What’s the best role for XTK in the ecosystem long term? Consider a range of future xAssets and xToken Lending. What would a theoretical staking return be composed of? What rights and responsibilities would stakers have?
Rewards should be sufficient enough to facilitate growth and align incentives. We could go for the traditional approach of redirecting a % of fees into buying back XTK and redistributing to stakers and / or some fee burning mechanism. I also think a modified version of time-weighted voting like CRV would be cool.
Brocephalopticus, I gotchu. Below are 2 non negotiable roles of staking XTK. Use of excessive puppy dog eyes has been granted and was applied with reckless abandon!
Staking XTK can have many a use case, putting non XTK governance tokens on the bench, taking a time oot. What happens when staking XTK, is that it is used to extend health factor of loans from xtoken lending market users when otherwise they would be liquidated.
An augmented version of typical lending markets could be used.
Say xincha has a LTV of 50% a high heat warning at 70% and liquidation threshold at xx%(no doubt frequently adjusted by governance, meme potential: Actor1: “what are you doing today?” Actor2: “I dunno, prolly go fiddle with the xtoken knob.”)
What high heat warning means, is that typically the position would have been liquidated on some other lending service. However, on xtoken, governance is willing to let it ride up until a certain point. The understanding is that if the situation doesn’t get rectified by the user, the XTK stakers will be the new owners of the collateral.
There is some risk involved in taking on a leveraged position past the high heat warning marker, hence why it is more often the liquidation threshold for many lending services. As someone once said: “With great risk brings great…” I don’t know, but it was meaningful and profound and I feel it is applicable here.
The reward is of course an additional interest rate applied on top of the collateral owed to governance / or treasury. The interest rate curve can be quite aggressive of course, and taking a page from 1inch, can be voted on and averaged and adjusted frequently, borderline wantonly, as can be seen on the 1inch page of adjustment dials.
So, worst case scenario? The high heat warning positions are liquidated and governance / treasury ends up with collateral of their own platform some xassets and maybe some ETH were xtoken to purse AMM lending markets. These should be very agreeable for governance / treasury to have in their possession, as the success of xtoken depends on xassets anyway. This would diversify the treasury and as we all know, those assets grow with time.
Do you like unrestrained, perhaps misplaced, maybe overambitious optimism?
Circle your answer: yes / yes
To further augment the XTK staking incentives, the staked XTK could be borrowable as an asset. We open the option to short our own token on our own protocol, WE DARE YOU! We’ll one up our competition, we’ll newspaper coupon clip match our competitors best rates! Why?
Because we could charge interest in DAI. This is more inconvenient sure but we’re sweetening the deal with low APR for borrowing. So, the DAI accrues somewhere not in the imagination. That DAI earned from XTK lending through the staking contract is a safety feature. The DAI is an option for XTK staking to liquidate the leveraged positions in xToken lending that have been let to ride past the high heat warning LTV ratio, if needed. Black swan flies in announces: “u up?” Governance makes it rain in DAI, the big bird, it tips its hat and bids us good eve.
The DAI isn’t necessary for every liquidation only if the gap between xx%(the knob governances can fiddle with to pass the the time.) and 100% LTV ratio is crossed, which if done right should only be a concern in black swan events. The DAI can build up to certain thresholds, some % of TVL of xToken lending markets. Past the threshold that DAI can be used for a variety of uses, lottery tickets were mentioned in other corners of this forum, it could be used as community incentives & grants for building. Whatever whimsical fancies XTK governance can dream up.
It would be easy to say, but ser! Ser, lending out XTK opens up protocol risk, what about vote buying?
make xXTK(wrapped staked XTK) the token with voting rights. Enforce time duration, etc… there are ways around having your entire token supply on the open market being a risk.
And that would be a discussion when both of these use cases are forced upon us.
I like XTK as a productive asset, i.e. one that produces cash flows to owners via a pro-rata share of the staking pool. For example, if the xAssets and related xToken products generate $100 worth of fees, XTK stakers can claim a share of the fees equal to an individual’s share of total XTK staked. If there are 100 XTK staked globally, and Alice stakes 1 XTK, Alice can claim 1/100th of the total fees, or $1.