[CLOSED] Proposed VSTA Staking Module 1.0

Background

To enable more utility for VSTA, I am proposing a governance staking module that ensures governance votes are casted by those who are with the community long-term through economic alignment.

In this document, I will introduce a staking module that rewards those who stake in the system the longest, and also rewards those who reinvest their earnings back in the protocol.

The core structure I’m envisioning will utilize a time-based staking system with heavy incentives for people to reinvest. Staking VSTA will entitle users to earn escrowed VSTA (esVSTA) and a share of the fees generated by the protocol, which is represented by Fee Point (FP).

As the team as mentioned on AMAs, they are working on their own proprietary module. However, I hope that this proposal better serves their purposes.

Escrowed VSTA (esVSTA)

esVSTA is earned by a user staking VSTA into the staking module. It is non-transferrable.

Three Possible States

  • Free standing (unstaked) - esVSTA in this state is not earning anything.
  • Staked - earns in the same way as staked VSTA - earns esVSTA and FPs.
  • Vesting - vests continuously into liquid VSTA over 1 year. Vested VSTA can be claimable at anytime
    • Original amount needs to be reserved for vest: original amount used to earn the esVSTA needs to be reserved for the esVSTA to vest. Both staked VSTA and staked esVSTA can be used as reserve.
    • esVSTA tokens in this state do not earn rewards. Staked tokens that are reserved for vesting will continue to earn rewards.

Distribution

esVSTA is distributed to the stakers based on net VSTA holding (VSTA + esVSTA + vlVSTA) every second.

To prevent concentration, I’d institute an upper limit on earning power based on staked VSTA. We recommend to cap the max amount of esVSTA at 4x the amount of VSTA deposited. This upper limit is subject to governance vote.

Reward rates will be evaluated each month and may be subjected to changes. Any modifications will be announced at least 7 days in advance before being implemented.

Fee Point (FP)

Fee Point (FP) is a representation of protocol fee. Since protocol fees accrue in VST, FP is denominated in VST. FP is non-transferrable. It can either be redeemed to claim a user’s share of protocol generated revenue or reinvested back into the protocol.

Distribution

FP is distributed to the stakers based on net VSTA holding (VSTA + esVSTA + vlVSTA) each epoch (currently set to one week).

Redeem

FP may be redeemed for a user’s share of protocol generated revenue at any time. Since protocol generates revenue in VST, FP is denominated in VST. When the protocol generates 100 VST in fees after one epoch, 100 FPs will be distributed throughout the staking pool. As such, a user can redeem a number of their FPs, receiving esVSTA of the same worth in return.

Choosing to redeem FP will harm a staker’s future earning potential, thus, users should carefully consider whether esVSTA now is worth the potential loss of fees in the future.

Reinvest

As a way to incentivize people to stay in the system, people may reinvest their FP back into the protocol to earn esVSTA and vote locked VSTA (vlVSTA).

esVSTA

When FP is reinvested, the underlying VST is then used to market buy VSTA, which is then given back to the user in the form of esVSTA.

vlVSTA and Reinvested Fee Point (RFP)

Reinvested Fee Point (RFP) is exactly what it says it is - it is a representation of how much FP one has reinvested. When one reinvests FP, the FP is burned, and one gets RFP in return. RFP is used to determine vlVSTA distribution.

vlVSTA

vlVSTA is given to people who have a RFP balance. It stands for vote-locked VSTA. The more RFP a user has, the more vlVSTA he or she is entitled to receive.

vlVSTA has a couple other properties:

  • Non-transferrable - vlVSTA is non-transferable.

  • Cannot be unstaked - different from esVSTA’s vesting mode, vlVSTA shall not be claimed. Its only purpose is to earn reward

  • Subject to burning - When VSTA or esVSTA tokens are unstaked, the proportional amount of vlVSTA are burnt. For example, if 1000 VSTA is staked and 500 vlVSTA have been earned so far, then unstaking 300 VSTA would burn 150 (300 / 1000 * 500) vlVSTA. The burn will apply to both staked and unstaked vlVSTA.

  • Distribution

    • vlVSTA is distributed continuously proportional to RFP holdings, as a further reward for re-investment.
    • Upon reinvestment, vlVSTA has a fixed distribution for each epoch (a month). Reward rates will be evaluated each epoch and may be subjected to changes. Any modifications will be announced at least 7 days in advance before being implemented

About Me

I’m just a concerned member of the community really looking to add some colour to VSTA and the protocol in general! I hope the team responds favorably to this proposed module. Thanks!

Comments

Attaching a Google Doc for comments here. At your convenience, please also comment on Curia below! Thanks.

8 Likes

I really like your proposal.

We could even increase vlVSTA utility. If I am right, we would want users to reinvested their FP as it is the most profitable to everyone. So what about giving some priority to vlVSTA holders? My idea would be:

Let’s say Vesta is launching a new collateral asset like GLP but the mint cap is limited to $1,000,000 at the beginning. The demand would probably be higher than that, so we could allow vlVSTA holders to access this vault BEFORE “lambda” users.

Otherwise, thanks for your engagement! Ave VESTA!

1 Like

Great proposal ser. I’d still like to continue with the initial idea for users to stake a VSTA-VST LP token, hopefully Curve V2 Factory pools launch soon for this purpose. This allows us to grow a deep liquidity pool, leads to less reflexive price movements, and allows Vesta/Vesta stakers to capture trading fees/DEX token emissions.

We can keep a lot of what you proposed, but I suggest the following token models Vesta Liquidity Pool (VLP), escrowed VLP (esVLP), and Multiplier Points (MP).

Token Model

It’s basically a model that resembles GMX’s staking but substitutes staking GMX for VLP, esGMX for esVLP, WETH rewards for VST, and MP stay the same.

Users stake VLP and begin earning esVLP & VST.

esVLP can be staked or vested, and eventually the emissions decrease over time.

VST rewards can be claimed immediately. Reinvested VST adds VST to VLP and rewards the user MP.

MP represent VLP that can’t be unstaked and are subject to proportional burning when unstaking VLP and/or esVLP.

3 Likes

Thanks for the proposal CD, we’ll definitely look over it more from over here. While we were looking into models a la the Hearth, your model here definitely gives more utility to VSTA. Well done!

1 Like

I’m a fan of this model which takes inspiration from GMX tokenomics in general as per my previous comment here;

I believe the team should put their own unique spin on this to fit the revenue model and general use case of Vesta along with $VST & $VSTA. I think liaising with the GMX community and team (@xdev_10 is very communicative) would also be ideal for feedback.

2 Likes

Thanks, @cd100, for putting together this proposal. I agree that a staking Module will drive further utility to $VSTA and also drive the engagement in general for the project.

I like the idea of keeping the VSTA staking model close to the GMX model, which has been a resounding success. It’s also a familiar model for lots of Arbitrum users.

Excellent proposal, I’m in favor. Would be interested to read exact numbers in terms of how much VSTA this will be creating/distributing.

Yes. About time too. As a user, im just looking for a place to stake. not just LP and collect rewards.

1 Like

I support this and want to campaign the community to rally around it

2 Likes

I support this proposal

1 Like

Support this.Great idea

1 Like