XP-7: Increasing The Unstake Fee To Better Align With Protocol Growth

As you all know the unstake fee is is currently 1.75% although this may be sufficient in the future when we develop as a more robust ecosystem with diverse products, for now I think that we need stronger deflationary pressures along with better incentives to encourage long term growth. Other protocols for example such as the Graph incur a token burn along with a thawing period to withdraw, while Aave has a 30 day cooldown period as well.

Keeping this in mind I think the current fee of 1.75% to unstake is far too low given that there is no “cooldown period” and that it can be done instantly also;

1) The rewards rate (and inflation) in the staking module is a generous 53.7%+

2) Most people who unstake do so to sell which further creates inflationary pressures on the xToken ecosystem.

3) Current Marketcap and illiquidity cannot support sell pressure without lowering APR thus making using xToken products less attractive and lowering AUM.

I propose that we increase the unstake fee to 5% and direct 1% of these funds to the xToken treasury. This would encourage users to stake their funds longer rewarding hodlers, while also providing funds to the treasury which will be used to benefit the ecosystem. I see this encouraging “good behavior” and it could also have the effect of luring in more stakers who would prefer a 4% over 1.75% tax on unstakers.

I think 5% is good because it requires about a month of staking, but would like community input on this topic, as I think it can be tweaked upwards or downwards.

Thanks everyone!

  • xChad
6 Likes

While I think increasing the unstake fee during this stage is a viable option, I think a larger tweak/overhaul of xXTKa is necessary. I’m currently collecting my thoughts together for a separate proposal.

2 Likes

I believe 5% is too generous for someone who staked yesterday and too harsh for someone who staked for nearly a year.

I would prefer to see a linearly decreasing penalty over a full year. It could be either 1%/month (12–>0%) or 0.5%/month (6–>0%).

While 12% seems large, we want to reward stakers with a long term vision for XTK over a short term vision.
Those who unstake/sell are often doing so in a panic moment during a market-wide collapse and chances are their entire portfolio is already down by 20-25% so 12% seems gentle in comparison.

3 Likes

Perhaps 10% unstaking fee with a declining ratio per staking month?

Maybe something tied to APR?

Or maybe a percentage halving after 6 months to 5% penalty?

3 Likes

I agree with increasing the unstaking penalty but maybe 5% is too high.

I also agree that it is more relevant for newer stakers not so much for long term supporters of xToken. Linearly decreasing makes sense but my concern is that this would require too much of overhaul to reengineer. Progressing forward with new products is more important IMO.

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Yeah I think might be too complicated considering transferred XTK as well :thinking: and rXTK

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But am in favor of increasing fee

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I am not in favor of increasing the staking module exit fee, as this time. This may turn away new investors due to exclusivity of such a high fee and many would prefer a more liquid construct anyway. Under the current contract, the framework that exists is relatively inviting to new users and I believe the team built this with that in mind.

However, I do agree with some of the above statements. A linear decreasing penalty over a year is a great idea. We can also consider how these tokenomics may play a factor in the future DAO. For example, one could lock XTK into the staking module for 30 days, 1.75% exit fee, and 1x the voting power. A 90 day lock could include a 1% exit fee, with 3x the voting power. Incentivize those better who want to play a role in building the protocol.

1 Like

Lots of good ideas that can be used for the future Dao I also think that changing the fee could be seen as reactionary by new investors myself, I do think the feedback is mixed and have mixed feelings about the proposal myself. The “best” proposals would require overhauls that are time intensive and better for a Dao like you mentioned. Maybe voting power could be contingent on exit fees without incorporating a lock or done linearly.

lmao2

The increase in unstaking fee will not discourage new investors from investing in the project, but it might discourage new investors from staking and encourage current stakers to unstake. I support the increase in unstaking fee (“10% unstaking fee with a declining ratio per staking month“). Please provide a written notice next to the staking field alerting stakers of the unstaking fee. Please provide a written notice next to the unstaking field alerting unstakers of the unstaking fee. That will provide more transparency to stakers. There are projects out there that charge sell fees that are higher than 10% and XTK doesn’t charge sell fees. This proposal is for charging a higher unstaking fee to stakers who have earned interest from staking. I also support providing 2% (20% of the total unstaking fee) to the treasury.

In the meantime, I will support the 5% unstaking fee and support sending 1% (20% of unstaking fee) to the treasury if it is easier to implement.

The more rapidly the exit fee decreases, the higher it can start. 10% is not terrible if it’s 5% after a couple of weeks and 2% after a couple of months. Ultimately it should go down to at least 1.75, as this is what existing stakers were promised.

A high early exit fee is also obviously good for those who remain staked, although some of that fee should probably go into a treasury or insurance fund or whatever. It would be amazing if fee rewards could somehow be weighted toward those who staked at a higher price than current.

Exiting doesn’t have to be economically wise, but exit at any time should be possible. Freedom is always best.

1 Like

I support this proposal.

1 Like