KIP-4: Adjustment of Staking Incentives

Summary

The Kapital DAO has operated a successful liquidity staking program for Q4 2022, and, in the interest of maintaining the staking program for a longer duration, the Kapital Foundation recommends adjusting the second half of the dedicated staking rewards to now be over five years.

Importantly, this would have no impact on existing staking positions, as the rewards for that pool have already been committed for one year.

The net impact of this adjustment would result in:

  • No change to current stakers’ rewards (i.e. 50,000,000 KAP still will be distributed as token rewards over the first year, as originally planned)
  • Adjusting the rewards emitted after September 1, 2023 to be in-line with a rate of 10,000,000 each year for five years following that date

The DAO proposes the following three options, as well as the customary null option.

Options

A. Approve KIP-4, reducing the liquidity staking rewards emission rate to 10,000,000 KAP per year and extending the lifetime of the staking rewards over a five year period following September 1, 2023

B. Reject KIP-4, and maintain the current liquidity staking rewards emission rate of 50,000,000 KAP per year for a total of two years

C. Create a new proposal to terminate the liquidity staking rewards program entirely

D. None of the above

The Foundation supports Option A.

Abstract

This proposal entails the adjustment of incentive rewards related to the liquidity staking pools operated by the Kapital DAO. The proposal suggests extending the lifetime of staking rewards by reducing the emissions rate of next year’s emissions by 80%.

Rationale

In an effort to create a long-run sustainable ecosystem, the DAO sees more conservative incentive emissions as supportive of a case for gradual decentralization and robust product development. Extending the staking incentive program by reducing the emission rate will allow a larger amount of DAO participants to enter the pool over a longer period of time, and drive more sustainable interest in the DAO’s activities.

Implications

Voting Option A on this proposal implies:

  • You wish for the Kapital DAO to reduce the liquidity staking rewards rate to 10,000,000 KAP per year after the date of September 1, 2023.

Voting Option B on this proposal implies:

  • You do not wish for any adjustments to the Kapital DAO’s liquidity staking rewards.

Voting Option C on this proposal implies:

  • You wish for the creation of a new proposal and a new vote exploring the dissolution of the Kapital DAO’s staking programs.

Voting Option D on this proposal implies:

  • You wish to abstain from voting.

Test Cases

n/a

Discussion

https://forum.kapital.gg/t/kip-4-adjustment-of-staking-incentives/88

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Copyright

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