SIP XXXXX Introducing Insurance Fund Mechanism and SOV HODLERS reward (Edited)

Hello SOVRYN citizens, my name is SOV_HOOLIGAN, been here since Genesis, stalking you from the shadows. I decided to prepare this SIP after having discussions with many active Sovryn holders/stakers. So this is a draft proposal with suggestions that I believe will be beneficial for the future of Sovryn. Alright, there we go:

The more SOV comes into circulation, the easier it gets for future people to buy up and stake their SOV, thereby making the earlier stakers less powerful in voting power. On the other hand, if we enable a burning mechanism with the amount of SOV staked as an indicator, it will get more expensive for future people to buy up and “outwin” the earlier stakers (or core stakers). This will happen because the burning mechanism will buy back a portion of SOV from the market and burn them according to schedule.

FACT: More circulation

Assumption: More revenue in the platform

Result: More stakers from the released circulation for the revenue.

Harm: Dilution of the earlier voting power

Prevention: Burning Mechanism

Example: Bob staked for a long time, with all the coins unlocked, his Voting Power (VP) gets lower value when it comes to reward distribution. The burning mechanism solves this problem by protecting your Voting power and ensuring that by the end of the staking period, those who staked their tokens will be “compensated” with less SOV in circulation.

It is also important to reward those who hold SOV in their wallets, as this will give SOV owners a feeling to understand SOV power. Right now, there are many ways people use SOV, Liquidity Pools, staking, margin trading. What if people want to hold their coin? How can they be rewarded by just HOLDING it? SOVRYN must be rewarding in every way, with whatever you choose to do with it, even if you decide to do nothing with it . Of course, the reward for just HODLING must be less than any other way you use your SOV on the platform. But the idea is, everyone must feel inclusive. A suggestion would be to implement a pool just for SOV HODLERS with minimum stable APY, like 1%, and the ability to withdraw anytime.

Many teams work hard around the clock on many different assignments. So if we end up with unused development tokens in the future, the suggestion is to burn those tokens to improve SOV tokenomics.

The vast majority of people from the community are pleased with the SOV locking through new tokens. The suggestion is to continue using the same strategy for any future token that will be introduced on the SOV platform. SOV is and must remain the platform’s major coin, and any new token that is about to release must be in a bonded relationship with it.

Proposal:

1) Implement a way for SOV holders (not stakers) to get a value out of SOV. Fees generated, suggestion for 1%. Or implement a pool where HODLERS can keep their SOV with minimum APY and the ability to withdraw anytime without penalties.

2) Implement a Burning mechanism on the platform that will gain power when more people are staking their SOV and have several burning mechanism rankings and scheduled burns like Binance. Alternatively, burns can happen daily (a burning tracker will be required). The burning mechanism will buy back a portion of SOV from the market according to the staking rank. Suggestion for the Burning mechanism factor to implement on top of any platform fees. An additional pool can be created to act as receiver of the fees collected from the burning mechanism factor then buy SOV according to schedule. Rank Example:
image

Maximum number of SOV tokens burned from burning mechanism: 21,000,000 SOV

When the maximum number of SOV tokens (21,000,000) burn, another discussion should occur again whether this factor needs to remain in place / removed or used for something else. It will require a different SIP proposal, and the community will need to decide what will be the best use for the burning mechanism factor.

If the decision is to use it for something else, the burning mechanism factor the suggestion is to transform it into a factor that will increase revenue to stakers and LP providers. An idea would be that stakers receive 75% of the burning mechanism factor, and LP providers receive 25%.

3) Burn unused development tokens and other tokens to improve tokenomics in the future (this has no connection with the burning mechanism, any burns will further reduce the total circulation).

4) We continue locking SOV through new tokens just like MYNT, ZERO, ORIGINS.

Any comments/suggestions/feedback are welcome. I feel that with this SIP, I express some thoughts of the SOV community of what it would be nice to be implemented on the platform in the future. But I can always be wrong. So no matter the case, I hope this SIP will bring some valuable discussions.

Regards,

SOV_HOOLIGAN

20 Likes

Can’t help but agree that this is an important and intersting topic.
I’ll keep looking forward to it with the hope that it can be taken seriously by our beloved devolpers, who can help improve it and suggest what APY can be possible on such a proposal.

I absolutely agree on the:

As I understand that many people would like to stake but are afraid that one day when they not expect they could need to withdraw the tokens earlier than expected. This would look like “Binance flexible staking”, where the rewards are lower compared to the locked staking (actual staking we have on Sovryn), but let investors the possibility to withdraw anytime without risking to incur in a penality.
It might look a little scatchy at first, but I know that many people would actually stake and take part actively in this pool, that would increment SOV whole TVL and aviable liquidity.

Thank you SOV_Hooligan for sharing this proposal.

3 Likes

Hi,

I don’t see why we should reduce the supply of a governance token for a decentralized finance protocol. In my opinion burning tokens leads to more centralization instead of more decentralization. We want as many people as possible to hold SOV and we want a distributed voting power. Providing SOV rewards/ increasing supply promotes this, especially for newer users, while burning tokens goes against that.

You can stake as short as 2 weeks to get some small rewards. This should be sufficient for 1).
I’d also argue that if you put SOV in a pool as described by you, it’s not HODLING SOV anymore and just the same thing as LP’ing, borrowing, lending, staking.

I am strongly opposed to burn unused development tokens, development shall flourish for years to come.

It seems to me that this SIP looks to pump up the price short-medium term by burning supply and development funds. In addition, this SIP looks for ways to earn yield on SOV without having the penalty of locking it up, which would enable dumping “when the price is high”. I don’t think that this SIP will add any long-term value to Sovryn.

Happy to discuss this further, maybe i am wrong, but i am very opposed to this.

6 Likes

i like this SIP a lot, i was skeptical of a burning mechanism, but you made a very good case to further explore this option.

I do like this SIP. as MattBrad, I was skeptical as well. but this is well thought out.

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i’m not convinced yet. i would like to see the discussion develop and i need some more time myself to make up my own decision

its very well written, kudos for that.

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I like the idea and well put together. Good proposal imo sov hooligan. I really like the idea of a minimal apy penalty free stake and the burn.

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I love deflationary tokenomics and I think it will have positive impact on the price long term. The problem I see is SOV token will be soon dilluted by other new tokens in circulation (MYNT,ZERO,ORIGINS), and burning mechanism is necessary.

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I agree with SOV_Hooligan on this SIP. It would be good for the tokenomics of SOV

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Well thought out SIP, it will definitely help SOV holders both in the long and short terms.

I think it’s also important to mention how this can impact marketing by itself. Many newcomers in the crypto universe are now used to reflections and holding thorugh everything. They like to have the lowest effort possible.
Let’s be honest, Sovryn is not a user-friendly environment, people that are here are most likely experienced traders and people that are used to the use of decentralized exchanges.
The idea to reward holders just by effectively holding the token (to my advise) is a great marketing manouver.

2 Likes

Even when I’m very pleased with this SIP proposal, I have to recognize the pertinent recall from Sacro about the centralization concerns. I have not the skills to refute Sarco’s arguments but I’ll be happy to read the comments from others in the community regarding Sacro’s well noted centralization concern.

I think that this is a really bad idea.

It will centralise VP around a few OG wallets. I think that we should not be afraid of distributing the voting power but instead encourage it.

There is no need to reduce supply of a governance token that is designed to incentivise long term thinking that also has a finite no of tokens that will come into circulation.

I am oposed to manipulating the price by using these sort of gimics to only pump the price short term. I see it as really unethical and something that bitcoiners will hate see.

The bonding curves are doing a really good job already of taking sov out of circulation.

We need to incentivise staking and active governance, not hodling. It is a crucial part of the governance that decentralises power. We should not reward lazyness.
In my oppinion the early unstaking fee is really important and should not be messed with. If we reward hodling we loose ine of the most important aspects of the tokenomics/black paper that states that it is envisioned that the majority of the tokens emited will be locked in the bitocracy.
We should instead, focus on ways to incentivise locking into bitocracy , “scalable governance” is one if the most underated features of Sovryn.

9 Likes

Mynt , zero , origins are the “burning mechanism”.

There is no need to make a fixed supply token “deflationary”.

The most sustainable way of “pumpin the price” is to bring users onto the platform. Burning mechanism are apealing to short term speculators and i am not sure we want to incentivise that.

I believe that our goal is to bring in people with a long term view about sovryn.

2 Likes

I think this is the last thing that this proposal is, SOV_HOOLIGAN have truly expressed a concern of an very long term stakers. How so? Let’s read.

This proposal essentially ask for these things.

  1. Burning mechanism with an indicator of the amount being staked(not by the increase of circulation)

This will help more people to stake their SOV.

The part where the indicator is “amount being staked” says a lot about the intention of the proposals; that is to encourage staking.

This is how i think it is,

When someone is staking they are getting more knowledge and experience with the sovryn platform and it’s ecosystem, the burning mechanism with amount staked as the indicator it values this experience and knowledge.

Say this mechanism is not implemented, with more SOV coming into circulation, it is as if it’s saying indirectly or fundamentally that we don’t value the experience and knowledge the stakers have gained along their journey + we don’t like you.

A person stakes his SOV during the times when sovryn is not even used in countries, he is happy to be part of this project and proposes SIPs and go through extensive critiquing of each and every new proposal that shows up and with his and other members of the community at that time takes this project to an position where the Sovryn is know and used by several countries worldwide.

Now with all of his hardwork the revenue the one that worked hard gets from the platform is only lowering because many people know about sovryn and want to stake their SOV due to his hardwork. Yes, ofcourse as the number of users increase the fees also increase but at the same time the number of staker will increase exponentially due to boosted confidence of sovryn being used in COUNTRIES! So the net effect will be lowering in fees earned by the earliest staker when compared to his hardwork.

Since this proposal have an hardcap on the number of SOV that can be burned my concern for the centralization is nullified.

  1. Rewarding the SOV HODLers

Yes many people is holding SOV, and they will be less likely to sell if they are getting a small percentage for holding SOV.

Why i think so?

Let be frank here, almst no one will be able to catch the top of the market and many people will come to conclusion to sell their SOV when the price is too low to be sold for. But what if they have an incentive to just hold their SOV? Will they sell it? I read a research paper somewhere that those who sell when the price is too low are men who have families to feed. I think it will be little relief for them to get rewarded for being part of Sovryn platform by holding SOV and they have missed the top already, so yeah…

This can also be seen as dividends(mini), all the major revenue should go to the stakers at any point in time.

  1. Burning unwanted development tokens.

I think this part is not required but an dashboard that shows where are all the tokens now is very essential. It will be a great add-on for the transparency provided by sovryn.

@yago @Ororo i would like to hear your opinion on this proposal.

4 Likes

this is a very interesting proposal, I do agree that the burning mechanism based on the staking SOV is a great idea.
for 1) the 2 weeks stacking is. great starting point, but maybe we need something different with less commitment to get more people in, maybe a small withdraw time, with less APY and no penalty would help

so the protocol should spend funds to buy back tokens from the market and essentially burn that money just to preserve early stakers Voting Power!? Why should we consolidate the position of early stakers and discriminate against new stakers?

21 000 000 x ($24.5 - present sov value) = $514,500,000. Where do you propose these funds should come from?

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Hi guys, I think this SIP is a great discussion, but I think it’s very early in draft. I see as the most important thing about sovryn is what the project proposes in term of a change of paradigm. As I see, we are still very few people who know about it, although that will change pretty quickly.

Without trying to be negative or reluctant to the ideas proposed in this SIP, I wonder about what could the effects of these decisions be on the trading psychology. I guess most of us have seen what is happening with the various NFT gaming tokens, for example. Those tokens are designed for a specific use, but when many people sees their volatility, they start to trade them without investing in the games or even being interested in the project. Of course this is something that no one can control, but… I think that these proposal may be more atractive to “take advantage” of SOV price and use than to keep what it stands for on tracks.

What I think could be a good parameter to take into account would be not just the amount of SOV but the amount of time staked and when it has been/is being staked.

For example, If someone staked SOVs for three years when the project started, It should weigh more than the person who entered long after and just staked for some months.

I think that price potential could be something attractive for investors who do not really care about sovereignty or even to institutions which are against it, to manipulate it. As long as main focus is ideological and the economic reward is not more attractive, more truly focused people on what sovryn stands for will join the movement.

I hope I made my point clear, I don’t mean I wouldn’t like a pump in the price or changes in staking, but I guess that this should be really taken into account regarding the importance of what sovryn proposes.

1 Like

Could you maybe say more about the problem that would motivate the burning mechanism?

Dilution of voting power is not in and of itself a bad thing. It’s bad if no new users are staking; but it’s actually a good thing if the voting power gets thinned out over a growing network of participants (= decentralization of governance). We want to decentralize, so dilution of the voting power of early stakers is precisely what we should want. To get the healthy sort of dilution, it’s important that the high rate of inflation goes together with the addition of further value (in particular further, diverse forms of utility for SOV), but this is what is already happening. Let’s not try to cling to our (voting) power as early Sovryns, that has never done any form of governance any good.

5 Likes

I dont think it is fair to believe that this is a ‘‘pump’’ SIP or to enable whales to dump when the price is high. In my opinion the target for this SIP is for long term. I would argue that this is a way to ‘‘enable dumping when the price is high’’. This is not the point here. There are many people with small stacks that are afraid to stake as they want to be able to have their coins at any moment. There are people who maybe do not want to stake as SOV is their only asset and they want to be able to make use of it if they need it for any reason without having a penalty to slash their stack. You name the reward, it doesnt matter in the end, it can be the minimum possible you can think of. Thats their choice. But they have SOV so they are already part of the community. ‘‘Enable dumping when the price is high’’, lets be honest here, all of us at some point are going to sell part of our SOV to cover urgent needs/expenses/retirement/2nd wife/whatever. I would say to focus more on the idea rather than the reward - maybe the way is not the most accurate, maybe there can be a better way to reward simple people who are holding SOV. This is a draft proposal which means ideas can be discussed and things can alternate.

Sure, the way I see it is, lets say you stake your stack for 3 years and imagine having a pool of Voting Power (VP). You have lets say for example 1% of that voting power in that pool. However, with more coins getting into the circulation, the amount of voting power that you have from the that pool will become less. So your 1% of total VP will become 0.8%, 0.65%, 0.5% etc. Unless you keep buying SOV all the time to be around the same levels. But what are the consequences of dilution of your voting power? in the long term you will have less airdrop rewards, less fees. Unless any airdrops and fees are based depending on the voting power it self, for example above 10000 VP will get XX amount of airdrop, and not having airdrop/fees distributed based on the Voting Power pool. I hope this makes sense.

I would have to agree, maybe I havent expressed my thoughts correctly on this one. And I want to grab this chance to say that our teams are doing a fantastic job and the leadership is amazing in communicating with our community. Personally i find the great communication we have extremely important for the long term plan that Sovryn has. And this proposal has by no means anything against anyone. I understand that our teams are working extremely long hours to deliver, which is something I respect a lot. The proposal of burning any ** future unused** development coins has to do with lets say we have a big allocation board of SOV that will pay X,Y,Z deliverables. By completing several targets and having spare SOV a burning can be beneficial. I would be interested to see a dashboard, we recently voted a SIP that unlocks around 13million SOV for the exchequer committee. I will personally find it very useful.

1 Like