StakeWise Tokenomics Proposal (veSWISE)

[Steel.Key]

@bZ1

Few questions here:

1. Would the specification be that the StakeWise team would create a new contract like in @vlad’s proposal that @kiriyha linked or are you suggesting we outsource this to another protocol (could even be a great SWAT proposal)?
2. Have you done any analysis on what kind of price impact this proposal can have?
3. What is the cost of this? (i.e. extra gas fees if another layer, dev resources, SWISE incentives)

Hi @bZ1 - good questions.

1. So I think it could be either though likely a decision for the team based on their internal resources whether it makes sense to build out internally vs outsource. Don’t think we’d outsource to a separate protocol to manage the staking interface itself per se (if that is what you are referring to) though definitely could outsource the code development. Definitely could be a good SWAT initiative to spearhead an RFP process there.

2. So this is a tough exercise to be exact about with alot of moving pieces (ETH/SWISE price ratio, % staked, etc.) but most definitely a positive impact vs status quo. I think of the price impact in two parts really (a) the market perceptive of fair value of SWISE (which would very likely increase once rev share is in place) & (b) the change in token supply/demand equilibrium.

For (a) we are in process of tweaking this proposal towards an xSWISE/rSWISE Model introduced in SWISE Locking Merits Discussion which we plan repost later this week. That will have some more analysis in it but at current ETH/SWISE ratios, staking yields could be as high as 8% with 20% circ supply staked resulting in incremental buying demand (given the yield) & a supply sink (via staked xSWISE) which would both have positive impacts on price. Additionally would note a stabilization in price as well, as declines in SWISE/ETH ratio during sell offs like we are see now, those yields would actually increase, incentivizing more people to buy/stake SWISE during sell offs which would reduce volatility.
For (b) I think the supply sink mentioned previously would be largest impact though there is also a consistent buy pressure from SWISE buybacks. Current DAO Rev run rate of 317 ETH per @kiriyha is about $475K/year (@ $1.5KETH). While small vs current daily run rate trading volume of about $273M (365x $750K), that’s not too dissimilar to BTC havenings vs BTC trading volumes and similarly would expect positive impact to be felt over 3-6mo time frame after implementation (all else equal). Putting any exact price level to this though would really be a finger in the air type exercise.

3. Cost would largely be dev resources which as discussed wouldn’t be a bad thing for SWAT to RFP. Would be some gas costs but likely minimal as you could execute the SWISE buybacks/distributions at times when ETH gas is low. (could maybe be written into smart contract to execute when gas 1 standard deviation below 7day avg potentially, etc. or just programmed to be done on the weekend at 1am UTC) No SWISE incentives (apart from maybe payment to devs) as its really just redistribution of current revenue.

Appreciate the questions. Let me know if I was clear on the above points or if you need any clarification.