I do not currently support this proposal for the following reasons:
This is an entirely unproven system, I do not think the DAO is in a financial position to be trialling experimental governance mechanisms whilst we currently lack basic functions. We should at a minimum wait for Arbitrum to trial the system and consider the results before we proceed. There is no benefit in being first here.
Rarichain lacks much of the expected infrastructure to encourage onchain activity which would generate sequencer revenue from increased capital on the chain. For example, according to Defillama there is a dex with $14k TVL, and a lending protocol with $6k TVL.
This is significant additional friction for Rari holders to endure when voting. They will need to bridge from mainnet to Arbitrum, and then to Rarichain. What is the benefit of having them vote on Rarichain as opposed to mainnet? Is there a business case for this? Does it generate revenue or impact important metrics?
The yield itself is relatively low to tolerate exposure to a token which has performed poorly on most timeframes. Significant buy pressure is unlikely to be generated by this proposition as people are able to farm delta neutral yields on mainnet and L2s which rival this yield without exposure to RARI.
What I believe will result from this:
Some people will migrate and vote but it will not result in any significant increase in supply voting on proposals. There will be no increased sequencer revenue from this migration of tokens as there is a clear lack of product market fit demonstrated by the 5 figure TVL onchain and lack of basic infrastructure that would encourage organic growth. Voting alone will not result in increased sequencer revenue. Funds will be spent with no impact.
I believe delegates at Rari need to begin thinking about what will be best for both the DAO and the tokenholders. We are representatives of tokenholders and are not here to simply rubberstamp any proposal presented.
When assessing proposals, I believe that at a minimum we must assess the following: risk, ROI, impact on token price. Lets look at this proposal across these dimensions:
This proposal is risky: 2% of the treasury is a not insignificant amount for an entirely unproven system, we can simply wait to see how the Arbitrum staking system performs and asses with the benefit of that information.
This proposal offers poor ROI: it does not generate revenue for the DAO or impact any meaningful business metrics, this is spend without return at a time when the treasury is in a sorry state and DAO and Foundation spend is unsustainable. There are better ways to spend the small treasury remaining.
This proposal is likely to harm token price: the only purchasers of tokens are likely to be farmers, who will dump, and at least some existing holders who migrate will also dump their staking rewards. This in turn further depletes the resources of the treasury as selling into very thin liquidity impacts price significantly. As the treasury is mainly denominated in $RARI, we will be harming ourselves by doing this. If 75,000 $RARI were sold into onchain pools on mainnet today it would result in a 68% decrease in $RARI price. Do we have some reason to believe there will be demand generated to absorb this? If so, where will this come from?
In summary I believe this proposal in its current form, at this current time would be harmful to RARI holders and the DAO. What I believe would be a better route forward for this proposal:
Wait for Arbitrum to trial the system and assess the results and then decide if this is worthwhile for Rari.
Wait until onchain liquidity improves to absorb expected sell pressure from this program.
Wait until token price recovers and we see sustained demand for $RARI to absorb any sell pressure.
I believe that only at that point would it make sense to reconsider this proposal, and only if the results from Arbitrum are significant enough for it to be worth the cost for Rari to follow suit.
Thanks for checking @Jaf. That’s a bit of a disadvantage for veRARI holders, that locked recently or for a longer time frame, since they won’t receive the early rewards. I guess, at the current state of votable supply, that’s not affecting many people, though?
Also thanks @cr1st0f for sharing your concerns. While (retrospectively) the governance upgrade was an expensive decision and has been delayed as well, I still would argue it’s important we migrate governance to our native chain and gain more delegators. The veRARI model is rather unattractive and, looking at the low votable supply, the DAO is prone to governance attacks.
As far as my understanding goes, the DAO already approved the governance migration and staking in last October, and this proposal only determines where the incentives should come from (please correct my if I’m mistaken @Jaf). Not approving the staking incentives would lead us to not using work, that has already been done / the DAO has paid for.
On the other hand @cr1st0f I agree on the lack of infrastructure, general “attractiveness” of the token and your suggestions on assessing proposals. Maybe that’s a topic for a community call?
I believe the DAO approved the governance migration and staking infrastructure. This doesn’t mean we need to allocate budget towards staking incentives. Saying we need to put more budget towards something just because we’ve already spent on it is classic sunk cost fallacy and we should instead cut non critical spend imo.
I believe a governance attack is extremely low risk as there’s nothing to steal, just native tokens with no liquidity to swap them out. This was just a sales pitch from Tally - it isn’t a real risk for us as a small DAO. We also have no idea if this will reduce the risk of governance attack or increase delegation, it’s just a theory with no proof. Why don’t we wait to see how arbitrum’s implementation goes?
I agree the budget is a bit too much. Is it possible to reduce the allocation for the first period only and assess how much staked RARI is attracted with it?
During the Gov call, we discussed that reporting should be done on a monthly basis to ensure everything is on track and to help decide the next steps.
I’m of the opinion that the launch of the program should be a bigger push to attract more stakers. So, I’d keep the numbers as suggested.
Depending on how the numbers look month after month → by the end of Phase 1 we should have enough supporting data to decide whether to continue the campaign as planned or pivot to a different approach.
Totally support your thoughts, @Jaf on keeping the allocations as stated in the proposal. With the monthly proposal, we’ll be able to track if the reward targets are on track to meeting our 300K $RARI staking goal, and if necessary, adjust either the reward percentages or monthly targets to meet that goal.
What I would suggest is the inclusion in the proposal that allows for adjustments of allocation of rewards (either TV or percentages of rewards) based upon monthly reporting reviews by the DAO to reach the 300K $RARI target.
This proposal will do much good to improve the community’s governance, not just the normal stake-for-yield approach. Also, this staking proposal lays the groundwork for future utility layers, because once the staking infrastructure and incentive logic are in place, we can begin experimenting with broader governance-linked perks and increase our community value.
That said, the DAO should implement a short-term incentive program, spanning three months, with clear success KPIs.
We could establish a tiered reward system to discourage passive holding, where some individuals hold tokens without contributing real value to the DAO. This system could include:
Staking and voting to receive more rewards.
Long-term staking alone results in bonus multipliers, calculated at a certain percentage quarterly.
Staking without any engagement yields only the minimum rewards.
We should also commit to creating dashboards (the frequency can be determined based on how often proposals are submitted on Tally) that display the percentage of RARI tokens staked and the number of active voters since the last update. These dashboards could also show the treasury balance used and influenced.
I agree on the risk of governance attacks, but not really on the incentives as an unnecessary cost. Since the DAO has already decided on this path, I would suggest we make the best out of it.
The governance migration needs to be attractive for delegators as well, or we could end up with even lower delegate rates / votable supply than currently. There’s very little community delegations at the moment, which is essential for a DAO. How about @insider0x’s idea to reduce the allocation?
@Jaf’s suggestion to monitor the development of the staked tokens and potentially end rewards earlier seems like a good idea as well, could you maybe adapt the proposal to include that, as @coffee-crusher suggested as well?
Unused tokens will be returned to the treasury, I guess, which is also a likely option.
I believe 85k RARI is to much. I suggest to change the amount towards this:
Phase 1 (months 1-4): 20,000 $RARI.
Phase 2 (months 5-8): 12,500 $RARI.
Phase 3 (months 9-12): 7,500 $RARI.
10,000 $RARI for quests = total 50k RARI.
To much treasury funds are going to governance now, I do not see how this aligns with the direction the Foundation is supposed to go right now, that is, supporting Rarible.com.
On top of that Delegates get rewarded now every quarter.
After considering all the feedback, the original proposal has been updated. Please take a look.
Summary of changes to the original proposal:
Overall cost reduced from 75,000 $RARI to 60,000 $RARI
The program’s progress will be tracked and reported monthly by StableLab. Reports will be posted in the forum for the DAO to review and discuss, along with recommendations on next steps
KPIs added to track performance:
Number of delegated RARI tokens
Number of wallets staked
Number of delegates receiving delegation
Unique proposal voters
Target APR: Designed to attract stakers with an annualized return of
Hey everyone!
I’ve been gradually reviewing Rari’s proposals, and I found this one particularly interesting for the future of its governance.
In addition to the changes outlined by @Jaf, I wonder if there are any current KPIs that could be compared with the newly proposed ones — for example: number of delegates receiving delegation, amount of tokens delegated to each of them, and unique proposal voters.
Regarding KPIs, it seems appropriate to include a contingency clause if price, liquidity, or staking uptake fall below predefined thresholds.
Depending on how the numbers look month after month → by the end of Phase 1 we should have enough supporting data to decide whether to continue the campaign as planned or pivot to a different approach.
Finally, I agree with this comment and in my opinion that it should be clearly articulated within the proposal. If the specific goals that motivate this proposal — to improve governance participation and increase the utility of the $RARI token — are not met, I think based on the proposed monthly reporting, the DAO should consider stopping or resizing Phase 2/3 based on Phase 1 data, under a “test-and-learn” strategy.
Thanks, @Jaf for the revised proposal based upon comments above, and your revisions align with a proposal that reduces risk and tracks (and adjusts) for success. I fully support your revised proposal and will vote “yes” on Tally.
I also support and endorse also adding to this proposal, @Carla comments above of KPIs that track # of delegates receiving delegation, total amount of delegated tokens per delegate and unique proposal voters (i.e. “net-new” voters).
Switching from mainnet to RARI Chain governance might be a bit of a hurdle for many without incentives present. Staking incentives will help attract much-needed voting power for the governance transition.
The reduced cost and KPI reporting also make a lot of sense. Essentially, the cost of the proposal will get us 5x the voting power. Half the incentives will be distributed during Phase 1, so hopefully, we see at least 150,000 RARI migrated to the new governance contract by the end of the first 4 months.
This proposal will do much good to improve the community’s governance, not just the normal stake-for-yield approach. Also, this staking proposal lays the groundwork for future utility layers, because once the staking infrastructure and incentive logic are in place, we can begin experimenting with broader governance-linked perks and increase our community value.
As a side note, if we could create a Dune dashboard that displays the percentage of RARI tokens staked and the number of active voters since the last update, that would be wonderful. These dashboards could also show the treasury balance used and influenced.
