Proposal 1: change the calculation of MPOND distributed to different blockchain communities

#1

Who is proposing:
P2P Validator | p2p.org

Short description:
Currently 20% of MPOND is distributed based on the number of blockchain communities participating in FlowMint without taking a contributed locked value of each into account. It leads to unequal gains for stakedrop participants across blockchains.
We propose to change the formula of MPOND allocation to participating in FlowMint blockchains.

Reasoning:
Currently, the highest share of TVL amongst participating blockchains belongs to Polkadot. However, due to the current distribution scheme one dollar of DOT receives > 44 less than one dollar in IRIS.

9l0JImoQ-iEHKfBiSV0It5pCmXw9XKC7wxaCxNlIZhM8_8JdwlB1IoljhSoHAa7C_lnUH-IBS8wmT3I3my7Oq_ydUc1rk0Vz60UaOG7li_OqEZV1EAIJOAn8t8FSgJhslPQnxUZ8.png1064Ă—194 15 KB

If we assume adding 10 new blockchains to FlowMint inequality of MPOND gains will increase even further. To equalize the amount of MPOND received per USD unit we propose to change the allocation formula.

from:
allocation = daily_rewards / n, where n is a number of blockchains
to:
allocation = daily_rewards * tvl_usd_share, where tvl_usd_share = blockchain_tvl / total_flowmint_tvl

This allocation scheme can balance stakedrop returns across blockchains according to their participation. TVL share can be recalculated on a daily (or weekly/biweekly, if daily is too cumbersome to maintain) basis being flexible to adding more blockchains to broaden the MPOND distribution to various crypto communities. Here you can find a spreadsheet with calcs.

Pros:

  • Equal MPOND distribution per locked USD unit based on participation
  • Higher incentives for stakers of a particular network to take part in FlowMint as it proportionally increases allocated MPOND
  • Provides a reasonable mechanism of MPOND distribution re-calculation in case of adding more blockchains to FlowMint and protects
  • Protects against over dilution of existing participant in case of adding more networks

Cons:

  • Lower MPOND gains for participating blockchains with lower TVL comparing to the current state
7 Likes
#2

Looks fair to me - if we want to maintain some competitiveness to this, we can try quadratic distribution instead.

2 Likes
#3

First of all, nice proposal and it definitely makes sense. I understand the rationale behind the proposal of course and personally stand to benefit in the NEAR pool.

But objectively speaking, I believe the idea behind pools has its inspiration from the DeFi farms where similar factors are in play and it encourages LPs to keep switching between pools which despite being cumbersome also makes the process interesting.

Now, there are differences of course.

(i) Its easy to switch from a USDC pool to a Dai pool but a long term DOT holder won’t start buying and more so staking BNB.
(ii) DeFi protocol benefit by having liquidity against several pairs. Is that applicable to Marlin FlowMint?

The inertia due to (i) and thus the difference is in favour of this proposal.

Reg (ii), Marlin does seem to benefit by engaging more communities and validators. So, if there’s a lot of interest in Polkadot but less so in Iris, a disproportionately higher reward rate for Iris holders does make sense. In such a case though, we should try to figure ways to get this opportunity across to the Iris community.

My 2 cents…

3 Likes
#4

To add to Taylor’s points,
(i) Staking on PoS chains involves an unbonding period
(ii) PoS coins aren’t stable coins so pretty volatile (I would want to sell DOT if it were to reach $10 instead of wanting to wait for a 3 week unbonding period)
(iii) The APRs are still much lower compared to the defi farms. (Not that I encourage the 10,000% APRs. The days of Sushi are gone and most of the high-yield farms were nothing but short-term gimmicks that tanked.)

I’ve a radical suggestion that might not be conducive to P2P given their seeming monopoly over the DOT pool - rewards within a given pool should be circulated amongst delegators of different validators. This doesn’t help all DOT stakers as a whole when competing with other higher yield pools but atleast within the DOT pool provides an incentive for new validators to join and take the initiative.

1 Like
#5

I don’t have anything intelligent to add to this conversation. I, myself, have been participating in the DOT pool. But, I am exploring rates in other pools. I see that in the Binance pool there are some whales who bonded. I am pretty sure such is the case in the DOT pool too. IMHO, using a linear function is a good start but far from optimal and as @vshvsh mentioned a non-linear function not just for allocations in different pools but also between individuals in a given pool should be considered.

2 Likes
#6

P2P’s dominance in DOT pool is consequence of us being good and focused for a few months at attracting our delegators to take part in Marlin protocol. Attracting more validators to Marlin is good but let’s do it in a way that will not shoot early supporters in the foot.

2 Likes
#7

I support this proposal. TVL is a more fair contribute evaluate method.

#8

If different communities are to use this layer 0, there may be some value to have equal distribution or the newer communities may be negatively impacted based on different and potentially conflicting needs. Should a wealthy person have 10 votes while a normal person has 1 vote? Should people with less value staked be allowed to have the same voice as those with more value staked? Perhaps it should be number of stake holders/delegates of each community.

#9

Nice proposal. It really seems great to have governance votes like this :slight_smile:

Couple of my points, i think linear distribution is not the best way to go too. @tayyy put it the best… if chain X has disproportionate reward / $, it only incentivises that chain to be a part of flowmint - which benfits marlin supporting multiple chains as a whole. However, indeed that needs to be mellowed down since people staking DOT may get less rewards if not done anything.

I would suggest calculation similar to this:
allocation = daily_rewards * tvl_share, where tvl_share = total_flowmint_tvl * log(bx)/log(b1 . b2 . b3 … bn )

where bx is tvl of blockchain X and b1, b2, b3… are tvl in usd of all blockchains… near, dot etc… respectively.

This would be more appropriate as it may help lower value blockhains.

1 Like
#10

From the marketing perspective, Marlin will get more awareness if It keeps separate rewards for each blockchain. Otherwise, Polkadot whales will get everything there arent enough incentives for small blockchains.