Another quality discussion & opinions in this thread 
I’ll address some of the questions and thoughts below:
how do you address the feedback loop between providing $swise rewards for LPing and distributing reth rewards for holding $swise?
have you done any analysis on LP rewards impact on $swise? my sense is that it has dilutive for legacy $swise holders
@slizz_lord You are absolutely right regarding the dilutive impact - this effect is the reason why we need to align the issuance of SWISE with TVL growth, so that this expenditure is not in vain. As for the feedback loop between SWISE and rETH2, would you mind elaborating on your concern?
[regarding clawback] if this were to be implemented, I think a DAO vote would be reasonable before implementing it
@dreth I totally agree - wouldn’t do it any other way.
We have the power of programming and mathematics, this yield could not only be adjusted through a DAO vote, but it could also be a dynamic number where a linear (or nonlinear) combination of these variables is considered from the very start. If a way to compute the yield is designed from the start as to give a variable yield instead of a constant one with the purpose of keeping the tokenomics of $SWISE healthy, which with this proposal should be our #1 goal or constraint, then holding $SWISE will be not only be nicely incentivized but also will help keeping $SWISE healthy.
I personally think that formulas are not necessary to create a variable yield for the token - the fluctuations in ETH price, circulating supply, APY mean that the yield is always variable unless we actually come up with a “fixing” formula. So the yield discussed in the proposal is meant to be variable, but we need to avoid the risk that it follows a downward trend due to the additional distributions of SWISE, which will naturally occur because we bootstrap liquidity.
IMO things to consider before this becoming a formal SWIP:
- create a pool on uniswap v3 for SWISE vs ETH with 0.3% fee (to be consistent with the others) as well as pull StakeWise’s liquidity from 1inch. ← IMO the most important 2 things.
- rearrange monthly LP rewards in a dynamic manner (as opposed to a fixed amount of SWISE every month), or delay the continuation of the rewards until a DAO discussion on the rewards is held
- reconsider flattening the pool rewards (i will follow up to my post, ever since i made it ive been monstruously busy to get hands on with it)
- reconsider the $SWISE staking proposal: Allow staking $SWISE as means of boosting the voting power of long-term token holders
I do agree that the SWISE/ETH pool on another platform is among the priorities. As for the other points (apart from the flattening - waiting to see this btw), would you mind clarifying 1. which LP rewards would you prefer to rearrange and how, and 2. what are the main reasons you’d reconsider the staking proposal?
This is one of those proposals where im not sure if vested $SWISE should have a different treatment, but ill leave that discussion up for grabs \o/
My personal take is that vested tokens should not participate in the protocol fee distribution if this proposal were to be made and passed.
Also, thank you for the great proposals re finding a better alignment between positive contributions to the protocol and distributing protocol fees. I think all these ideas have merit!
Technically speaking, I’m an advocate of KISS implementations, especially in smart contract world where bugs can be dramatic… But I’m also concerned by the protocol fees waste such a solution would imply.
The clawback of unclaimed rETH2 seems reasonable to me if the rules are fixed by the DAO.
I agree that once such a mechanism is implemented, DAO must be very careful with $SWISE emission.
@remche duly noted sir, and good point there about the KISS implementation. I am personally leaning in the same direction + clawback.
I am torn here. On the one hand, I see the absolute necessity to incentivize SWISE holding and making it more popular through rETH2 farming (love the idea, especially the more involved method), but on the other hand I also strongly believe that the DAO needs funding for important things like proper marketing, team staffing etc. - Especially the marketing part is of concern.
Not really sure what I would vote for at this stage. Hoping that a lively discussion here will bring more clarity.
Is it possible to divide the Stakewise revenue between both (e.g. “startup funding” and providing incentives for SWISE holding)?
@cryptochrome thank you for the feedback. Starting from the last question - I think it’s totally possible both from the ideological perspective & technical implementation standpoint to make this split if need be. However, as of now I would be reluctant to use the DAO’s Treasury for any hiring/marketing needs, because a portion of SWISE has already been sold to fund these activities.
I like the simplicity of the proposal: hold SWISE – get part of protocol revenue. Turns SWISE into a governance and “shareholder” token. Sure can see it increasing the attractiveness of SWISE.
For cons … could it attract people not really interested in the project buying up large quantities of SWISE? And skewing future DAO votes? Or maybe all buying interest in SWISE is good. We still need to get the token out there a lot more I guess.
@jonathanstrange Frankly I think you are right - it absolutely could attract the wrong crowd that doesn’t align themselves with the protocol’s needs and would rather focus on value extraction. The flipside is that they’d pay for it, and as long as other DAO members want to own a seat at the table rather than cash in their pocket, this could create a positive effect for the price of SWISE. Finally, I do agree - the token needs to have more visibility, both through a proper marketplace and through the popularization of StakeWise.
This sounds quite well balanced to me.
Regarding some of the questions, I would not do a clawback, if people want to wait a long time before claiming, even years, for whatever reason, I don’t see anything wrong with that.
I do think the minimum amount is the better mechanism to avoid micro amounts.
I like the idea of a minimum holding period too, as long as there’s no need to lock it in a contract, so that Swise can be used freely in LPs or maybe as collateral one day. I’d make it at least 1 week, maybe even a month.
Finally, the only concern I have, is that I think protocol fees, should first be used to pay for all running costs that there may be, and some for further development. So that the whole system is nicely self sufficient. What’s left I agree should be paid out to token holders.
As stated already regular payouts to token holders would probably increase the price of Swise, which would in turn help to reduce the amount of Swise needed for farming rewards. Which would be a good thing.
@ottodv thank you for sharing your thoughts. Where would you set the minimum amount at, and which expenses do you think should be covered?
As a SWISE holder, I love the idea of getting more rewards for it. But But I find @kiriyha’s last point, about increasing Stakewise marketing reach, even more convincing. Stakewise is the most positive, transparent, responsive, and user-focused staking solution I’ve seen in the ecosystem. And yet, TVL seems to be growing slowly and I don’t see a lot of talk about Stakewise outside of this Discord.
I’d rather see protocol money spent on trying to increase TVL (and thus the value of SWISE) than claiming an extra couple percent of yield. If we had Lido’s growth curve, SWISE would be more valuable and we’d all do much better in the long run.
@Athiriyya thank you for the kind words and caring about the protocol first and foremost. I totally agree with your perspective and just wish we released v2 already to get the needed growth under the belt. Otherwise, let’s brainstorm some ideas for the marketing budget - where would you start?
I decided to crunch a few numbers to see how the Simple Method compares to the Involved Method for claiming the rETH2. To claim the rETH2 & SWISE rewards from the Uniswap LP requires 135,000 gas, which at a gas price of 40 GWei would cost 0.0054 ETH. There is probably around 50,000,000 SWISE currently in circulation and kiryha states that the DAO currently earns 150 ETH per year. From this you can calculate that you would need to hold 1800 SWISE just to get sufficient rETH2 to pay the gas fee for a withdrawal once a year. Thus for smaller holders, only the Involved Method is likely to make sense financially.
I am starting to lean towards the ETH being used by the DAO for other purposes.
@amphoria what a considered comment! This is the way - putting the idea into context to reach the conclusion. Thank you for the calculations - I have not done them, but had a gut feeling that smaller holders would not find this as attractive as the bigger fish. The result does impose certain restrictions on what we can do if our goal is to offer the benefits from holding SWISE broadly. I suggest we brainstorm alternative ways to bring value to SWISE, ones that directly tie the Treasury spend with TVL growth. Any ideas? Will think of my propositions in the meantime.
If the vote came down to either (i) distributing the protocol fee in it’s entirety towards incentivising SWISE holding or (ii) securing protocol growth I would prioritise the latter, at least for now.
If there’s a way of setting x amount aside for protocol advancement - ie marketing and DAO personnel - and distributing the rest among SWISE holders utilising the simple method outlined by @kiriyha, with a clawback approach clearly defined by the DAO, I think that could be the most beneficial way forward. I’m also very humble in the limit of my technical understanding and realise that this might not make sense from that side.
@richardostrmn thank you for the input! Given these 2 choices I would also be inclined to pick the latter; however, luckily we do not need to choose. I think this is a matter of finding the right initiatives and allocating funds towards them. While the team is working on some of them, if you have ideas we would really love to hear them 
Hmm I need to think about this a little more, this might be a little too early for the protocol. I think like mentioned in the risks section, it might be more important to focus funds on increasing TVL and awareness. With that being said $SWISE staking could bring more awareness.
If it is decided to implement this, I still think there should be some sort of locking vest system for $SWISE in order to earn protocol fees. Maybe something like veKP3R where you choose how long you lock it for and the longer you vest the higher percentage of your vest counts towards earning fees.
@rustedpopcorn did you have more thoughts on this? I think you are right to point out this risk in particular - from the development standpoint, protocol fee distribution might be premature if the SWISE distribution mechanism clearly linked to TVL growth is not found. With regards to SWISE staking - in your opinion, what are the advantages of it over the simple distribution?
Portion 2 of the replies coming right after
