This is a community proposal for possible changes for the existing staking allocation and staking mechanism.
TÜRKÇE İÇİN: https://forum.omchain.io/t/oip-3-staking-mekanizmasi-turkce
We are distributing 3.08% each month for the staked tokens on the smart contract. Currently the amount of staked tokens are roughly 58M in the smart contract, with additional rewards not deposited to the contract, we estimate total stake amount to be 60-65M.
With this in mind we are distributing 1.8-2M tokens each month as reward and with current price this is equivalent of $46K worth of tokens. The staking mechanism was sustainable when our token price was trading at $0.004-0.005 however it is clear now that such rate is not sustainable for the long term.
We have asked community to state their opinions on the staking allocation and staking rewards for over a month now and we realized that there is no established consensus. Each community member have their own opinion so it’s very hard for us to come up with a proposal that will be accepted by everyone. That’s why, this proposal will suggest a few different mechanisms and a rejection option. If the proposal is rejected, we will further discuss another staking option until community feels okay with the proposal or accept direct proposals from community members.
Some members of the community stated that if we completely burn the staking tokens or reduce the rate there might be stakers who will be unstaking and starting to sell their tokens, which will cause a pressure on the token price. While this is a valid concern, our findings reveal that;
Before our price action in January, the total amount of tokens that were deposited on the MEXC platform were around 7 Million tokens. With the price increase, this amount became 21 Million tokens. Additionally Bitmart and Biconomy wallets in total contain another 5 Million tokens which makes the grand total 26 Million tokens. With the price increase we can see that 25% of the staked tokens were already moved to the exchanges for taking profit.
This brings up another question, if we distribute 50M more tokens as rewards, with next price increase we might see additional 12.5M tokens ending up in the exchanges and being exchanged thus creating a sell pressure on the token’s price.
Also the concern that says “lower staking rate will make stakers sell their tokens” has another side too, if a user is dedicated to staking for a long time, then it’s wiser for them to have increased price over long time rather than having short term spikes in the price. For example;
- A user stakes 1M tokens, bought at $0.01 (total $10K worth investment)
- Staker receives 3.08% each month and sells those tokens on the market, making $308 a month
- After one year staker profited $3700 from the income from staking and selling on the market, however, if token price goes down by 37% - they are at break even at the end of the year.
- Additionally the staker might receive less than $5K while they are trying to sell the 1M tokens on the market after a price crash at the end of the year, thus losing money.
Considering each and every staker, while they like to have profit, would not want their capital to become worthless over time, we believe that a reduced rate would still attract stakers because at the end, short term high rates cause an illusion that would create a lot more problems when the stakers wish to cash out on the next price increase.
With all the stats and facts and opinions from community in mind, we came up with a few options for community to vote. PLEASE NOTE THAT THESE ARE NOT THE FINAL DECISIONS FOR THE STAKING AS COMMUNITY HAVE THE FINAL SAYING ON THE DECISIONS AND CAN REQUEST ANOTHER PROPOSAL AT ANY TIME
Option 1: Burn all the staking allocation and cancel staking program
This was suggested by a few community members both publicly and a few who reached us out privately. If this option is selected, the staking allocation will be burnt after distributing all the rewards accrued so far. This will bring the end of the staking era on Omchain and there will be no more OMC added to circulation.
Please understand that canceling the staking program might result in stakers to sell their tokens and create a sell pressure on the exchange and price to crash. However, it would eliminate the additional $50K worth OMC issuance each month.
Considering that after this proposal is selected and price crashes 80%, we would have $200-250K worth tokens to be sold on the market. The price would be crashed 80% (which might initially seem like a bad thing) but on the other hand, once that $200-250K sell pressure is lifted over a few months, we wouldn’t have any more $50K issuance each month. With current method we are estimated to have the same sell pressure over the next 2 years.
Another concern with this option is that once staking program is cancelled, there might not be enough demand for the OMC. This concern is truthful at the moment since there are not many projects launched on Omchain, however, over time this concern must be eliminated with new protocols and products integrated to Omchain.
Option 2: Distributing staking rewards over 10 years
In this option we can distribute 5M tokens each year at most, and dynamically adjust staking income depending on the amount of tokens being staked. With current staking stats this would be roughly 8-10% staking incentives per year and would reduce over time with more tokens staked in the following years. It would ensure that maximum 416K tokens issued each month, which is $9.5K with current price of $0.023
Overall, considering the project’s roadmap and adoption, this could be a feasible option for both stakers for holding tokens for the long term and short term traders because they can profit with even 15% price change range over the year.
This method would again have minimum lock duration of 30 days and compounding options each month.
Option 3: Different lock periods with changing staking rates
In this option we would have different staking rates with NO WAY TO WITHDRAW BEFORE THE STAKE END PERIOD different time periods.
What we propose is;
- 3% APY for 30 days of staking and 1 day unlocking period (0.25% for 30 days)
- 5% APY for 60 days of staking and 2 days unlocking period (0.41% for 30 days)
- 10% APY for 180 days of staking and 3 days unlocking period (0.83% for 30 days)
- 25% APY for 360 days of staking and 7 days unlocking period (2.08% for 30 days)
- 40% APY for 720 days of staking and 14 days unlocking period (3.33% for 30 days)
This way short term stakers would have a chance to speculate on lower APY. This would additionally be reducing the sell pressure on the project by large stakers per month since there are no more unlocked rewards per month but still giving them a chance that they can earn a considerable amount of tokens over the long run. This would still have 50M tokens to be distributed via staking.
This proposal would give project some time to have apps deployed on top of it and different protocols enabled, thus when the year or two years staking periods end, the rewards accrued from those stakes could be sold without any problem on the market assuming that Omchain would be further adopted (that’s the assumption of the long term stakers).
Option 4: Reject Proposal
This option means that you don’t want to vote for any options stated above and you wish that another proposal is made or proposal is divided into smaller parts. If you vote for reject proposal, community will be coming up with another proposal(s) for the staking allocation and mechanism.
The community always has the final saying over the decisions we are making or asking for suggestions. We want the full community involvement on this proposal as it’s going to effect the project’s fundamental token issuance mechanism. We want everyone to be on boarded with the decision being made. Thus, we require total of at least 20M OMC voting power to be included in the decision making. If the total amount of votes is less than 20M OMC, we will consider that community participation was not enough and we will seek for ways to make more members to participate.
Before this proposal is carried to the vote, please share your suggestions below for us to evaluate and include in the proposal.