| id | Title | Status | Author | Description | Discussions to | Created |
|---|---|---|---|---|---|---|
| TIP-182 | Direct revenue share to stakers | draft | Danijel | Start distributing SB fees directly to stakers | discord.gg/thales | 2023-11-08 |
This TIP proposes significant changes to THALES tokenomics.
Safe Box fees will no longer be used for buyback and burn but rather be directly distributed to stakers.
Staking inflation is to be reduced from 105k a week to 40k a week.
The protocol is currently spending $2,400 per day for buyback and burn. This makes for $16,800 spent per week, $72,000 a month and $876,000 a year.
At current THALES price this makes for 8,000 THALES a day, 56,000 THALES a week, 240,000 THALES a month, and 2,920,000 a year, or 3% of total supply per year.
THALES has a fixed supply od 100 million. 2.5 million has already been burned to date.
Per initial tokenomics, staking and gamified staking and LP incentives were planned for 4 years as means toward fair distribution to most aligned users. With this in mind, we aimed to use protocol revenue for buyback and burn, this increasing the final share of all aligned users during the distribution phase. If 30% of circulating supply would have been burned in those 4 years, the share of a user who has been staking and holding throughout that duration would have been increased 300% due to autocompounding of staking rewards.
Latest community and market sentiment show us that this approach is not currently appreciated. While the burn feels very tangible, criticisms rise about the emissions being higher than the amount of tokens bought back.
Following that feedback, I believe the best course for the DAO at this point is to start direct fees distribution to stakers and reduce token inflation.
At $15 market cap, the $876k a year makes for 5.84% APR. This is if all THALEA circulating would be staked, which isn't realustically the case. At estimated 30m THALES staked, the APR is close to 10% which is considered to be a very good return in any industry.
The Safe Box fees have been treding up last few months, thus I believe the rates above should be maintainable, with upside potential due to upcoming product improvements and account abstraction implementation.
Distribute all accrued Safe Box fees in a staking round to stakers. Fees are to be claimed weekly, same as THALES staking rewards, within the same transaction. Unclaimed fees rollout into the next round.
Reduce staking inflation from 105k to 40k, 50% of that going as guaranteed rewards, and 50% as bonus rewards per gamified staking leaderboard.
All Staking rewards (THALES and fees) will distributed across chains using CCIP. Therefor the APR for each staker will be identical no matter which chain he/she stakes at.
Staking rewards are to be reduced by 0.5% every staking round per previously votes in TIP.
With the focus on fees sharing, there is no more reasoning to keep LPing gated, therefor AMMs LPing will be ungated across all AMMs and chains.
This TIP will be released once all functionality in it its ready. Until that time, daily buyback will be doubled from $2400 to $4800 with a hard stop at 50k left in SafeBox which continues to serve as insurance against oracle failures.
Copyright and related rights waived via CC0.