Interim Era Incentive Schemes: (1) One-off Migration+Stake Bonus & (2) Ongoing Stable Yield

These two incentive schemes will be put to the token-holder DAO for approval.


(1) One-off Migration & Stake Bonus
All stakers who –
(a) begin staking
(b) correctly configure their Proxy Re-Encryption operator node
(c) set a governance delegatee address
prior to May 15th (originally April 30th)
and
(d) continue to stake and operate a PRE operator node through the launch of Threshold’s full applications (including the tBTCv2 bridge)
– will be distributed a special token bonus, equivalent to a 2.5% growth in their stake size.

This bonus intended to motivate further upgrading of KEEP/NU into T, and putting that T to use.

Following the principles of the stable yield mechanism, the number of tokens issued for the bonus will be calculated based on the average staking rate. For example, if the average staking rate is 33%, then generating a 2.5% yield for all stakes requires the Council to distribute 82.5m T as the one-off bonus sum.

Note that all rewards, including the bonus, will accrue to staker addresses on-chain but will be inaccessible until the launch of full apps on Threshold, at which point it can be withdrawn. To qualify for the bonus, your stake and operator node must remain active until then. If you stop your operator node or withdraw your stake, you forfeit the bonus.

A reminder that the future stake unbonding duration will be on a per-app basis and governable, but the default universal minimum will be around 2 or 3 months.


(2) Ongoing Stable Yield
From May 16th onwards, reward amounts will be based on the duration you are staked and reliably operating a PRE node. The target annual yield will be 15%. For example, a staker who starts staking on June 15th would see their stake grow by (15/365 * 15% = 0.62%) in the 15 days up until June 30th. The nominal inflation rate and monthly issuance figure will again be dependent on the average staking rate.


These two incentive schemes are only at the proposal stage – they still need to be validated via DAO governance. To give stakers an opportunity to migrate and properly delegate their voting power, the target for commencing an on-chain vote for this proposal is May 1st, so make sure you’ve migrated and delegated by then.

6 Likes

This is a great proposal to encourage holders to move their stake to secure the new network! Thank you so much @arj and team for the hard work. I just wanted to address a few concerns on the infrastructure side regarding the proposed timeline.

As per my understanding, PRE v6.0.0 nodes need to be up and running before April 30th for the stake to be eligible for the interim rewards. We’d like to request that this deadline be pushed back by two weeks to May 15th.

The proposed timeline feels a bit rushed, especially considering the layers of testing and security checks that the staking providers need to undertake before going live. For the staking providers that service both NuCypher and Keep customers, the testing, migration and onboarding to Threshold involves double the work-

  1. Two different sets of internal audits will have to be conducted.
  2. There are different migration paths on some platforms which also involves separate testing for customers on both sides.
  3. There are additional complexities associated with adding the PRE node to existing KEEP ECDSAv1 clusters. Since customers need to reuse existing addresses to service a new node type, further changes and testing will be required.

With all these moving parts on the engineering side, I propose an extension of the due date for the interim rewards to 5/15 to appropriately test the systems with the new contracts. This extension enables us to fully test out the security of the platform, safeguards user funds, incentivizes users to move over to the new network, and makes for a more secure and stable Threshold Network.

Thank you for considering our proposal. Other staking providers are likely in the same boat, but I’ll let them chime in for themselves.

5 Likes

This is Jonathan from Staked. We have been operating both KEEP and NU nodes since pre-genesis testnet days. We strongly agree with Viktor’s suggestion to move the launch deadline back to 05/15 for all of the reason outlined so clearly by Viktor. We simply need more time to prepare.

2 Likes

Elizabeth from Figment here. We also have been operating on KEEP and NU, as well as actively working with the core teams to ensure we have all the information to support staking on Threshold when 6.0.0 goes live. We’re aligned with Jonathan and Viktor here - we need more time.

3 Likes

I would like to echo the sentiment from our partners and ask for the proposed timeline to be extended as originally asked by @ViktorBunin. I believe the extension would be extremely valuable to many token holders who plan to spin up a PRE node.

The Marketing Guild is feverishly working on resources to make staking more comprehensible but I realistically do not expect to have any additional guides available for at least another 7 days. We currently have one staking/PRE guide. The guide was released by a long time NuCypher community member that is now a contributor to the Threshold Marketing Guild and is only meant to be an additional resource to help in the education process - Promethium.dev - How To Setup A Threshold PRE Node on a Cloud VPS

The Marketing Guild could also utilize the additional time to recruit new stakers to the network through this early incentive.

2 Likes

Thanks @ViktorBunin @jonathanmarcus @ebeth - given the amount of stakers using these services, staking infrastructure provider timelines should definitely be taken into consideration for any proposal that moves to a formal DAO vote imo.

Thanks for sharing that context :+1:

2 Likes

After observing activity in the first 12 days since the incentive proposal was announced, it appears to be in the best interest of the network to push back the migration bonus deadline. We’re 16 days away from the original deadline of April 30th and so far ~40 stakers (addresses) have successfully launched a PRE client, excluding those run by the NuCypher team. The staking rate sits at 10.33%. So evidently our prospective staker array needs more time.

Thank you to those who provided the recommendation to delay and your patience in awaiting the proposal update (deadline edited above from April 30th to May 15th).

Note that this modification only applies to the proposal, which must still be formally validated by the token-holder DAO. That validation process does not yet have a fixed kick-off date but will also be moved back by 15 days – i.e. to the first few days of May at the latest.

A clarification on the proposed target yield of 15%. The unanimously supported stable yield snapshot of Nov 21 posited, at network genesis, a maximum inflation and corresponding minumum yield as 10%. However, the inflation and yield only converge when the staking rate is 100%. As mentioned, the rate is currently 10.33%. So in practice, the network can safely provide a more generous target yield (indeed, this better resembles the curve in the original proposal, and aligns to some extent with @jakelynch’s thinking on node capex), as part of a staker recruitment drive ahead of the full apps launch later this year.

4 Likes

Given the uncertainty of an exact date re: tBTCv2 launch, we may need to revisit the date that rewards are actually received by stakers to remove ambiguity. One possibility is to instead vest the migration bonus over some time period, contingent on the Staker continuing to be active.

2 Likes

I like a vested bonus in theory, but we need to turn this into a concrete proposal and start spreading the word if we want to see movement. And to spread the word, simple is better.

How about…

  • drop a 2% bonus on staked amount if staking + delegated by 5/15.
  • drop a 0.5% bonus on staked amount if staking + delegated by 6/15.
  • then we rely on regular staking rewards

What I like about this: we get 2 dates that are far enough our that we can heavily market both, and we don’t have to explain tons of details around vesting while still spreading it a bit.

3 Likes

re: “To qualify for the bonus, your stake and operator node must remain active until then. If you stop your operator node or withdraw your stake, you forfeit the bonus.”
We should define a duration around “If you stop your operator node…” due to Infura/Cloud outages and so on.

3 Likes

Update – Bonus Deadline Extension to June 1st

~1.89 billion T has been staked and over 90 PRE nodes are up and running! A great start, but newer stakers could use a little more time – so we suggest extending the deadline of the Migration & Stake Bonus, such that any staker who commences staking before** June 1st** will be eligible. The bonus, if validated by the snapshot & DAO vote, will now be 3% for eligible stakers – see qualifying criteria below.

Time-based rewards (15% target APY) will start accruing to your stake from June 1st onwards. The first merkle distribution – after which your rewards will be withdrawable – is planned for mid-July.

The updated bonus eligibility criteria:
(1) Begin staking and correctly configure their Proxy Re-Encryption operator node prior to June 1st (previously May 15th) .
(2) Reliably operate a PRE operator node until at least July 15th, and ideally through the launch of Threshold’s full applications. Temporary outages in PRE node operation due to known infrastructure failures (e.g. due to DigitalOcean or Infura downtime) will not automatically forfeit affected stakers’ bonuses. However, please take care to avoid extended non-availability.
(3) Remain fully staked until mid-July. If you unbond any part of your stake between June 1st and the first distribution (mid-July), you will automatically forfeit the entire bonus – all 3%. However, you would still accrue ongoing (time-based) rewards in proportion to your stake size and the duration that it remains staked.

Note that the requirement to set a delegatee address has been removed from the original criteria in the forum proposal. However, it is still required to participate in the Threshold DAO.

1 Like