Summary:
As outlined in The Tokenomics Flywheel, dForce plans to introduce DF staking with a unique hybrid model - a combination of free staking (no lock-up) and lock-up (boosted yield) staking. This will also introduce a new governance mechanism where DF holders of Lock-up Staking are able to delegate their voting rights to anyone who is interested in participating in dForce governance.
The staking and governance modules are audited by Peckshield and we hereby propose to implement the DF staking, governance and new tokenomics.
Background
dForce has been carrying out liquidity mining campaigns since the beginning of the DeFi summer, which served as the main driver for DF holders to obtain DF rewards. However, we believe this is not a sustainable way to align interests between protocol growth and DF holders in the long run. We have already implemented a Protocol-Controlled-Liquidity module to take over the majority of DF liquidity in the open market. Now we believe this is a good time to introduce the new model.
DF Staking
Moving forward, DF staking will function as the major venue for earning DF rewards and yields, serving in two forms:
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Free Staking (sDF): No lock-up requirement. DF stakers can unstake at any time, however, the Free Staking will feature lower yield and less voting rights than Lock-up Staking.
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Lock-up Staking (veDF): DF holders can choose a lock-up period for staking from 1 week up to 4 years. There will be no time decay during the lock-up period (the weighting holds constant throughout the selected period), with weightings determined by selected lock-up period:
- 1-year: 100 free staked DF for 25 veDF
- 2-year: 100 free staked DF for 50 veDF
- 3-year: 100 free staked DF for 75 veDF
- 4-year: 100 free staked DF for 100 veDF
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The veDF balance will remain unchanged and won’t get diluted before you unstake - even after a lock-up period expires. However, veDF holders will only receive Free Staking rewards (lower yield) with the same level of voting weight as lock-up participants (voting weight will remain unchanged) upon expiry of lock-up. Stakers need to re-stake their position upon expiration to harvest lock-up staking rewards.
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All DF purchased from the secondary market (with fee incomes etc) will be distributed to veDF holders (lock-up stakers).
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DF holders participating in Free Staking will receive DF as reward claimable on per block basis, whilst those participating in Lock-up Staking will receive sDF as reward (compound on Free Staking yield) claimable at any time.
As the new mechanism just rolls out, please expect some adjustments in the coming months. Initially, we propose the following DF distribution to staking:
- Free Staking: 5m DF/year
- Lock-up Staking: 5m sDF/year
- All DF purchased from the secondary market (with fee incomes etc) will be distributed to veDF holders (lock-up stakers)
Voting Power
In order to support the broadest possible participation in dForce governance, two forms of staked DF (Free v.s. Lock-up) will have different voting weights aggregated across all blockchains and layers we support:
- DF, iDF (lending certificate): each DF or iDF for 1 vote
- Free Staking DF: each staked DF for 1.2x votes
- Lock-up Staking DF (veDF): each veDF for 6.0x votes
The voting power favors long-term holders - the longer you lock your DF, the more voting power you will get.
It is worth noting that unlike the veCRV model, veDF balance will NOT decay before participants unstake upon lock-up expiration. For example, a holder locks DF up for 4 years, and his veDF balance will remain unchanged throughout the lock-up period. We believe this will give more incentives for DF token holders to participate in long-term staking.
Delegation
Delegation will be introduced to the dForce governance process, which could further encourage participation from our community. For DeFi experts who don’t hold DF tokens currently, you can still participate in the dForce governance as long as you are supported and delegated by other DF token holders.
Delegation is only applicable to veDF holders for the time being, meaning that any veDF holder participating in Lock-up Staking can delegate their voting rights to any governor of his choice on-chain.
We welcome protocol users and community members to express their interests in becoming governors of dForce, where veDF holders can delegate their voting rights to you and allow you to participate in the dForce governance process on their behalf.
Motivation
DF staking is a significant step towards aligning DF holders with long-term interests and development of the protocol, introducing a more inclusive governance via delegation.
The staking model will also allow DF holders to fully capture the value of dForce’s protocol matrix.
Proposal
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Implement a hybrid free staking and lock-up staking (4-year maximum) for DF holders, with 5m DF per year distributed to participants in Free Staking, and 5m sDF per year distributed to participants in Lock-up Staking.
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Implement the new vote weighting:
- DF, iDF (lending certificate): each DF or iDF for 1 vote
- Free Staking DF: each staked DF for 1.2x votes
- veDF: each veDF for 6x votes
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Implement veDF delegation