Good idea to incentivise new apps to get started on the network.
Q1: Since the target is new apps, would these tokens come from the Developer Grants? The description of the fund here seems to fit the bill.
Q2: Would this new subsidy be applied pro-rata to all stakers, or would it provide higher APYs to those willing to lockup their stake on the new apps for longer?
Prompted by FR’s creative idea above to use this additional subsidy to reward stakers who are willing to lockup their stake on new apps for increased rewards. I suppose that could be the second part of this proposal but if it turns out to be difficult to reach consensus then maybe it could be addressed as a separate proposal.
One danger I see here is further down the road if an unknown (bad actor) wallet launches and somehow manages to get people to lock their stake on it… then starts getting its collateral liquidated.
This would punish the long-term stakers who can’t withdraw so maybe there could be a liquidation escape clause for long-term stakers to withdraw their locked stake in this situation. Not sure how manageable/automatable this would be. Might not be very “decentralised”, but smarter minds than me etc.
Q3: For new Flexa-enabled apps, how much notice will we get of a new app launching?
When Capacity first went live back in November 2019, we had about a month to load up our stake before the rewards distribution started the following December. Now that we’re live, you’re not going to want to wait a month between implementing a new pool and starting to distribute the rewards, but it might help build liquidity and even out the opportunities for stakers of all sizes if we get a day or two, or even a week’s notice of a new app launching before the rewards go live.
This would probably make the super-high instantaneous APYs we saw with the zero-notice Lightning Transformer a thing of the past, but giving stakers more notice would mean that those who are staking smaller amounts would have a larger time frame to hope for lower gas fees if they want to move their stake, allowing for a more decentralized pool. Basically, it seems like a good time to standardize how new collateral pools get launched.
I’ve often thought that a subsidy like this should probably run for about a month which imo should give the app sufficient time to build up its own user base, transaction volume, collateral pool and APY. Would like to hear others’ thoughts on this though as it’s not based on anything scientific.
If the subsidy period is significantly less, then the amount of launch notice we’re given will be a factor. If a new app is launched with no announcement, and ends up getting an initial APY of 100%+ anyway, then any additional incentive might end up being dwarfed and largely irrelevant, at least at first.
Tough one. Agree it sounds good at the moment to start an app off at 4-5% but things might change quickly so probably better to reference the subsidy as an additional figure on top of the current highest. For example, Lightning is currently the highest at 4.29%, in that case provide enough rewards to guarantee 4.29% +1% (for example), and have this 5.29% APY taper off to the app’s own organic level at the end of the subsidy period. If the app itself starts to generate this level of APY organically, then the incentive should start to get cut off earlier than planned to preserve the incentive fund, and to avoid falsely skewing the APYs too much.
However long the subsidy lasts, would be good to see this subsidy linearly tapered off to zero over the whole subsidy period (or maybe the last half of the period?) to avoid a stampede for the exits as the subsidy gets suddenly cut off on a known date.
I’m not really sure if the specific percentages and periods I’ve mentioned as examples would work out from a fund longevirty pov ofc. Would look to the team to provide the percentages and periods that would work, these are just structural suggestions.
Also looking forward to hearing other ideas.