PIP: [to be assigned]
Title: DOUGH Staking & Governance Mining
Created: Aug 10, 2021
DOUGH Staking creates a value accrual mechanism for token holders by promoting long-term alignment in which active participation is rewarded with regular cashflow-incentives.
The PieDAO community has long discussed implementing single asset staking for DOUGH, as well as a mechanism for fee distribution.
The DOUGH staking design is shaped to add valuable utility, promote long-term alignment, and encourage participation in the decision-making process.
The proposed staking framework serves as a mechanism to distribute protocol fees as well as other revenues generated by the DAO.
The following paragraphs go into detail about the different components and how they work. The high-level concept can be summarized as such:
- Governance Mining means revenues are shared with DOUGH stakers actively participating in governance.
- Long-term committed capital is more valuable than short-term committed capital, for this reason, long commitments are granted with extra incentives such as more voting power and a higher portion of rewards.
- veDOUGH holders (aka DOUGH Stakers) receive cash flow in a diverse basket of tokens knows as “Reward Pie”.
How veDOUGH works
veDOUGH uses a lock-up weight system. The number of veDOUGH obtained by staking DOUGH is determined by two elements: The
stakedAmount of DOUGH and the
Locking DOUGH is allowed for a minimum of 6 months and a maximum of 36 months. The multiplier follows the curve:
10,000 DOUGH for 36 months, gets
10,000 DOUGH for 24 months, gets
Tom wants to lock
10,000 DOUGH for 12 months, gets
After the lockup expires, the user can withdraw their stake and will not be able to vote anymore.
Anyone can call the
eject function to push out an expired lockup and force-unstake the tokens for that address, as such anyone can make sure free riding is prevented.
The Reward Pie
From a technical perspective, the Reward Pie is a regular PieVault with the only difference that the function
joinPool is disabled.
The RewardsPie might contain DOUGH, Pies such as PLAY and BCP from protocol revenues currently held in the Fee Pot, as well as farmed tokens such as BAL, CRV, SUSHI, etc. coming from the Treasury Farming Committee.
Farmed tokens are harvested every 30 days and included in the Reward Pie.
The underlying assets inside the RewardsPie will not be used productively and are therefore enabled for meta-governance at any time.
Compared to dumping the farmed tokens, this approach promotes cooperation with other protocols by encouraging non-parasitic farming, as such PieDAO becomes a valuable ally to other DeFi protocols acting as a liquidity provider and as a distribution venue for the project governance token.
How Governance Mining works
Governace Mining is a fancy name to say: you cannot pretend to get paid for a job just for showing up.
It represents our solution to the free-riding problem in DAO governance and it’s designed to be flexible enough to evolve over time.
The veDOUGH contract had an embedded system to gate the claim of rewards. It does that by using a merkle root to verify that the address claiming is eligible to do so.
This system allows for participation to be tracked offchain and therefore easily evolve over time.
At the current stage, the definition of “Active Participant” is simple as it tracks the participation to Snapshot votes with 2 rules:
- veDOUGH holders who did at least one vote during the last 30 days are able claim their rewards.
- veDOUGH holders idle for >90 days have their rewards redistributed to everybody else.
To make an example, governance could create rules for participation like: Needs to have partecipated at least to a community call, needs to have posted on the governance forum once, etc.
Technical development has been completed and pending audits.
- 60% is directly distributed to veDOUGH holders
- 25% is used to compound the treasury principle
- 15% is used to cover operational costs.