Nope. Never said that. The next part of my post (which you even quoted), explains it. It motivates people to buy more swise, which makes ths price go up. Which may compensate for the negative effects of this proposal.
Having to either hold for a long time or sell, will lead to more selling pressure on very low liquidity AMMs due to drying up supply. A combination that could really tank the price. So we need a counter pressure to make the price go up, a minimum required investment could do that.
Please take a look at my example calculation above again. There will be no voting power boost of any significance, nor any staking fee reward increase of any significance, if the vast majority of swise holders act rationaly, by either staking long term or selling if they don’t want to stake. And frankly a non-staked swise will loose nearly all voting power and rewards so there’s really no good reason to hold on to them unstaked.
So please let’s not pretend anyone is going to get any significant voting or reward boost from this. This is just a proposal to lock up your swise for nothing much in return.
I don’t agree with the way you calculate optimal outcomes/strategies as it does not take into account factors like opportunity cost of capital, liquidity premiums and crypto market sentiment/cyclicality.
Each of these is individual to each SWISE holder and shapes the optimal duration each person is willing to stake/lock SWISE for. There is thus no universal discount rate you can apply here for all holders.
I can speak for myself, i will never lock any asset in crypto for longer than 2 years because a) its’ hard to predict the market on a timeframe of 2+ years, b) i value liquidity (put a discount on illiquidity) and c) i interact a lot in DeFi searching for new yield opportunities (higher opportunity cost).
I believe im not alone in taking these things into account when choosing to stake and thus expect the stake duration distribution resemble normal distribution more or less.
Longer term stakers take an outsized bet on SWISE despite the factors i brought up above and thus should be rewarded with an outsized higher voting power and/or higher claim on the protocol earnings in the future.
Putting a barrier to entry in place with min stake required does very little for buy pressure as not all will be staking for the longest term (as argued above) and thus will just disincentivize/exclude smaller holders and community to stake.
“show who really believes in the project” by the means of having to buy a significant “bag” is not a valid approach, as if smaller holders cant believe as strongly in the project as the larger ones.
Im thus for the concept of disproportionately rewarding longer term stakers (as their earnings are discounted) even at the expense (small earnings/ voting power dilution) of holders like myself who will not lock for the max duration, which is fine as we all have different discount rates. I believe this approach is helpful to drive more utility to SWISE while giving any holder a choice to pick his own duration and be rewarded accordingly relatively to the choice he is making.
What’s wrong with the math?
All you present is some fantasy scenarios without hard numbers to show the effects.
While no-one invests in crypto with the idea that exactly 1 year or 2 years from today I am going to sell. These markets are far to volatile for any planning like that. People either buy for the (very) short term to play the market or the long term, maybe waiting for an unpredictable rally to cash out. If you’re going to lock up for say 2 years, you might as well do 3 or even 5. It would be stupid to lock up for 1 year and renew each year for instance, if that’s your intention then go for the max from the start to get the max reward.
There are therefore only two rational strategies, either lock up for the max reward, or sell.
But let’s entertain the idea for a minute that say 25% of holders play irrationally and don’t sell, don’t lock up for 3 years, but for 1.
For simplicity let’s have 100 swise “shareholders” that currently each have 1 vote.
75 shareholders stake for 3 years. Each of their shares now has 5 votes (together they have 375 votes).
25 shareholders stake for 1 year. Each of their shares now has 2 votes (together they have 50 votes).
So we now have a total of 425 votes for 100 swise “shareholders”.
This makes a 3 years staked swise share now have 1.17% of the vote (a 17% gain),
while a 1 year staked swise share will now have 0.47% of the vote (a 53% loss).
I am pretty sure we can all agree that the promise of 5x more voting power (and rewards) is a gross misrepresentation of the facts. This simply will never happen. Not even close.
Anyone who has the intention to stake for less than the maximum 3 years, is going to loose out a lot. They’d all earn a lot more by keeping things as they are now.
The current lock in proposal is a barrier to entry in itself, so clearly the problem isn’t a barrier to entry. Regarding the minimum stake, small holdings simply do not carry enough weight to influence prices (a let’s remember that the purpose is to get the price up), however anyone willing to invest a significant amount more will influence the price positively.
Now let’s also not forget that there are people who are not reading and following every proposal here, some may find out later that they had to stake in order not to be screwed out of their rewards. If you think that the majority voting in favor of such a change justifies stripping a minority of their rights (to votes and rewards), then the majority can also vote to raise the minimum required stake. This is how majoritarianism works (basically democracy without safeguards where every person/share is treated equally).
Personally I think that every swise should be treated equally, with equal voting rights and equal reward rights, that can not be taken away even by a majority decision. But if this principle is out the window (as this proposal would do), then I think any other proposal with similar effects on another group of swise holders is equally fair game.
Now as it happens large holders will always have more votes, so I suggest everyone be very careful with throwing this principle out the window.
Aren’t votes tied to shares of SWISE (not individual shareholders)?
This proposal seems to help level the field so that a smaller investor who believes in the project could potentially match the voting power of a whale, who values liquidity and is less likely to lock up their SWISE for an extended duration.
I support the idea of tiered lockup durations. Some of us have different time horizons and risk profiles for investing. There’s no guarantee Stakewise will be solvent in 1, 2, or 3 years… If rewards were flat, there’s no reason for me to lock up for 3 years when I can justrenew every year and lower my risk.
Why would a whale not lock up their swise? Losing even a fraction of the reward would be serious money for whales. Whales also tend to not need to sell, as they tend to have lots of other investments too, they are the group for whom it’s easiest to lock up.
It’s smaller investors, who might need the money on a rainy day who are less likely to want to lock up swise for a long time.
Also staking and later unstaking and claiming costs gas, which at times can be quite high, the smaller your holdings the more those fees impact you, while for whales the fees barely matter.
So on the contrary this proposal is likely to shift more power to whales at the expense of small token holders.
I want to revive this discussion!
How would it be if staked SWISE was the portion of SWISE that actually got the distribution of fees from the protocol?
https://forum.stakewise.io/t/distribute-stakewise-protocol-fees-to-holders-of-swise/432/28
paging @vlad @kiriyha @cryptochrome @remche @ottodv
Nothing changed, all my objections still stand.
It’s exactly the same as what I described here: Allow staking $SWISE as means of boosting the voting power of long-term token holders - #16 by ottodv except with rewards instead of votes. End result a few who don’t pay attention get royally screwed, and the rest gains next to nothing while saddling themselves with a huge restriction.