[RRC-XX] Rari Staking Incentives Program

Proposals Parent DAO Proposals
#11

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?

3 Likes
#12

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?

1 Like
#13

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?

6 Likes
#14

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.

Curious to hear what others think about this.

1 Like
#15

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.

3 Likes
Coffee-crusher Delegate Thread
#16

Thank you for putting this up, @Jaf.

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:

  1. Staking and voting to receive more rewards.
  2. Long-term staking alone results in bonus multipliers, calculated at a certain percentage quarterly.
  3. 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.

Finally, +1 on a gamification approach to this program as suggested by @dzonson.eth; that comes directly from Arbitrum’s handbook.

1 Like
#17

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.

1 Like
#18

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.

5 Likes
#19

Thanks @forexus for the suggestion, sounds like a reasonable reduction to me.

5 Likes
#20

Thanks everyone for joining the conversation.

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
    • 25% in Phase 1
    • 15% in Phase 2
    • 10% in Phase 3
  • Funding distribution by phase:
    • Phase 1 (months 1–4): 25,000 $RARI
    • Phase 2 (months 5–8): 15,000 $RARI
    • Phase 3 (months 9–12): 10,000 $RARI
7 Likes
#21

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.

4 Likes
#22

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).

3 Likes
Coffee-crusher Delegate Thread
#23

Thank you for the updates regarding the funding distribution phase., I’ll be voting yes on this proposal!
Can’t wait till everything goes live :slight_smile:

2 Likes
#24

Thank you @Jaf, I am in support of this proposal.

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.

4 Likes
#25

Thanks @Jaf for incorporating the feedback and reducing the amount, fine with me as well.

Welcome @Carla! Agree with your suggestions regarding KPIs and subsequent consequences or adaptations, in case the expectations are not met.

4 Likes
#26

Friendly reminder to all!
The proposal is up for voting on Tally:

Voting eds in 4 days.

3 Likes
#27

i want to see how this goes, so good job!

1 Like
#28

RRC-43 passed on chain voting on Tally.

5 Likes
#29

Thank you for putting this up, @Jaf.

We voted in favor of this proposal.

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.

4 Likes
#30

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:

  1. Initial funding budget of 60,000 $RARI from the DAO treasury for staking incentives.
  2. A twelve-month staking incentives program to be launched on Rari Chain.
  3. 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.

2 Likes