RRC‑XX: Fund Phase 2 of RARI Staking Rewards

#1

Authors: StableLab / Kaf
Reviewers: Anna Riabokon (RARI Foundation)

  1. Summary

This proposal seeks approval to authorise the staking rewards distributor contract to spend up to 15,000 RARI from the DAO treasury to fund Phase 2 (months 5–8) of the governance staking programme on Rari Chain. These funds will be used to deliver the second tranche of staking incentives, which target a 15 % annualised APR for an estimated 300 000 RARI migrating and delegating to Rari Chain. The staking incentives programme itself was approved via RRC‑34: Enable RARI Staking, and the reward amounts for each phase were outlined in RRC‑43: Rari Staking Incentives Program. After the Phase 2 rewards have been distributed, the programme will be paused to allow the DAO to reassess the incentive structure and governance alignment before committing any additional rewards.

  1. Background & Motivation

Migration and Staking Incentives

Rari DAO is migrating governance from the Ethereum mainnet (veRARI) to Rari Chain (stRARI). To bootstrap adoption of the new L3 and align token holders with delegates, the DAO approved a one‑year staking programme with diminishing APRs: 25 % for Phase 1, 15 % for Phase 2, and 10 % for Phase 3. The goal is to attract roughly 300 000 RARI (matching the amount locked in veRARI) to the new staking contract.

Phase 1 allocated 25 000 RARI for rewards and successfully attracted ~140 k RARI in TVL. However, the realised APR (~56 %) was well above the 25 % target due to lower than expected participation, and approximately 4 200 RARI in rewards remained unspent. Community feedback and the Season 1 report indicate that participation plateaued and oversubscription raised questions about cost‑effectiveness. Continuing into Phase 2 at a lower APR allows the DAO to honour its commitment while reducing emissions and providing time to recalibrate the programme.

Phase 2 Objectives

  • Lower APR: Reduce the annualised yield from 25 % to 15 % to conserve the incentive budget and encourage sustainable participation.
  • Encourage delegation and governance engagement: Reward stakers who delegate their voting power and participate in on‑chain governance.
  • Pause after Phase 2: Once the Phase 2 rewards are fully distributed, the staking programme will be paused. This pause will allow the DAO to analyse updated metrics (e.g., voter turnout, delegate participation, distribution of staked RARI) and consider dynamic or participation‑linked reward structures before launching any further phases.

  1. Proposed Mechanics

  2. Reward formula and amount

  • The reward amount for Phase 2 is calculated using the approved formula for the staking incentives programme:
    RARI incentives = 300 000 × Target APR × (Phase duration ÷ 12 months.
  • With a target APR of 15 % and a four‑month duration, this yields 15 000 RARI for Phase 2.
  • Any unspent rewards from Phase 1 (~4 200 RARI) will be returned to the DAO treasury or rolled forward at the DAO’s discretion.
  1. Staking rewards distribution
  • Rewards are distributed proportionally to the amount of $RARI staked. Participants must delegate their staked RARI to an eligible delegate to earn rewards.
  • The staking contract will emit rewards linearly over the Phase 2 period. Once the 15 000 RARI cap is reached, emissions will cease and the programme will automatically pause.
  1. Treasury actions
  • Approve: The DAO treasury will execute an approve() transaction to grant the staking rewards distributor contract permission to spend up to 15 000 RARI from the treasury.
  • Set reward amount and notify: The staking rewards distributor contract will be called via setRewardAmount(15 000 RARI) and notify() to start the emission schedule (as in the Phase 1 proposal).
  • These calls will be bundled into a single proposal on Tally to ensure atomic execution.
  1. Pause mechanism
  • The proposal will specify that no further staking rewards will be authorised after Phase 2. Once the 15 000 RARI are distributed, the staking incentives contract will not receive additional funding unless a future proposal explicitly approves Phase 3 or a redesigned programme. This ensures the DAO retains flexibility to redesign or discontinue the programme based on updated governance metrics and community input.
  1. Considerations
  • Budget utilisation: Phase 1 used ~20 800 RARI of its 25 000 RARI allocation, leaving ~4 200 RARI unused. Funding Phase 2 with 15 000 RARI keeps total emissions within the 50 000 RARI staking budget approved in RRC‑43.
  • APR overshoot: Lowering the target APR and pausing after Phase 2 addresses concerns about runaway APRs and budget exhaustion. If TVL remains below the 300 k goal, realised APRs may still exceed 15 % — underscoring the need to reassess incentive mechanics.
    Governance alignment: Phase 1 data showed that increases in staking did not proportionally translate into voter turnout or delegate participation. Future incentives may need to tie rewards to governance activity (e.g., voting, creating proposals) to better align incentives with DAO objectives.

  1. Next Steps & Timeline

  2. Forum discussion (7 days): Share this proposal with the community to gather feedback on the Phase 2 reward amount and the plan to pause after its completion.

  3. On‑chain submission (mid‑December 2025): Submit the proposal on Tally with the approve(), setRewardAmount() and notify() calls.

  4. Execution: If the proposal passes and the veto period elapses, the treasury will transfer 15 000 RARI to the staking rewards distributor contract. Rewards will begin streaming immediately until the allocation is depleted.

  5. Pause & reassessment: After Phase 2 concludes, the staking programme will pause. StableLab and the Foundation will compile a Phase 2 report and present options for redesigning or terminating the incentives programme based on updated data and community feedback.

  6. Summary

Funding Phase 2 of the staking incentives programme with 15 000 RARI aligns with the reward schedule approved in RRC‑43, reduces the APR to 15 %, and honours the DAO’s commitment to support the migration to Rari Chain. Pausing the programme after Phase 2 allows the DAO to evaluate participation, governance engagement and budget utilisation before deciding whether to proceed with Phase 3 or adopt a redesigned incentives model. Community feedback is essential to finalise the amount, timing and conditions of this proposal.

Links

Governance

RRC-30 – Enhancing RARI DAO Governance (migration to Rari Chain)
RRC-34 – Enable RARI Staking (deployment of staking contract)
RRC-43 – RARI Staking Incentives Program (12-month incentives program, approved 16 May 2025)
RRC-45 – Fund Phase 1 of RARI Staking Rewards (authorises up to 25 000 RARI for Phase 1)

Analytics

Tally Metabase public card

Staking report

4 Likes
#2

I do not have any objections against this, phase 2 staking rewards seems to be more than affordable. We have to collectively help in reaching the goal of 300k $RARI staked.

I’ll be voting “yes” on Tally.

3 Likes
#3

Thank you for presenting this. I fully support this as I have stated in prior threads. Let’s get it locked in and done.

3 Likes
#4

This looks good to me. Phase 2 keeps incentives aligned without overspending.

Also, it gives us time to evaluate if staking is actually driving governance participation before committing more treasury funds.

4 Likes
#5

I fully support this proposal. Looks good :+1:.

3 Likes
#6

Thanks, @KAF for this proposal, I believe it’s an important one.

I support the decision to proceed with Phase 2 and then strictly sunset the program. The data from Phase 1 clearly shows we are overpaying for participation that isn’t translating into active governance, so ending it early is the right move for the DAO.

However, I have three critical issues regarding the custody of funds and communications strategy that need to be addressed in a “Specification” section before this goes to a vote:

1. Explicit Amendment of RRC-43: Since RRC-43 authorized a 3-phase program, we need this proposal to formally override and adjust that DAO vote. I would recommend adding a clause stating: Upon approval of this proposal, Phase 3 of the RARI Staking Incentives Program (originally authorized in RRC-43) is formally cancelled. This proposal supersedes the original timeline.

2. The “Clawback” of Unused Funds: My understanding is that the full 50,000 RARI program budget (excluding the 10,350 RARI for Superboard Quests in Phase 1, paid out in September with RRC-49) was already bridged to the Foundation’s multisig wallet (0x2a83d2891Ef3df6967E3C2e9b69cCc7aD029736B) in May with the execution of RRC-43. By my calculation, after Phase 2 is funded (15,000 RARI), there will be a significant surplus sitting idle in that wallet:

  • Phase 3 allocation: 10,000 RARI
  • Phase 1 surplus: ~4,200 RARI
  • Total: ~14,200 RARI

The proposal needs to include the explicit “Next Step” to return these funds. We should not leave ~14k RARI sitting in this wallet, and return the unused funds to the DAO treasury. Can you add a step to bridge this surplus back to the DAO Treasury upon the execution of this proposal or at the conclusion of Phase 2?

3. User Communication (Off-boarding) Since we are effectively changing the term length of this program, from the original expectations of a 12-month yield program (shortening it to 8 months), we need a clear communications plan that should be coordinated with the Rariable social media team and a posting on the Forum for stakers. This communications should cover:

  • How will we notify stakers that rewards end after Phase 2?
  • Posting a blog post/FAQ explaining the “Withdrawal & Claim” process so users don’t think their funds are stuck when the APY hits 0%?
1 Like
#7

Thanks for putting this together. The plan to fund Phase 2 feels reasonable since it keeps the programme moving without pushing emissions too far. The lower APR makes sense given what happened in Phase 1 and I like that the DAO will pause afterward to look closely at what is actually working. It gives everyone space to check whether staking is helping governance in the way it was meant to. I’m in support of moving ahead with this.

2 Likes
#8

Thanks for the thoughtful and detailed feedback @coffee-crusher, all points make sense and are aligned with good governance hygiene.

I agree on the need to (1) explicitly override RRC-43 and formally cancel Phase 3, (2) clearly specify the clawback of unused funds back to the DAO treasury, and (3) include a clear off-boarding and communications plan for stakers given the shortened program duration.

I’ll incorporate these items into the on-chain proposal when moving it to Tally so everything is explicitly captured in the specification before the vote.

4 Likes
#9

@Kaf_StableLab , thanks so much for the response and considering of my recommendations. I’m looking forward to voting in favor of this proposal once it is posted onto Tally. Thks!

2 Likes
#10

Update: based on the feedback and general alignment in this thread, the staking proposal has now been moved to an on-chain vote on Tally.

Thanks to everyone who shared input during the forum discussion.

4 Likes
Live on TALLY --> RRC‑XX: Fund Phase 2 of RARI Staking Rewards