unlocked and can be either sold or staked in order to compound inflation.
Note additionally one can add an additional optional incentive to continuously claim, as rewards that are not claimed every 3 months are foregone forever. This ensures that the community remains active throughout the lockup period.

Inflation & Management Fee Split

Finally, to further create value from nothing :sweat_smile: , we can split the management fee farming from the inflationary XTK farming by introducing vXTK, a subtoken that is earned seperately. Each XTK token earned by inflation also earns users a proportional amount of vXTK. vXTK is a transferrable token that can be sold or can be staked in pools assigned to one protocol under management. Therefore, people can stake their vXTK in xSNX mangement pool to earn management fees related to the xSNX protocol, or if they find better returns elsewhere, they can at any time unstake and move their tokens to xAAVE pool for example.
Management fees are claimable at any time and are disbursed into the respective protocols each week, however, those that are not claimed within a week are added to next week’s pool to be earned by those who claim regularly. vXTK owners can move their tokens wherever they find the maximal APY, with different game theoretic competitions playing out as vXTK is shifted from one pool to another to maximize the APY until a certain equilibrium is reached.

Note that vXTK minting does not need to be on a one-to-one basis with XTK inflation, but can be a parameter configurable by XTK owners via vote. So a parameter of 2 for example, would mint 2 vXTK for each XTK claimed by inflation.

3 Likes

are you suggesting inflation coming from the 50% community allocation or incremental inflation above the current max supply?

That’s a reasonable question, we can start off the program as being funded from the community supply, and see in few years how the community feels about continuing it…