Dapps Staking Reevaluation

Motivation

Dapps staking gives a sustainable revenue for developers to build to earn, but there has been many teams that has not contributed to the network. In a decentralized network with reverse panopticon social dynamics, community must be vigilant and stops those team who only takes Shiden’s asset without contribution or adding value to the network.

Proposal

I suggest to reevaluate any dapps that has not shown working in shiden network to be eligible for dapps staking. It is obvious that they have not build anything and they take our community’s fund. Also, I suggest monthly competition board where the network can display the ranks of the each dapp in the public social media to show progresses of each dapps activity.

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Right now, there are 15 dapps that are listed on the dapp store (excluding Community Program and Stake Technology). Out of the 15 dapps, only 4 of them have actually created value to the ecosystem.

  1. Standard Protocol
  2. Polkaex
  3. Kaco
  4. JPYC

What I meant by creating value is, having their product fully running on Shiden Network. The rest of the dapps are not integrated yet therefore, they have not created value or brought users into the ecosystem. Regardless, they are still earning the dapp staking rewards. This seems unfair to everyone in the ecosystem.

Therefore, I propose:

  1. To delist projects that have not done any integration or being fully functional and we can review their performance in the future and list them again.
  2. New projects must be fully functional and need to have a reasonable amount of users and on-chain data for at least 1 month, before getting listed.

This will be a continuous cycle. If a project gets listed but fail to meet on-chain data requirement, there shall be a vote to delist them. We want dapps to grow our ecosystem. At the same time, we want dapps that create value.

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I agree, a system of staking rewards for dApps developers after integration is desirable.

I agree with this proposal but there is another option to hold sidden reward for at least few months they can see they have reward but they can’t claim.

To claim these reward they must have to prove with their work which community will support to release SDN reward but if they fail to deliver any use case on time burn that reward or move that staking reward to treasury.

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That is a great idea. I think we also need some podcast or interview so that ppl can understand what each dapp is doing in their ecosystem.

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I totally agree that projects should list their dApps only when they have working product running on Shiden. At the same time need to think about dApps nominators, if we have only couple of dApps with working product it might need to increase maximum nominator slots per dApp.

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This is not a problem. We can always create a few “community” contracts to fill the gap, just to let everyone to stake. It does not need to be a dapp. Just a contract where nominators can stake.

The community can later decide what to do with the reward that goes to the contract. Burn, airdrop etc.

The same way how you can see "Community Program’ contract on the dapp store.

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I agree with this proposal, but I would like to emphasize focus on two parts:

First one is it’s okay for dApps to be listed even though they haven’t launched on Shiden, the second one is that if that happens they they should give a roadmap a deadline to when they are going to launch so they can be held accountable if the miss the deadline by a second, then they get delisted.

I have seen a lot of projects get listed on the dApp Staking and there is basically no date given, they go and launch on other networks before shiden.

If they want shiden dApp Staking revenue they need to be clear and focus on shiden first, then to other chains.

I would also like to add that each dApp can be on the dApp Store as soon as they start building and have dates and a roadmap, we need more dApps and we need them to be part of the ecosystem I don’t want to wait for PolkaEx to launch for ETH and leave Shiden in the dust, and then launch on shiden for example which is exactly what happend.

TL:DR; more dApps listed even those in development given that they provide the community with strict deadlines, so when they are not met they can be punished. This serves as protection for both the stakers and everyone in the ecosystem.

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don’t you think dapp owners should be rewarded in stablecoin ? It will prevent from dumping their tokens and price. Stakers rewards should be higher as well.

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I agree with this proposal.

Here are my thoughts :

  • For existing dApps, we should reevaluate them, check their milestones and give them a last warning if they haven’t done anything or haven’t respect their milestones. The warning will give them a period of time (3-4 weeks) to make changement and do something in the ecosystem. After the period if they haven’t done something, they will get delisted.

  • For news dApps, they should first build something on Shiden, let’s say one milestone and brings agood amount of users to the ecosystem. The reward should have a vesting period before authorizing claim for dApps operators.

  • About inflation, the dApps operators reward is too important and the staking rewards for stakers is too low. I propose to change inflation like :
    Collator : 10%, Treasury : 40%, Developers: 30%, Stakers : 20%

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it is a great idea to create something like sUSD. but in order to do that imo we will need DEX which is a Parachain or running on Shiden to let the dappOperator swap to another asset.

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reward them with JPYC for now and later with SUSD

Collator : 10%, Treasury : 10% (team doesn’t like spending money on anything, defo not on the marketing, so at least the high staking reward could work as a marketing), Developers: 40%, Stakers : 40%

I don’t think the USD idea will solve the problem.
If the rewards are in USD, it means the protocol has to sell SDN to USD at every single block and that’s more selling pressure on the token which is another problem. However, the dApps operators are free to use their rewards to provide liquidity into their Dex, stake it in dApps staking or use it for collators.

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Correct. The rewards are coming from block rewards, which is SDN. The blocks do not generate USD. To have USD, we have to sell SDN in the market.

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I think the key to success for Dapp staking concept is each Dapps need to be able create value for Shiden community first before receiving the rewards, not the other way around. With current Dapp staking model any projects can receive rewards by being on the store and do not need to create any value. Each Dapps tries to compete for stakers by giving high % kickback in sdn staking rewards which has nothing to do with the Dapps itself. In a long term this is not going to be good for both sdn holders and Dapps who deserve to be in the store as many projects who are looking to “free-ride” sdn would just flock into the store and give back high %kickback to get the community to stake with them more. With this model even if in the future there are Dapps that could bring so much value to the network it does not guarantee that people will stake for them as they would simply stake for whoever give back more in sdn rewards. I think this would also be very unfair for the Dapp developers that can bring “real value” who deserves to be rewarded by sdn community.

What I propose in the following:

  1. Remove sdn kickbacks rewards mechanic and only allow dapp developers to rewards in NFT, Dapp tokens and farming contracts:
  • sdn kickbackrewards has nothing to do with the value of the dapp itself
  • rewarding in dapp tokens and dapp nft reflects the real value of the dapp. The community can decide themselves through speculation on which dapps have future value as each dapps keep progressing in development
    -Dapps that bring real value are likely to do well and if they do well it will attract more new people to join shiden ecosystem to stake and earn those high staking rewards + Dapps token rewards.
  1. Increase Nominators rewards ratio and reduce Dapp Operator rewards ratio but remove maximum stakers
  • Even though Dapps developers will receive less rewards ratio through this change but because the maximum stakers are removed, Dapps that bring more value and progress more than others will have more upside in receiving even more rewards. Also as collators/nominators earn more rewards ratio this will attract more people to join sdn community, thus increasing the buying pressure and price of sdn. sdn holders will be more confident in the Shiden in a long run and use those rewards they receive from staking to stake more for Dapps that they see value in.
    -This also eliminate the problem of “freeriding” sdn as each Dapps needs to show real value to sdn holders in order get sdn rewards. Dapps that look into taking advantage of this incentive would naturally leave the ecosystem as there are no rewards for them to be earned.
  1. Schedule payout rewards for Dapp Operators:
  • If Dapp Operators receive rewards right away this will create constant selling pressure from both good and bad projects.
  • Since there is no maximum number of stakers for each Dapps, there’s no limit to upside to earn staking rewards for Dapps who perform well, the rewards should be enough to be paid in schedule rewards.

This is just a rough proposal of course. But intention of this post is to keep/attract Dapps who deserve to be supported by sdn community and eliminate those who doesn’t. The ecosystem needs many dapps to join in order grow, but only good projects who can bring value not any projects. I think Shiden community can decide themselves which dapps are valuable to them.

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I like this but Point 2 is likely impossible. The reason why there is a cap on the number of nominators is because it is using a lot of resources. Hence we startred with 512 and then did the Shibuya testing with 2048.

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It seems that we have a few topics about dapp staking being discussed in this forum.

  1. dApps staking economics
  2. Lock Block rewards for developers to avoid insta dump

We have learnt some things in the last few months.

To summarize:

Qualification to get listed on the Dapp store
We need to be more strict on this. Getting accepted into the Builders Program doesn’t mean getting listed on the Dapp Store. Dapps need to be fully integrated, meeting all the Builders Program milestones in order to get listed and start earning rewards. If we do not do that, a lot of Dapps will come just to only enjoy reward as a freerider. Freeriders do not appreciate the hard earned rewards and chances is that they will insta dump. However, if the projects are really creating value to the ecosystem, we won’t be bothered with what they want to do with their rewards, because they deserve it.

Revamp Dapp Staking Tokenomics
At this early stage we have only 14 dapps being listed. 40% of block rewards is too much if only 14 dapps are getting all of it. Easy come easy go. This rewards are not proportionate to the effort that they are putting in. We can’t control how they use the rewards, but we can adjust the tokenomics to make it healthier. But this won’t be the case when we have 500 dapps as the rewards will be distributed more evenly.

We need to consider adjusting the block rewards distribution to:
15%: Dapp operators
35%: Nominators

Or whichever amount that can be healthier than it is now. And as more dapps are joining the ecosystem, we can increase the portion for Dapp Operators.

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Qualification to get listed on the Dapp store
Yes. I think we need to be more strict on the prerequisites (checklist) for being accepted into the Builders Program. Freeriders are a problem, and yeh, they need mechanisms which stop them.
->>sub topic: continual evaluation of dApp milestones (number of tasks are weighted 2 periods before, and assessed by a panel (to make sure they are not gaming the system). Unsatisfactory results and failure to meet task deadlines increase the duration of locked funds assigned to their task weight.

Revamp Dapp Staking Tokenomics
A sliding scale should be considered, much like the motion being passed to increase the Polkadot validator sets by 1 per day. The question we should be asking is, what does the average dApp consumer staker expect as a return/yield? Validators obviously need incentives at the start, but over time this needs to be adjusted in line with what users expect. I think for this conversation to continue with more clarity must be given with the following;

  1. Nominator (who are they)
  2. Validator (who are they)
  3. dApp Stakers (who are they)
  4. dApp operators (who are they)
    ---->and why do they deserve what - perceived consumer obfuscation is going to be assumed if ‘network effects’ are not visually addressed precisely (easy & simple) for Tom Dick and Harry.

I don’t believe dApp insta dumps are prolific when taking into consideration of market structure and situation. I think the stakeholders of the PLASM Eth lock drop have been selling onto the market. This Shiden sell-off can be seen as a common market structure (See alliance block in their sell-off phase: ALBT-USDT | Uniswap V2 live chart | Cryptowatch). Furthermore, validators/nominators there is a clear disparity - why does a validator deserve such a large proportion of funds when all they are doing is running an Azure cloud server? And then stakers receive 10% of that 35%? This needs to be addressed. There should only be a 1-5% disparity in the long run.

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As an investor, it is rather daunting to think that validators are getting such large rewards. It is disproportionate at first glance, and my immediate thought is my holdings are getting diluted. I risk validators selling tokens onto the market. They have too much control and can potentially collude.

I suggest rewards for validators are vested overtime to give dApp developers greater incentive for long term development. Accountability is key. Within the store/dApp staking platform milestones/roadmaps could be a UX/UI feature which encourages transparency. And consequently if they do not achieve what they say, users can remove their backing, and their vested tokens erode and/or are bonded for a greater time period.

I am really feeling Shiden is missing an integrated UI feature which encourages transparency and accountability between the consumers (users & nominators (stakers)) and validators/dApps devs.

Furthermore, I see an issue with ‘airdrops’ - or mallicous stakers gaming the system by breaking their wallets into smaller sizes to crowd out other stakers so they only receive the rewards (this is a huge future problem) @Yeru sees it too. And yeh the market needs to decide…but like with Standard Protocol staking rewards (as a dApp), there is only information about rewards. You have to dig deep via crowdcast or tokenomics section of the white paper - the ecosystem should be inclusive of everyone on day DOT - so that in the future it has a SEXY looking gini-coefficient.

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Please see ui/ux example for dApp store.

Objectives:

  1. Increase stakeholder transparency
  2. Increase validator/dApp accountability

I will do my best to elaborate:

  1. Milestones (expressed as quarters e.g. Q1) would consist of tasks that are allocated percentage weights by dApp developers for a period e.g. set 2 periods before (Q-2).
  2. Failure to complete a task would result in a time penalty. For instance, it could be applied to a baseline linear vesting schedule, and furthermore assigned to the corresponding task reward. So for example, 12 months becomes 15 months to ensure the task is complete before the next period ends. If not, a further penalty could be applied, or alternatively, rewards could be burned or returned to the treasury.

In essence, this mechanism would not impact the reward applied to the tasks they had complete. It would only impact the task in progress. The underlying concept, to slow/freeze/burn rewards assigned to tasks that remain incomplete. The visual nature of the timelock could be expressed by a color code to help better inform stakeholders of their ongoing decision-making process.

On a side note, another issue I see is at what price do rewards become an extraction of wealth? So perhaps this is a mechanism in which stable coins are issued @Slawek @pnpdude and it fluctuates with SDN price so that reward mechanisms are kept inline to the present to an extent, and placed back into the treasury.

I am no mathematician, coder, or pro designer so unfortunately, I am not capable of taking this concept much further.