The aim of this proposal is to identify improvement that could be made to the 7 days unstaking period currently in place to make the protocol more flexible and staking option more attractive
Proposal Summary
Summarize the key elements of the proposal, its objectives and the projected timeline. Share who would be responsible for the implementation of the proposal and how it will generate new benefits for the Mendi community. In this section the reader should have a clear understanding of the whole proposal.
The initial RFC focus on the options possible to implement to bring more flexibility to unstaking. From reducing the 7 days duration, implementing withdrawal fees for faster unlock, and in this case, identifying what could be done with those fees. No change should be made if the majority of voters believe the current situation is optimal.
Motivation
The aim of the RFC and hopefully of the following proposal is to make staking mendi less constraining by offering the ability to withdraw from the staking pool faster. This will hopefully reduce the possible hesitation new investors or current holders would have to stake, making the mendi token more attractive and bringing more people into the DAO. More people in the DAO could also help bring more new ideas that could help improve the protocol.
The following options can be envisaged:
reduce lock duration to 24h
reduce lock duration to 24h with a 10% fees/3days with a 5% fees
allow claim as soon as the unlock is triggered with a log like fee curve (100% at 0sec, 25% at 1h, 10% at 1 day, 5% at 2 days … 0% at 7 days)
In case of fees, the following options could be envisaged:
burn mendi fees
redistribute fees to stakers
add fees to marketing treasury
For both options the list can be amended during the discussion for the RFC
Technical considerations
The team should ideally come up with estimate of the load associated with the various option to help the DAO take a decision.
Key factors to consider with the proposal
Is it helping the proptocol grow
Is the cost of implementing it worth it
What is the priority of the update vs other planned update
This is definitely a hot topic within the DAO governance discussion in recent days. Thank you for moving this forward with an RFC.
I think its the right choice to handle this as only a Request For Comment instead of RFC + Temperature Check.
We will review the options and try to provide an overview of the scope of development that would be required to implement this.
I think the DAO should also be aware that this will most likely have auditing implementations as well, due to the fact that the new functions will deeply change the existing staking protocol, and due to the amount of funds that are stored in the staking protocol this would be the diligent security steps.
I think the price of Mendi token is important for Mendi protocol, so I think this will harm even more the price.
I think the better way to solve this is to change the MLP mechanism, because 50% is given to borrowers and they can dump Mendi token at any time, maybe a 100% to stakers and 0% for borrowers and implement different lock mechanism like lock for 1y 2y 3y 4y and depends on the lock time the share of protocol rewards and MLP give more to more commitment long term lock.
Whales will take advantage of weekly rewards, by putting a lot of money and unstake in 2 day imo.
Mendi needs a better token price, so it needs to be more incentive for folks to lock Mendi price will go up, more folks will lend and borrow because it will be worth it compared to other protocols APRs.
Other thinks that might help is increase the collateral a bit, so people will loop more, I think the last change was very good, but if we compare with Ionic on Mode, they have better collaterals, so to take the market of zerolend you need to be more competitive.
Or you can keep the 7 days, but definitelly MLP rewards should be 100% stakers 0% borrowers imho
I think only locking for 7 days will make more ppl stake instead of more time, because the rewards needs to me more higher for a commitment like this
I have said it before and i say it again: use the zkswap finance model: no time lock, 1% fee on unstaking that goes to loyal stakers. This usually btings a 2-3% boost in apr for loyal stakers while feeling free about our capital.
All major projects (successfull ones) do not have a locking period. Ask yourself why
There is no vote for now as I would not be able to list the impacts of each options:
time to dev
time to deployment
extra cost (audit,…)
Also there are suggestions to increase the duration instead of decreasing which also has merit.
So as it stands there is no vote as there is not enough data to properly vote.
When I see “all successful projects” I’d like to know what that means. Does it really means all, is there a list of how various lending protocols lock or don’t lock stakers?
Therefore if we calculate staking into the circulating supply (which was deducted from it due to Coingecko determining its not part of it) 64.6% of the total emitted supply is staked. That is very high.
I understand that making it more attractive to investor could make it even higher, but imho this is already very high.
50% could be ideal, we need part of the supply in LPs and part of it as market that is traded.
Its a serious undertaking that will create a lot of costs down the line. I think the argument that staking is unpopular is a bit false, as numbers show a huge amount of the supply is staked.
I would need to digest this, but I assume this conversation would fall into one of two camps: “exit tax” scheme or a “ve(3,3) type lockup” scheme where yield distribution is dependent on your tolerance for absorbing the risk of the time the tokens are locked up.
This is an interesting proposal, and there are a lot of good suggestions here. Thanks @yorgl for bringing it up.
Firstly, I guess the main suggestion in the RFC try to increase the value people see in the Mendi token by making it easier to stake. Reducing withdrawal time could be one way of doing that, but one week isn’t particularly long in my opinion. By way of example, API3 has a week cooldown as well, and rewards vest for one year. Currently over 50% of API3 supply is staked. Mendi also already has a pretty high % of stakers. I think the main argument against changing unlock method or lock time is the development time that would go into implementing one of the solutions, as well as costs to audit afterwards, could in my opinion be better spent elsewhere.
@rrigo Increasing the rewards for stakers is in my opinion a good way to improve people’s willingness to stake. The problem with this is that rewards have to come from somewhere, and reducing how attractive Mendi is to lend to or borrow from will also reduce protocol fees again, and potentially cause more issues by reducing TVL. One of the initial proposals for OEV revenue was to go to Mendi stakers, and this could be something used to boost yield - but I would be interested to see any insight from Mendi core team about how much revenue incentivising borrows gets stakers as opposed to simply distributing it to stakers.
I think having more ppl staking or at least don’t selling much will help more ppl LPing.
I don’t see ppl borrowing more because of rewards from a possible Linea airdrop or now that we have more points.
So imho I think a price increase will help ppl lping more and borrow more, because if price increase you create a flywheel.
The last time ppl saw gourgeous APRs on borrowing they started borrowing a lot and we supassed a lot of MLP milestones.
So I still think it’ll be more interesting in keep at least 70% staked if more better, price will appreciate and ppl will Lping more, because APR for LPing will go up and borrowing too, that’s my view.
OEV rev will be great imo, but only if ppl borrow more, we are stagnated under 40M for a long time now.