Abstract:
Following the approval of RRC-30 , Rari DAO began transitioning the $RARI token and governance to the Arbitrum ecosystem. The community has already approved the implementation of RARI staking to enhance the governance and security of the RARI protocol.
This proposal specifically seeks approval for:
- Initial funding budget of 60,000 $RARI from the DAO treasury for staking incentives.
- A twelve-month staking incentives program to be launched on Rari Chain.
- Continuous tracking and monthly reporting to optimize the program rewards.
Implementing these staking incentives together with the already-approved staking mechanism will maximize its impact on the DAO’s governance participation and token value.
Motivation:
The Rari DAO is undergoing a significant transition from the Ethereum mainnet to Rari Chain. This migration is a critical milestone for the DAO’s evolution, aimed at improving governance efficiency, reducing transaction costs, and enhancing the scalability of the protocol. However, the success of this migration depends heavily on user participation and the seamless integration of existing governance mechanisms into the new environment.
The current governance model relies on Rari tokens locked in veRari contracts on Ethereum mainnet. For the migration to Rari Chain to be effective, these staked tokens must be unstaked, bridged, and delegated on Rari Chain. Without sufficient incentives, users may hesitate to migrate their tokens - especially early on. While mainnet utility isn’t lost, since tokens can be wrapped and used for governance after the upgrade, incentives will still be key to drive early staking and adoption of the new RARI L2 token standard.
Two of Rari DAO’s most important goals are to improve governance participation and increase the utility of the $RARI token, both of which are significantly advanced by the introduction of RARI governance staking, developed by Tally. In this contract, $RARI stakers that delegate their voting power to an eligible delegate will receive staking rewards. Adding staking rewards will further motivate token holders to migrate and contribute to governance, ensuring stronger alignment with the DAO’s overall objectives and enhancing the utility of the $RARI token by providing tangible benefits to participants.
Rationale:
This proposal establishes a fixed-term (twelve-month) incentives program to jumpstart governance participation. To incentivize early bridging and staking, the incentives will be scheduled in three phases (see specification) with diminishing rewards over time plus a one-time bridging Quests for early users. The initial goal is to attract a similar amount of $RARI as currently sits into the ve-contract in Ethereum, ~300,000 $RARI, to the governance staking contract in Rari Chain.
The staking mechanism supports both direct voter participation and the option for token holders to delegate their voting power to active community members, creating multiple pathways for governance engagement while still earning rewards.
The long-term vision is for staking incentives to be sustainably funded from the DAO’s revenue streams. After this initial period concludes, a new proposal will be required to continue the staking rewards program, ideally transitioning to the self-sustaining model derived from DAO revenue.
The progress of the program will be tracked and reported monthly by StableLab. Reports will be posted in the forum for the DAO to discuss, along with recommendations on next steps.
KPIs to track include the following (more can be added in the future):
- Number of delegated RARI tokens.
- Number of wallets staked.
- Numbers of delegates receiving delegation.
- Unique proposal voters.
Key Terms:
- RARI token: RARI DAO governance token
- RARI DAO: body governing the Rarible Protocol and RARI chain
- Arbitrum ecosystem: Arbitrum One and RARI chain L3
Specification
Staking Rewards Mechanics:
In the governance staking contract, rewards are distributed proportionally to the amount of $RARI staked. We calculated the amount of $RARI to allocate for rewards based on an APR estimation for 300,000 $RARI migrating and delegating to Rari Chain:
- Target APR: An attractive yield of 25% (Phase 1), 15% (Phase 2) and 10% (Phase 3) annualized return to attract stakers, balancing the risk of holding $RARI on Rari Chain against typical crypto yields (e.g., 3-3.3% for ETH staking, 4.5% for Sky’s USDS).
Reward Calculations:
As each Phase lasts 4 months, to estimate the amount of Rari to yield each target APR we must calculate:
$RARI incentives = 300,000 (Staked $RARI estimation) * Target APR * 4 months (Phase duration) / 12 months (annualized returns)
Therefore,
- Phase 1 (months 1-4): 25,000 $RARI.
- Phase 2 (months 5-8): 15,000 $RARI.
- Phase 3 (months 9-12): 10,000 $RARI.
Additionally, 10,000 $RARI will be allocated to Quests for bridging into Rari Chain to kickstart Phase 1.
Steps to Implement
Upon successful approval of this proposal on Tally, 60,000 $RARI will be sent to the Foundation’s SAFE on mainnet (0x2a83d2891Ef3df6967E3C2e9b69cCc7aD029736B).
Then, Rari Foundation will bridge the funds to Rari Chain and deposit them into the DAO Treasury at 0x83CBaF64b94D1eDfeDd468b23234DeCf2AecDD8b.
The Governance Staking contract will then be given permission to allocate funds as staking rewards based on the outlined reward structure, through a DAO-approved proposal on RARI Chain (more details on governance staking here ).
Overall Cost:
Overall costs: 60,000 $RARI
- 10,000 $RARI for Superboard bridging Quests.
- 50,000 $RARI for staking rewards.
Blockquote
This proposal requests 60,000 $RARI to fund a 12-month staking incentive program on Rari Chain. It aims to boost governance participation and drive early migration from Ethereum by offering phased staking rewards and bridging incentives. Progress will be tracked monthly by StableLab.
