Staking and voting rewards for pyth stakers

Abstract

The idea is to take a percentage of the PYTH tokens that are dedicated to “ecosystem growth” and use it to reward stakers and voters for their contribution to the PYTH network. The rewards will be a way to incentivize stakers and newcomers to the network to take part in the PYTH DAO and help the project grow

voting rewards will be included in the tokens that will be used as staking rewards and people who vote on-chain will receive a certain amount of tokens as a reward for every vote they make regardless of their opinion on the topic

Rationale

Staking/voting rewards allow stakers and voters, who are essentially contributors in the network, to get rewarded for their contribution to the PYTH ecosystem and be more incentivized to keep on taking part in the network

This has been a long awaited wish that was mentioned for a while by community members across the different platforms and this offer, if will be considered valid the forum and community members, can be the answer for what people have been asking for in the different PYTH community channels.
Moreover, rewarded staking/voting will be an incentive for people who are new to the network to take part in the staking program and participate in the on-chain voting and as a result help the ecosystem grow
In addition, people who want to take part in the PYTH ecosystem but still have doubt whether they should do it or not will have an extra reason to take part in PYTH rather than in other networks

Proposed plan and feasibility

The rewards will be distributed in a way that 10% out of the “ecosystem growth” tokens supply that is unlocked at every token unlock will be rewarded to stakers of the PYTH token over the period of time from one token unlock until the next one. For example: if 1B tokens are unlocked for “ecosystem growth” at a certain token unlock, 10% of those token (100M) will be rewarded to stakers and voters across a 12 month period, until the next token unlock. This process will keep going until 1 year after all the tokens are unlocked in month 42 (until month 54)

The staking rewards distribution will look like this

a. start: 10% of the “ecosystem growth” tokens that just been unlocked (month 6) will be rewarded to stakers from now until month 18

b. from month 18 to 30 10% of the “ecosystem growth” that’s unlocked on month 18 will be used as the rewards for stakers

c. Same process from month 30 to 42

d. from month 42 to 54 where all the tokens are unlocked and 10% of the “ecosystem growth” tokens that is unlocked at month 42 will also be distributed over a time period of a year

to put it into words, during every one of these 12 month periods that are mentioned above, 10% of the “ecosystem growth” tokens which are newly unlocked at the time will be used to reward stakers and voters over that period of time until the next token unlock happens. Then again, 10% of “ecosystem growth” tokens will be used to reward stakers for the next 12 months and so on

Staking rewards will be rewarded after every epoch (every Thursday) and there will be a constant amount of tokens that is divided between all stakers as the weekly rewards

Therefore 10% of the supply over a year = 0.19178082% every week (by the calculation of 10% / 365 X 7 = 0.19178082%) out of the “ecosystem growth” tokens that’s been set aside to be used for staking rewards

The rewards will be manually claimed from the official PYTH staking website in a tab that will be used to claim rewards (there will be added a rewards tab to the stake/unstake/withdraw tabs that are already on the website)

On the rewards tab there will be 2 options:

a. Claim rewards to your wallet where the rewards will be sent directly to your wallet

b. Compound rewards where the staking rewards will be added to your total staked amount

Since the amount of tokens that serve as weekly rewards remains constant then the more stakers that come into the network the lower the rewards will be and vice versa

For instance, if there is a total amount of 500M PYTH staked and an account received 100 PYTH as weekly rewards and after a week there is 1B PYTH staked (x2 the total staked) that same account will receive 50 tokens as its weekly rewards

the amount of tokens that will be rewarded to each account will be proportionate to the staked amount. Thus, an account with 2000 staked tokens will receive double the amount of an account with 1000 staked tokens

Voting rewards

this one will be very simple

each time an account participates and votes in an on-chain voting it will receive 0.1% of the amount of tokens it has staked as a reward for participation regardless of the “side” it voted for and the result of the voting

The reward will only be distributed to participants after the epoch where the voting took place is over so that users will not be able to abuse the system by essentially voting and canceling their vote multiple times earning extra rewards (if the rewards were immediate or even during the epoch)

the process of claiming the voting rewards will be identical to the claiming process of the staking rewards

example: An account that has staked 10,000 PYTH tokens voted on a topic on-chain will receive 10 tokens (10,000 X 0.1% = 10) as voting bonus in addition to the staking rewards once that epoch in which he voted has ended

Edit: I propose to make a threshold of 3 FULL epochs where people would have to stake their tokens for this amount of time before they can recieve any voting rewards so that people wouldn’t be able to just stake when a voting is due and then unstake right after that.
Moreover, people who stake for longer recieve bigger voting rewards. The rewards will increase every 4 epochs (every 28 days) by 0.015%.
For example, once the 3 epochs period of no voting rewards for a new staker is over he will enter a 4 epoch periods where after each one, his voting rewards for every on-chain voting he participates at will increase by 0.015% (voting at the council elections counts as 1 voting no matter how many people you voted for). This way, if a new staker of 10,000 PYTH tokens is subject to recieve a voting reward of 10 tokens, which are 0.1% of his tokens (as mentioned above) for the first 4 epochs period (after the 3 epochs “cooldown”), that same staker will be recieving 11.5 tokens as voting rewards for the next month (0.115% of his tokens), then 13 tokens for the next month (0.13%) and so on.
Implementing this model will be a way to not only rewards stakers and voters, but encourage them to stake and participate in the network for much longer

Edit #2: Stakers who prefer not to participate in the voting process will be able to delegate their voting power to someone else who has applied to serve as a delegate to vote for them in the on-chain proposals.
Anyone could be serving as a delegate and will have to apply for it by simply writng a short application document that will include his adress and a description of who that person is, what are his interests and what goal/s that person will try to serve. This way, stakers who prefer deleagting their voting power to someone else would be able to know who might be the best delegate to serve their interests.
People who serve as delegates must commit to paricipating in AT LEAST 80% of the votings that take place in the time period of a year or their tokens will be slashed. To put that into simpler terms, if a delegate has voted on less than 80% of the on-chain proposals that took place during the past year (simply measuring 1 year backwards from any given point in time since the system is implemented) his tokens will be subject to slashing due to inefficient activity.
Slahing will be made possible 6 months after the pogram starts (no slashing for the first 6 months).
Slashed tokens will go to the DAO treasury

By using this delegating process, people who dont always have the time to dive deeply into topics before voting would be able to delegate voting power to someone else who they trust to best serve their interests in the pyth network

Summary and questions

To sum it all up, I believe that rewarded staking is something that might help the PYTH ecosystem develop itself and grow even further getting more recognition and support from even larger amounts of people and attract more people into the network and its community

Furthermore, using such a staking rewards model will not create any type of inflation on the token in comparison to other coins and tokens since there is no need to change the token unlocking schedule or unlock any “extra” tokens for this model to exist

Those certain numbers and percentages that were mentioned above were chosen so that there will not be too much of the tokens that will be dedicated to staking rewards but also not too little staking rewards for stakers considering the amount of newcomers that are yet to come into the network but are projected to do so

voting rewards can also be seen as a mean to cover the transaction fee of your on-chain vote including a participation bonus for voting

Both voting and staking rewards numbers and percentages are subject to change if the community decides on a better model and if you think this model is good I would like to hear it as well

Edit: I believe that seperating the voting rewards from staking rewards is also a possibility so that we can implement the staking reward mechanism first and then add the voting reward system

I would love to open it for a discussion to hear what everyone thinks about this proposal and this model

66 Likes

Do you think long term this creates a bad precedent? People voting without actually reading just to claim their stimmy? Or creating a negative experience when the voting rewards faucet empties and people sell due to a perceived lack of incentive? Not saying I disagree with your proposal, but it certainly makes me nervous.

14 Likes

@PapiChuloGrim

I believe that you cant really ensure that people who voted actually went through the topic even right now so whether these people get the incentive for voting or not there will always many people who just vote for the sake of voting.
As mentioned in the proposal the voting rewards and staking rewards will be taken from the same pool and since the weekly rewards are CONSTANT so even in a week of voting the amount of rewards divided between everyone will be the same as in a week without voting. The difference is that in a week of voting the people who voted will get that extra reward and people who stake and didnt vote will get smaller reward than usually

7 Likes

The proposed method to reward voters regardless of their stance is excellent for promoting active participation. However, I suggest implementing safeguards to ensure meaningful engagement rather than superficial voting. For instance, introducing a minimum staking period before voters can claim rewards could prevent exploitation by transient participants.

In conclusion, I support the proposal’s direction and its potential to drive engagement and growth within the PYTH network. With a few refinements and continuous community involvement, this reward system could significantly enhance PYTH ecosystem.

13 Likes

that’s a very good point actually though I personally don’t think people would stake tokens when there’s an upcoming vote and then unstake them right after that.
also don’t forget the fact that if you only start staking your tokens at a week of voting there is still that 1 epoch delay until your tokens are eligible for voting so you won’t be able to vote anyways since you had to be staking before that epoch started.

thank you for the reply

6 Likes

I dont support rewards for staking if there is no slashing/penalty. There shouldn’t be reward without risk in my opinion.

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Great Job @Detective!

I think that staking rewards is something a lot of community members is looking for and should bring a lot of attention and new eyes to the project.

I would like to know, if anyone from the team can chime in that would be great, what is the expected purpose of the “Ecosystem growth” allocation? If most of this budget is already allocated for example we need to make sure we are not putting other initiative at risk. If that’s the case, what is actually “available” for Staker Rewards initiative?

I like the idea of rewarding the vote but I think we would need to put a maximum cap or find a way to limit what institutional wallets can get from this initiative. No saying we need to aim to dilute the position of key actors but we should aim towards to more decentralization.

I support the concept but we need someone from the team to join the discussion and give us their insight.

Again, thanks for taking the time and putting in writing what a lot of Pythians have been asking over the last months.

May Pythia guide our paths! :crystal_ball:

8 Likes

This, in my opinion, is a very positive proposal. We have all been waiting for who takes the bold step of proposing staking incentives and there is no better time for this than now. Most projects in the web3/Crypto space all provide incentives for stakers and governance participants and I believe Pythians should not be left out. This is not just about rewarding staking, it’s more about rewarding and encouraging participation. And this proposal addresses just that with the inclusion of voting rewards. I very much believe that stakers who lock up their tokens and in turn help shape the network deserve a share of the ‘ecosystem growth’ allocation. It’s now left for the team to look into it and make amendments where necessary and see that it’s put up for voting. There, the general community will decide if that’s what they want or not.

3 Likes

@abwrld
what makes you think we need slashing here?
I mean I understand the fact bad actors should be punished but people like you and me can simply vote on proposals, we can’t really do anything further like data publishing or anything like that which has the potential of bad behavior in it.

2 Likes

Nice idea, good

3 Likes

@Frozenmind
Thank you for the feedback sir

First of all you can just search what “ecosystem grow” category is and it will give you enough sources to understand it imo.

Second, as I mentioned in the proposal, the voting rewards will be proportionate to the amount a user staked therefore if he stakes more he should earn more. besides, we can always play with the percentages for it to make sense

lastly, this model can be implemented in 2 levels where we first of all add the rewarded staking and only afterwards add rewarded voting. plus it can be made in a different pool so that it won’t affect staking rewards which is the main component of this offer I believe we can say that

2 Likes

Thank you for the feedback my friend

5 Likes

Have you guys seen this post? This seems to be a better use case for staking rewards.

6 Likes

Another question sir

Why do you think people who are not at the risk of their staked tokens being slashed would want to delegate their tokens to essentially a 3rd party that might act bad and make them lose their stake or some of their stake due to something someone else did?

There is already the publisher rewards dedicated to that and there is in my honest opinion no logical reason or scenario where it will benefit the stakers who got nothing to do directly with data publishing

3 Likes

What if stakers receive rewards?
In my opinion there should be risk for reward, and vice versa, reward for risk.

4 Likes

It’s great to see the idea for staking rewards being shared. However, in my opinion, as currently proposed, it may not positively impact the growth of the Pyth Network.

I don’t believe that distributing rewards for simply staking creates a sustainable economic model for the network. It’s crucial to align incentives for all participants—data providers, dApps utilizing Pyth, and stakers—to ensure long-term growth and stability.

From the new topic posted, it states this as a goal:

And also asks the question:

Not sure how but what if we could introduce stakers ’ reward in this design?

6 Likes

Thats a great point sir
However, there are already the “publisher rewards” which are allocated for this exact purpose and there is no logical reason for the average staker to risk their token and putting it under the responsibility of someone else essentially.

Moreover, dapps that utilize pyth are already paying to use that data (if they are outside of solana as I remember) so its hard for me to find the logic behind this idea personally

Then everything that’s left to reward is the stakers who are the basis for the decision making in the neywork and yet they dont have any type of rewards allocated to them

Lastly I think the other proposal could be used to play with the numbers of the “publisher” rewards and the way to proportionally reward THEM according to their realiability and contribution. There could be some statistics collecting where it calculates which publishers had the most accurate prices compared to the total price publishes they made and then determine their rewards/punishment based on that.

All of this could happen without the average staker risking his own tokens being slashed by someone elses possible actions

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Stakers here have no reason to be slashed. It’s not like they are validators or something. Participating in governance only shouldn’t involve any slashing risk but rewards.

6 Likes

Yep agree this is the right way to think about it

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Yeah agreed. Slashing stakers would be too harsh.

2 Likes