Referral rewards

Referral rewards have helped a lot of sites grow. In the DeFi space, even 1inch does it. Referrals could also help Stakewise grow.

Parameters

  • I’d suggest a referral bonus worth between 20% and 40% of the protocol fee (which itself is 10% of the staking earnings). These earnings are in rETH2, but we could also make it claimable in Swise instead as we already have working reward programs in Swise. The exact percentage is to be decided by the community.

  • As per our previous farming programs, this one should also accrue every day based on the total invested by that referee on that day.

  • A referral reward for one referred staker will last for 1 year (or another term if the community decides so). After which the referral reward for that referred user will end.

  • In order to prevent gaming the system, any ETH that has been removed from Stakewise is not eligible upon restaking, even if it’s moved around between different addresses or mixed with other ETH. If this check is too difficult to implement some other methods need to be designed to prevent gaming this reward.

  • Existing accounts with stakes can’t be referred. Obviously.

  • A referral link could be really simple, like this: http://stakewise.io/?r=0xyourethaddress There’s no need to register, the referral is simply credited to address used in the referral link.

  • We can start this reward program for 3 or 6 months. After the term ends the community will decide if it needs to be continued and what the parameters will be for the next run. Any referrals from the previous period will still need to be honored against the parameters of the previous period.

  • We may need a cap, or maximum payout for the whole program over one period, as a safety stop - just in case.

Hoped for benefits

This will hopefully encourage more social media activity, blog posts, youtube videos, etc… which in turn could lead to more new stakers in the protocol.

The referral reward should pay itself back handsomely, as it would increase protocol fee revenue by a lot more. (That fee will likely be distributed to Swise holders, as per another proposal currently being discussed).

This also offers a way for people to earn rewards by other means than staking or liquidity providing, while still adding value to the protocol. If we opt for a reward in Swise this could be a way to enlarge the community of Swise holders, and/or help small swise holders to enlarge their holdings a bit faster.

5 Likes

I like this proposal a lot Otto, I think it is aimed in the right direction and should help increase protocol TVL

Using ENS would be cool too if there is one for that address, otherwise the simplicity you propose is great.

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Ideally, it should be possible to use either a raw ETH address or an ENS name in referral links.

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One caveat I think needs to be mentioned: for the referral rewards to be claimable in Swise it would be good if we had better price discovery for Swise than we do today.

To that end there is this proposal by @dreth, which would be good to have implemented before referral rewards go live:

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Agreed with the fact that a referral program is needed and that SWISE needs to be a more established asset before we could roll it out.

Will make an announcement today to the community about these initiatives as we need more eyeballs and comments.

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This is fantastic, great work on this proposal.
I see all the beginnings of a great referral program and word of mouth in this industry is a very important lever yet to be pulled by Stakewise.

A couple of inputs to consider:

Add an upside for those who stake after being referred.
In our vibrant community of financial products there is no greater motivator like cold hard tokens.
This side of the incentive could function simply as a one time air drop of SWISE for new stakers. Similar to the launch campaign way back when. To go even further we could have reward tiers that payout based on amount of ETH staked. This could tie in to the % of the protocol fee.

Time lock rewards based on specific criteria
This is a common pattern in these incentive type programs and could help reduce gamification.
It could be as simple as, pay out rewards after 6 months of joining and staking. If funds are removed from the referred account then so are are your rewards :frowning:

Dedicate marketing spend to support the launch of this program
This one is pretty simple. Set aside budget for development of creative and promotion. Include all relevant digital media channels including SNS.
Secure enough budget to run the marketing campaign over say 3-6 months.
Sidenote: I am new to this so I don’t know if this is stuff we decide on as a community but I would highly recommend this activity with such an initiative.

3 Likes

Welcome @Lion, it’s great to have you join the discussion!

An often used mechanism for this is to split the the reward between the referrer an referred. Which seems simple and easy. It’s something we probably should build in with a setting (percentage shared with referred user). That could be set to 0% if we decide not to activate it.

Ethically, you’d have to warn people about this when they are about to remove their stake - at least if they are getting a share of the reward. That usually happens via a sale on Uniswap, and that’s a user interface we do not control.

As rewards accrue per day held and change with the total held in stake that day, it’s still best to leave a stake for at least 1 year to reap the maximum reward. So there’s definitely already a cost to withdrawing early.

Also the protocol profits anyway, even if someone staked for only 1 day, and the claimable reward for a very short stake would be very small anyway, probably not worth the transaction fee to claim - that’s another natural incentive to stake for a longer period. (And for referrers to find people who will stake for a longer period.)

Agreed. Some good marketing material that referrers can use should also flow from this.

I would consider expanding this concept beyond the contract itself.

We could incentivize growing the community on and off-chain. In the case where a recruiter gains members to the discord channel (https://discord.gg/stakewise), who have gone onto stake; We can extend the reward program to them. I’ll outline how this might be accomplished at the end and the pros/cons of one approach.

Scenario

A recruiter pulls new users to join the StakeWise community and have themselves gone onto stake.

Feature

Reward that recruiter with improved ROI either via SWISE or RETH.
Elevate that recruiter’s status within the community to reflect their efforts.

Approach 1: Independent Systems

Have two distinct and separate systems for discord and StakeWise smart contract.

  • Have a bot that tracks the discord referrals independent of whether those who were recruited have gone onto stake. (Unless those recruited request their recruiter’s address)
  • Have a referral code that recruiters send to potential stakers, that will incentives the referrer with rewards.

Pros

  • Simple to Implement
  • Rewards recruiters for new stakers
  • Potential stakers will not need to publicize their wallets

Cons

  • No explicit link between who has recruited people to the discord community with who has actually grown the staker pool
  • Doesn’t reward those who successfully recruited someone to the discord channel, who then went onto stake
  • Recruiter will need to publicize their wallets
  • Users could self recruit themselves easier by having several wallets and sending themselves referral codes

Approach 2: Linked Systems

Have an on-chain contract that will verify which discord accounts have recruited new members, then confirm that those members have gone onto stake and reward that recruiter.

Pros

  • Explicitly links recruiters to their discord accounts
  • Makes it harder for individuals to self recruit, by adding additional hurdles to recruiter validation
  • Stakers could be retroactively rewarded for those who have been referred to staking

Cons

  • Complicated to implement (requires on-chain oracles and off-chain id management bots)
  • Requires a persistent on-chain contract to continuously be polled in order to update the recruiter rewards
  • Recruiter will need to publicize their wallets
  • Referred stakers may need to be incentivized to publicize their wallets in order for recruiters to be rewarded.
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This is great! Maybe one additional thought is how can we provide incentive to the potential staker to stake with StakeWise?

What about offering an incentive to the potential staker as well?

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I am not really a fan of referral rewards build on the base to incentives people to get as much as new users possible as I feel is the wrong approach and potentially lead waste of rewards.

In my opinion the success of a referral program should relay on a happy customer that is willing to serve as cheerleaders for our protocol. The idea is that those customers spread the word to their networks, and both earn a reward as part of the process for doing so, but the main driver for bringing new customers should be that you had a good experience and you are happy for the service and not because you want to accumulate SWISE.

Stakewise protocol do not lock in customers as a new staker can stake a day and unstake the second day, which makes the referral not very efficient and a waste of resources.
I suggest that if we go through that path to “not make the rewards too easy to get”, this is not beacuse i think people could take advantage of it but to ensure that the rewards and the referral programs are effective and useful to the protocol.

Ideally would be good to setup different rewards levels based on specific thersholds or objevctives (e.g. number of new users referrals, contribution to TVL and ideally get the reward only if the user stakes for a certain period of time ) as it will be good to encourage users to refer relevant contacts that can increase TVL instead of begging everyone to sign up for rewards.

I also think it would be nice to incentvise referrals such as social media actions, memes, education materials but i assume this will be covered with the SWAT program once launched

Marketing and advertisment are important but in the DeFi Space the best advertisement is a good APY I feel at this stage concetrating resources to farming rewards and in increasing the value of SWISE is the best investment we can do, giving SWISE to people bringing 10 users staking 0.01 eth each I feel is not that added value.

I am not totally against it but it have to be well defined in order to drive maximum value to the protocol

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