Proposal for P125 staking behaviour

bZx Improvement Proposals
#1

I could not find much information on how the buyback would happen on the P125 debt token, so let’s start a conversation about how things could be implemented.

Here is what I would like to see implemented:

  • Ooki creates a staking vault where people stake their tokens and own a percentage of the pool.
  • Whenever the DAO decides to buy back P125, they distribute the fees to stakers, relative to their percentage of ownership. And burn the equivalent of the P125 staked.
  • If people want to get out early and sell, they can do it on a secondary market outside of Ooki.

This is very similar to how Ooki/Bzx fee staking works, except tokens in the vault are also burned on each payment.

The advantage of that proposal is that:

  • we can start getting rent as early as the first payment without losing any value. We do not need to exit early if we need any cash flow.
  • It’s fair, as everyone is getting the same percentage paid back each time.
  • Ooki does not care about the price of the token, they will always burn 1 token for 1$ distributed. That makes the contract implementation dead simple.

Here’s a concrete example to make this crystal clear.

Let’s assume there is a vault of 10M P125 tokens.
UserA staked 1M token, owns 10% of the vault at the moment.
UserB staked 0.5M token, owns 5% of the vault at the moment.

DAO has 1M to buy back. It distributes 100k to UserA, 50k to UserB, … and burn 1M P125 tokens.

UserA is left with 0.9M P125 token staked & 100k in USD.
UserB is left with 0.45M P125 token staked & 50k in USD.
And the vault is left with 9M tokens to buy back at a later time.

DAO stops purchasing once there is no more token in the vault.

Updated on Dec 16th from conversations on Telegram:

Here is a possible implementation:

For the staking contract’s behavior:

  • deposit: Called by the user. Stake P125 token. This function transfer P125 token to the contract and updates the % of shares the user owns.

  • withdraw: Called by the user. Get back your P125 token. This function transfers the P125 token back to the wallet and updates the % of shares the user owns.

  • harvest: Called by the user. Transfer the USD paid back available on the contract back to the user’s address. Either by using the address on the contract or by using token tracking. This is important to allow users having low rent to only harvest when it makes sense to them.

  • earn: Call by Ooki with the 30% fees. Deposit the USD into the contract and distribute it by share % to the users for them to harvest at a later date.
    The earn function should not allow depositing more USD than there is P125 staked. For every USD deposited to the contract & distributed, 1 p125 token is burned (transfer to 0xDead)
    The DAO keeps using 30% of their fees until they reach 0 P125 tokens in the vault.

Notes:

  • To avoid creating more tokens, the contract does not mint any token tracker in returns. We take the same implementation as Autofarm does for its vault. The contract tracks the amount of P125 token per address, and harvest/withdraw can only be done back to the same address that deposited the P125.
    While that creates a small drawback, it makes the implementation a lot easier by only having one P125 token and one staking contract.

  • Once the number of P125 tokens reaches 0 in the staking contracts, Ooki will announce it to their users and give them x days/week (TBD) to stake their remaining P125 into the contract.
    If no new P125 is staked into the contract before the deadline, then the entire reimbursement scheme stop and people still holding P125 (outside of the staking contract) will forfeit their reimbursement.

  • To address people wanting to sell early at a lower price, we could start with a telegram channel where people could announce/find bids and redirect them to use peer-to-peer swap (e.g: nfttrader.io/trade).
    That would give the market a good idea of the price range people are looking at, allowing a secondary market to emerge (e.g: creating an LP if that makes sense).
    This is not the responsibility of Ooki though.

6 Likes
#2

Great proposal.
Much more logical than pool madness on uniswap. And fair.

#3

I love the idea. It has more sense to do that.

#4

I have no objection to this proposal provided it is technically possible for the team to implement. Basically instead of setting up a liquidity pool and using 30% of fees each month to buy from the liquidity pool, the DAO can just give that 30% of fees directly to people staking P125, and burn a proportionate number of P125 tokens.

The only downside for the DAO is that it will lose the ability to buy P125 from the liquidity pool at less than $1 (which is what will happen if there is a liquidity pool), but this idea is more fair to people who lost money.

However, keep in mind that the tradeoff for doing this is that the buyout will take much longer to complete and people will have to wait a lot longer for their money - there is no option to sell the P125 token at a discount to get quick cash (unless someone other than the DAO sets up a liquidity pool, but I’m pretty sure even if there is one, it won’t have much liquidity) - people who lost money will be stuck in the staking pool waiting till the buyout to be 100% completed to get all their money back which could be years.

The original proposal had the benefit that people who wanted to get out quickly could sell P125 at a loss and get cash, while people who were willing to wait could wait as long as they wanted for the P125 price to get to $1 (which would happen over time as the DAO buys up m ore and more of the supply). Plus the DAO would seed a liquidity pool as well.

Doing it this way has advantages but it has the above disadvantages as well.

1 Like
#5

Hey BadriNat, thanks for your input.

I fully agree that is a tradeoff, but I think the goal of Ooki should be to make their users whole.
If we implement the LP token, many people will be pressured (me included) to sell their token very early to get some cash out to cover other positions. If I want to get 1% of the amount I lost soon for any reason, I probably need to sell all my P125.

And that if there is enough of a need to sell early, I’m sure the market will seize this opportunity and price it out properly.

The only downside for the DAO is that it will lose the ability to buy P125 from the liquidity pool at less than $1 (which is what will happen if there is a liquidity pool), but this idea is more fair to people who lost money.

I’m not sure that’s true. From the conversation I had on telegram, it seems the uniswap v3 concentrated liquidity will be used. So that will always result in the DAO spending 1$ on 1 P125.

1 Like
#6

(from telegram)
I see 3 options right now that ooki can do to setup to buy back the P125 token. I’m only referring about what ooki does, not what the secondary market will do with the token.

  1. Using uniswap v3 pool, with a custom price range of 0.99 to 1.01$.

What that means is that every time ooki wants to use the 30% from the fees to buy back the token, they will add liquidity to the pool, at which point people will be able to swap their P125 token for USD.

Since the range is so tight around 1$, the p125 token price for the pool will always swap at 1$ until there is no more USD in the pool.

That has a major drawback, as whoever is faster will swap its token first, leaving the pool empty in microseconds (with help of bots). That leaves most users without the ability to swap until all people with bots get their entire fund back. We’re talking years without seeing a dollar.

  1. Using uniswap v2 LP:

Ooki will provide liquidity USD-P125, which a price of P125 super low. At that point, people can decide to sell them P125 for very low, or wait for others that sell very low to get rid of all their token, until ooki put enough USD in the pool and bring the price to 1$.

That gives us an even worse case, where you literally cannot be made whole until everyone before you that was ready to sell their tokens has done it. So either you sell for lower, or you get nothing for years. This would have a negative loop where more people are probably gonna sell for lower (as they need cash) making the price go very low for a very long time

  1. Using a staking/rewards mechanism

As I describe above. People stake their token into a vault made by ooki. Everytime ooki decide to buy back with the 30% from the fees, they distribute the fund relative to each person’s percentage ownership and burn 1 P125 token for every USD.

This gets the fund distributed equally to everyone in the pool and give a rent from the first payment.

In all these cases, the P125 is a ERC20 token. So other secondary markets can still be open by anyone. It can be traded, swap, ect… as long as someone is ready to buy it or set up a LP for it.

I think option 3 is by far the best option. As it provides a rent, it provides a clear value to the token, making its price a lot more interesting in the secondary market.

#7

I support this proposal… The ones that want to wait will receive a “rent”. Those who want to cash out, still will have the option, but on (much) lower prices… Everyone can decide what is the best for himself.

Depending on the “rents”, it might be interest on buy more P125 on the secondary market.

1 Like
#8

Great proposal. I compeletely agree and hope it gets implemented!

#9

Hello everyone!

We got some great discussion on telegram about how a possible implementation could go.
I added everything back into the proposal.

Please, let me know if any questions or feedback, here or on telegram.

1 Like
#10

I support that proposal as well , the best one so far

#11

Yes great proposal. I think that the DAO should absolutely back it. Hesitancy to do on their part is just further evidence that they don’t plan on reimbursing losses at full price. People who want to sell early and still get something can make a side market with OOKI DAO or other interested buyers and still have chances to find those opportunities.

1 Like
#12

Why can’t you implement both options? Staking vault and liquidity pool?

#13

Ooki is going to take 30% of their fees and buy back the token, the question is how do they spend that money and what role do they play.

As I describe above in the comment, I believe that if Ooki creates an LP where it buys back the token, it will create a downward spiral that incentivizes people to sell early for a very low price.
That’s because if you want to wait, you’re getting absolutely nothing until the price gets to the level you are comfortable with. The price will start low and stay low for a very long time, as ooki does not have that much fund.
You basically have to forfeit most of your debt to get any fund from ooki and if you do not want to forfeit it, then you must wait years to get your first dollar out.

Are we really ready to wait like 5 years to start touching your first dollar, and this will still be at a discount?

Imo, ooki should offer a way to make people whole not incentivize them to sell at a discount. And let the market decide the price of the token.

So then you could do a 50%/50% split, where ooki uses half the amount from the fees for the staking and half for the LP.
But I think that just has the same issue, just to a lesser extent.

I believe it makes a lot more sense for ooki to create a staking/rewards mechanism and have the price of the token decided by the market only. They still influx the same amount of cash, but it give money to all the holder right away.

If there are values in the token, people will be ready to buy it on the secondary market.

1 Like
#14

I think this proposal would have a difficult time passing considering that it would likely extend the buyback period by 5-10x.

#15

Why would it extend the period?
There is a fixed amount of tokens that need to be bought, and that all comes from the same 30% of their fees. That is through an LP or through staking, they have to buy back all of them.

If they decide to vote against it, while the owner of the P125 wants it, they are purposefully setting up a protocol that they know will not reimburse people fully. In this case, they have to stop pretending they care about making people whole.

If you want to build trust in your platform, purposefully scamming your past investor or user is really not the way to go.

1 Like
#16

There is a fixed amount of P125 that needs to be bought, not a fixed value of P125. With the planned implementation, impatient people can sell their P125 early on to the DAO for a large discount. This means that the initial buyback rate can be much higher than if every P125 were bought back for $1. Patient P125 holders would strongly prefer this method since it means they will be able to get the full $1 for their P125 much earlier than the proposed method in this thread.

#17

Yeah exactly.

So if people holding P125 tokens want this staking, and it seems they do, if Ooki DAO votes against it, they are purposefully deceiving their past users by pretending they desire to pay them fully. But in reality, they refuse to implement the feature that would allow them to do so.

If they want to implement a behavior that people do not want, for the ONLY reason it saves them money, they would have to stop pretending that they did their best to pay back people. They would be lying and deceiving their past investor and users.

Users can still sell on the secondary market if they want to go out early. The only reason to vote against it, if the owner of P125 wants it, is to not reimburse their people fully form their f**k up.

Great way to start a rebrand, by the first thing you do is f***ing over and lying to your past investors and users.

1 Like
#18

This proposal makes it much more difficult for anyone to receive the full $1 per P125 in a timely manner. It really only benefits people who are impatient and harms everyone else.

#19

The LP proposal makes it impossible to ever get paid anything before years if we want to have any cash-out. You must forfeit your debt to get any if you ever need money.

And it’s purposefully designed to buy back the debt at a lower cost. Your own word.

I’m fighting for people to get as much as they deserved. You’re fighting for people to be pressured to sell their token at a lower cost so Ooki does not need to pay back what they lost in their f**k up.

And we both know that the market will decide the price in a secondary market. If people want to get out early they will be able to, by selling to other, which will stake in the vault.

The only difference is that ooki has to pay back the token at 1$, which they promise they would do.

1 Like
#20

The token will be bought at UP TO $1. This isn’t a debt token method that the DAO made up. This is the standard method used by many popular defi protocols. The method described in your post sounds good on the surface until you realize that it only benefits the impatient people who want money right away.

1 Like