TIP-53: Mint 470M Threshold work tokens for DAO to distribute per the stable yield model

Proposals
1

Vote Type

Token holder DAO via Governor Bravo

DAO-elected Sponsors

John Packel, Ashley (@MrsNuBooty)

Timeline

  • 3 days for comment / discussion on this proposal
  • 9 days for Governor Bravo vote (+ 4 days queue & timelock)

tl;dr

  • If passed by the DAO, this proposal would see the Threshold protocol mint 470 million Threshold work tokens (T) for future staking rewards

  • The sum distributed, and therefore withdrawable, will depend on the average staking rate between August 1, 2023 and July 31, 2024

  • Every stake associated with a functioning PRE and tBTCv2 node will grow by 15% APY based on the DAO-approved Stable Yield Mechanism (the target yield is 15% per year)

  • For the reward split schedule (between the two applications), see Threshold Improvement Proposal (TIP)-32

Details

For more details on the minting methodology and token distribution procedure, please see the two previous Threshold Improvement Proposals regarding minting of tokens for staker rewards: TIP-030 and TIP-038.

Minting sum calculation:

  1. This minting event will seek to cover the period of August 1, 2023 and July 31, 2024. This is equivalent to one year of staking.

  2. The DAO-approved Stable Yield Mechanism has a target stake growth in this time period of 15%.

  3. Based on the total T claimed up until now, the liquid circulating supply is 10.515 billion T. There is 3.115 billion T staked, which implies a current staking rate of 29.6%. This means the sum of tokens required to universally increase all stakes by 15% is: (15% * 10.515 billion) * 29.6% = 467.25 million T.

  4. Rounding up, this proposal therefore suggests that the Threshold DAO mint 470 million T tokens, which will be directly deposited into the Future Rewards contract (0xbe3e95Dc12C0aE3FAC264Bf63ef89Ec81139E3DF).

  5. While the total T supply after the minting will be 10.985 billion T, any minted tokens will remain locked in the Future Rewards contract until they are needed for distribution of staking rewards.

These calculations are made with the assumption that the staking rate will remain constant. If the staking rate decreases, any excess tokens will remain in the Future Rewards contract. If the staking rate increases, the next proposal for minting a new batch of rewards may happen before July 2024.

It’s worth noting that initial supply of T was 10 billion and after this minting, which is projected to last through July 2024, the total supply will be 10.985 billion T, which works out to an overall inflation of 3.8% per year - a very reasonable amount given all the network development and community activity that Threshold has inspired.

6 Likes
2

Looks good to me. I would consider minting a slightly larger buffer than the 2.75m (~0.585%) extra tokens proposed here. If the staking rate were to increase to 29.79% (from 29.6%), then there won’t be a sufficient sum to achieve the target yield of 15% without another proposal and minting procedure. Previously I calculated the third standard deviation using the variance of daily staking rate entries, starting from network genesis – if you applied the same approach it would produce a far lower ceiling given the relative stability of the staking rate in recent months.

4 Likes
3

Thanks, Arj. What would you recommend - maybe a 2% buffer, so 477M (or even round to an even 480M)? The TTG recommends we mint enough to last a year precisely so the DAO won’t need to do an interim mint.

3 Likes
4

This proposal passed Snapshot with all 410 million participating tokens voting in favor: Snapshot

1 Like