This temperature check is focused on updates to the initial LQ staking rewards model launched on mainnet last week. The initial model is conservative in its implementation for a simpler rewards calculation system for the Liqwid devs to implement. In addition, following community feedback on the APRs and the overall distribution strategy which aims to reward long term LQ governance participants while not punishing shorter term LQ stakers. Staked LQ enables users to vote on governance proposals, delegate their voting power to community delegates, and co-sign proposals using their voting power (delegation and proposal co-signing is non-custodial and the staked LQ is always in your control). With this our core team proposes the following changes:
Introduce a base rate of 5% APR which is time-weighted depending on the length the user stakes LQ in the LiqwidDAO. The Aquafarmer held in the user’s staked wallet is currently being calculated as a time-weighted boost so this is just making both the LQ staked in addition to the Aquafarmer boost function on a time-weighted model. This update means users no longer will need to stake for a 6 month minimum and any period of time LQ is staked users will accrue a time-weighted 5% APR return.
Users who stake for a full 6 month period (180 days continuously without unstaking) will earn a 30% APR on their staked LQ, in addition to the normal Aquafarmer boost based on rarity tier.
Users who stake for a full 12 month period (360 days continuously without unstaking) will earn a 50% APR on their staked LQ, in addition to the normal Aquafarmer boost based on rarity tier.
Important points to remember: Each deposited stake action is counted as its own individual allocation. This means per deposit, as you add/remove/create new LQ stakes each of these actions is treated as having its own historical length. This gives users the flexibility to complete any action on their existing LQ stake position.
The same historical length applies to each Aquafarmer send/transfer from a user’s staked wallet. This means if you initially begin staking LQ but later you send an Aquafarmer to the staked wallet, the Aquafarmer boost will apply from that day forward to your existing LQ stake position.
For users who wish to delegate to multiple LiqwidDAO community governance delegates at a time, multiple LQ stakes must be created. This can be done today by starting multiple LQ stake positions (e.g. split in half if you want to delegate to 2 LiqwidDAO community governance delegates at the same time). Delegation is fully non-custodial and allows community governance participants you wish to support to vote on active governance proposals using your LQ voting power in the LiqwidDAO. This is a core feature of Agora’s on-chain governance module.
*The Aquafarmer boost held in the staked wallet will apply to all LQ stake positions held.
Do you support this increase to the LQ staking rewards rate and update to the rewards model?
I think adjusting staking to this type of level would be a move in a positive direction, but exact levels need to be determined in a comprehensive framework that takes into account some other positive changes to the tokenomics that have been put forward in other temperature checks. Adjustments to farming rewards, emissions rates, and staking are interdependent on each other and need to be considered jointly. If there are bones for this already created I would love to see them. If not I would like to see a forum channel dedicated to this end entirely (New Tokenomics Draft). Starting a fresh channel will make it easier to keep track of this specific discussion. I vote “yes” to an increase to significant levels and 5% to stakers in the time-weighted fashion. Final levels need to be determined with other major tokenomics changes in mind.
Tell me that you’re panicked without telling me that you’re panicked. Increasing APY from 5% to 30% is not a tweak, it’s an admission that you believe LQ is massively overvalued and are trying to artificially support the price. This at best kicks the can down the road for 6-12 months.
We all know it is overvalued still. But for being the largest lending protocol on Cardano atm, who’s to really say that? Price discovery is naturally occurring in the market now for the first time. And the inflation curve will be straightening out if/when this passes proposal vote. I would like to see more discussion on how those % were selected and why though. I like the idea of it because it rewards long term stakers & early adopters at the same time. The people most likely to care about governance. But I think 15 / 30 would accomplish that too.
I think these are very fair numbers and are a logical step forward in supporting those who support governance, as well as giving them reasonable compensation for their opportunity cost.
@DC1 : I agree with the 1st changes. Time-weighted model would be awesome. Other than that, I think I need more documentation to read & time to understand the on-chain governance in Liqwid Finance
Could we have an APR curve over time (months)? If the APR is proportional to time (5% per month; 6 months = 30%; why would 12 months be 50% instead of 60%?)
I voted in favour of this temperature check. Mostly because I like the introduction of the base rate of 5% APR (plus AF bonus). I am however not sure about the raise to 30% and 50% APR after 6 and 12 month - that seems a bit excessive to me. Maybe something more like 9% and 19% after 6 and 12 month.
My idea would be to introduce a small incentive for actual voting on governance proposals: maybe like additional 1% APR if you voted in at least 50% of proposals in the 6 or 12 month.
I voted no, however, I am for the changes with a slight change in values. would like to know further why 30% and 50% and it seems a bit excessive in my opinion.
We can model this for various scenarios but it ultimately depends on the % of LQ that is staked in Agora. For starting we can model this based on the current LQ staked %.
The main response I am seeing from these comments are 30% APR for 6 months and 50% LQ for 12 months feels excessive. To be clear these amounts are not set in stone, as this is a temp check they can of course be adjusted. Either way we feel strongly that LQ stakers in the first year should receive the highest reward APR to incentivize governance participation and reward early governance participants with protocol ownership should receive the highest reward APR. We also think this should be gradually decreased and to @LapinMalin point we are simulating the length LQ staking rewards would last given this amount, though with the shift to a dynamic emissions schedule for the LQ user distribution allocation we believe the emissions to LQ stakers should be the sufficient enough to encourage maximum staking (and thus governance participation).
No one is panicked at all and what you just said does not make any sense when you take current APRs of Cardano DeFi into consideration. Minswap LQ-ADA LPs are currently earning 55% APR in boosted MIN yields. The protocol needs to provide a sufficient APR for LQ to be staked and used in governance. It’s that simple. Also you should really learn how price discovery works, LQ holders and market participants will determine what the token’s fair value is, not a temp check proposal to update the staking APR.
I support the idea if increased staking apy in general. Wirh high apy (30 and 50) as suggested I would add some limitations though.
Kind of a anti-whale-limit. Meaning that there should be a limit for the increased apy. For example that they only apply for 1000 LQ. If for example 1300 LQ are staked, 1000 would get the high apy and the remaining 300 a lower apy that would have to be agreed upon. The basic idea can also result in a more complex model than in the example whichvis just for illustration. (I know that people might game the system with multiple wallets. Maybe something can be done to prevent this?)
I would make the high apy a time limited offer to reward early adopters/users. Maybe guve them only to stakers who stake their LQ within 3 or 6 months after the decision.
