TIP-038 Mint 250m T tokens for the Council to distribute following the stable yield model (Oct22 - Jan23)

If passed by the DAO, this proposal would see the Threshold protocol mint 250m T tokens. The sum distributed, and therefore withdrawable, will depend on the average staking rate between October 1st and January 1st (if it were to remain static, then approximately half of the 250m will be distributed). Every stake associated with a functioning PRE and tBTCv2 node will grow by 15% APY (~3.82% over 93 days is the target yield in this epoch). For the reward split schedule (between the two applications), see <TIP-032>.

Minting sum calculation
For more details on the minting methodology and token distribution procedure, please see <TIP-030>.

  1. This minting event will seek to cover the period of October 1st 2022 until January 1st 2023. This is equivalent to 93 full days of staking.
  2. The target stake growth in this time is: (15% / 365) * 93 = 3.82%.
  3. Based on the total T claimed up until today, the liquid circulating supply is 10.141bn T. There is 3.12bn staked, which implies a current staking rate of 30.76%. This means the sum of tokens required to universally increase all stakes by 3.82% is: (3.82% * 10.141bn) * 30.76% = 119.2m T
  4. The ‘ceiling’ staking rate is computed to be 63.32% – three standard deviations of the daily historical staking rate (mean) since network launch, added to today’s staking rate. This approximately covers the 99.7% percentile of future staking rate scenarios, assuming a simplified normal distribution. It is reasonable to assume that the launch of tBTCv2 could be as impactful on the incentive to operate a node as the launch of the network in April, hence the variance calculation above includes data entries starting from network genesis.
  5. Applying the same calculation in (3) but inputting the ceiling staking rate instead of today’s staking rate, the sum of tokens required to deliver 15% annual yield to all eligible stakes (until January 2023) would be 245.44m T.
  6. Rounding up, this proposal therefore suggests that the Threshold DAO mint 250m T tokens. Note that about 49% are likely to be distributed, unless the staking rate grows far quicker than it has in recent months. The excess tokens will be withheld by the Council and are not made liquid or withdrawable, but may be used for future rewards later in 2023.

TIP-038 has been moved to Snapshot for a temp check.

Snapshot passed.
TIP-038 has been moved to Governor for on-chain voting.