Should All Rewards Have an Unlock Period?

From 18th August 2021 onward, the RAI protocol will officially have staking as another layer of defence in case of bad debt. The staking rewards will be able to be claimed as follows:

  • 25% of the rewards can be claimed right away every block
  • 75% of the rewards are unlocked over 6 months from the moment the staker claims them

This is different from the way rewards are distributed right now for RAI LPs, borrowers etc. We got feedback from some community members that everyone should have a 6 month unlock for their rewards so that we level the playing field.

Should all rewards be unlocked similar to the ones for staking?

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Yes. Maybe with multiple steps (25%no lock, 25% on 3th month, 50% on 6 month)

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Some supplimental numbers:

  • Current FLX in circulation: ~100k
  • Rewards (after the start of staking): ~15k/month
  • RAI supply growth: 7m (June bottom) → 19m (now), +170%/2months (~+65%/1month)
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15% monthly inflation is insane

I’m on board with escrowing the rewards. But as I’ve previously mentioned if rewards are being escrowed, I’d like to retain voting rights.

My understanding is that the current rewards campaigns are intended to create enough demand early on in RAI roadmap, so that rewards can be switched off further down the road and the system will be self-sustaining. I’m in favour of that.

The current FLX emissions are too high and need to be reduced. But doing that while also switching to a stricter vesting model for all campaigns would turn off a lot of degens and frankly we need the demand they bring to the table. More mature platforms like Aave already have a good degree of natural demand and can do strict vesting and still be attractive. If we turn too many of degens off too early, we might end up havnig vested rewards for an ecosystem with stalling growth which is in no one’s interest.

Instead I’d be in favour of decreasing rewards; not vesting for campaigns except staking (participants are likely already quite long FLX and wont be deterred); and instead moving to continuously accurred rewards that can be claimed at any time.

That’d make FLX rewards campaigns more accessible and tangible for degens, hopefully sufficiently so to offset any fall in demand from reduced rewards. It’d also spread token dumping out more evenly rather than over one large dump each month, making reward APYs seem more stable and attracting some more conservative participants.

I understand that more frequent rewards unlocks is on the roadmap, I’d be in favour of that. If we do decide to do more vesting, then I think these two things should be introduced together and hopefully they can offset one another a bit.

Reducing rewards is on the way.

Continuous accrual isn’t really possible with mint + LP. We can at best try to give out rewards every 2 weeks starting in late September.

Thanks Stefan for the quick response!

If we did move to vesting for all, would be looking at doing so before late September or not until afterwards?

There’s no consensus on what I read above on moving to vesting so nothing to be done now.

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Maybe Sushi’s experience can be of use here, they used to lock a fraction of the rewards for a couple of months. This is a disincentive for farmers that needs to be counteracted with higher yield because we are competing for capital. So lowering the rewards and adding a vesting is a double negative effect for farmers.
Long term believers will give more value to locked rewards, short term speculators will probably choose farming other protocols. In this sense, locking rewards is good if we want to attract a more loyal type of capital.

Having said this, I’d rather have the same locking rules for everyone, stakers and common farmers. Stakers take the risk of being slashed, they should get more rewards than common farmers.

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