Idea for changing the staking model
You propose a staking mechanism that impose increasing returns based on the lock-up period of funds: the longer you lock your tokens, the higher your reward rate. Conversely, a short-term commitment results in a lower yield.
This approach creates a financial trade-off between liquidity and returns, encouraging investors to adopt a long-term outlook while discouraging pure speculation.
Critique of the Tiered Mechanism
1. Short-term Supply Shock
- If several participants initially committed for a 10% return and this is later reduced to 5% for certain durations, they may withdraw their funds en masse.
- This abrupt exit would increase the supply of circulating tokens, putting downward pressure on the price.
2. Speculation and Stakers on Polkadot
- Contrary to the assumption that such a system would limit speculation, there are virtually no pure speculators on DOT: Yield investors, who are by definition long-term investors.
- Pure speculators do not engage in staking, as it involves locking up their funds.
3. Advantage of Rapid Unstaking
- The ability to quickly unstake is reassuring for those concerned about crypto market volatility.
- This option attracts new participants:
- Investors already holding DOT can stake for short periods.
- These short sessions reduce the circulating supply and energize the ecosystem.
4. Balance Between Stakers and Speculators
- Staking and speculation are two distinct but complementary dynamics.
- Currently, Polkadot only offers incentives for stakers, with no dedicated mechanisms for speculators.
- This asymmetry creates an imbalance, a loss of confidence, and reduced demand (and price) for DOT.
In summary: For your system to be viable, the current logic of “rapid end-of-year destaking” must be completely rethought. Users should be given a choice between several options. In that case, the system becomes both brilliant and viable, as it incentivizes staking for both long-term and speculative visions.
Proposed Mechanism: Lock-up Tier System
1. Standard Lock-up Durations Offered
Users choose fixed lock-up periods:
| Tier | Duration |
|---|---|
| Bronze | 2 days |
| Silver | 28 days |
| Gold | 6 months |
| Platinum | 12 months |
| Diamond | 2 years |
2. Associated Reward Scale
| Tier | Duration | Annual Rate (APY) |
|---|---|---|
| Bronze | 2 days | 4% |
| Silver | 28 days | Current APY |
| Gold | 6 months | Higher than current APY |
| Platinum | 12 months | Higher than current APY |
| Diamond | 2 years | Higher than current APY |
I’m not smart enough to model APY bonuses and time ratios. All I can say is that the current 28-day period, if kept, should match the current APY to avoid causing a supply shock. If we want to reduce it, we can do so by offering a lower yield — but still higher than the dollar — to encourage staking and help fight real-world inflation.The problem is that the “Higher APy” is funded by those who choose to go bronze. But right now, for me, those people don’t exist — so I don’t know how we’re supposed to fund it in the short term.A dynamic vision makes more sense than a fixed one, but I believe we recently removed that dynamism in favor of a fixed approach — or maybe I’m wrong?
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