Benefits for StakeDAO NFT holders - What's next?

[LittleKitCat]

Preliminary discussion in order to write a governance proposal.

Context:
There are 666 Stake DAO nfts (3 batchs of 2 cards ; each card with 100 common copies, 10 rare copies and 1 unique copy => 111 copies per card). They have been used to award early adopters and loyal users of stake dao. They could be acquired by anyone that had earned enough points staking xSDT in the Palace, showing its commitment and its trust/belief in the DAO.

The first NFTS, Tempest/Pythia were giving access to a part of SDT inflation, this is still the case to date.
The second batch, Tamiel/Leviathan were giving access to exclusive arbitrage strategies which have been closed more than 1 year ago.
The third and last batch, Pondergiest/Stark have been released with promise of exclusive rights associated.

For a full understanding of the purpose of these nfts see this article from the DAO: Unlocking the full potential of DeFi with Stake DAO NFTs | by Stake DAO | Medium

For now, only the first batch of nfts still gives exclusive advantage. This is going to end if the following proposal passes: SDGP-31 : SDT Inflation update
It was corresponding to an average of 1200 sdt per NFT per year.

Beyond the fact that this innovation is a trademark of our DAO, it would be a new disappointment for loyal and committed users of stake dao and would de facto finish to destroy the value of these nfts. A very bad signal for the community and the rest of the crypto sphere.

A DAO is a brand which needs to bring trust to retain its current users and convince future ones. A large part of that is to stand by its commitments if it want to be successful overtime.

Goal of this discussion:
To brainstorm and propose some exclusive advantages for all of the 666 NFTs in order to write a governance proposal. Ideally this proposal should be voted before ending the 0.1 sdt inflation towards Tempest/Pythia.

Here are some ideas:

1- each NFT to be backed by real veSDT (perpetually locked) taken from DAO treasury/inflation (once and for all). I did not have the numbers accessible but something in the 5-6ks vesdt per NFT on average (4 M SDT perpetually locked) would be something interesting.
2- Limited sdt budget distributed weekly over time (same ideas as above but with real distribution) e.g. 4 M SDT over time.
3- each NFT to give access to some % the DAO revenue
4- each NFT to give access to a share of sdtoken hold by the DAO
5- each NFT to provide specific advantage such as max vesdt without locking them 4 years, early acess (e.g. 2 weeks in advance) to new strategies,…
6- Exclusive access to any airdrop to the DAO
7- Lottery
8- To be completed…

I do like personally options 1/3/4 and I am not a big fan of option 7.

Any new ideas or comment is more than welcome . Do not hesitate !

I will then write a governance proposal based on the most supported ideas.

@chago0x @Tube

[Tube]

Nice proposal!
I like option 6 a lot: any airdrop, we make sure they go (at least in priority) to NFT holders.

Also we can do a first airdrop with the current accumulated rewards from the NFT inflation stream which has never stopped from the launch. Could be a veSDT airdrop of some sort to avoid creating a massive one of dump.
There is currently 250k SDT accumulated with this 0.1 SDT since the last NFT distribution. It’s far from the 4m SDT you were mentioning, but at least it corresponds to the amount that has been voted by governance to be attributed to NFTs.

So imo, we could do that:

• one-off airdrop of SDT to relevant NFT holders
• NFT receives any future airdrop going to the DAO (except airdrops that are given to specific products, for example the PRISMA airdrop that was given to sdCRV holders).
• Inflation to NFT stops.

Now the big decision that remains is what NFTs should qualify for this one off airdrop?

I think we need to do a bit of work on this. In my humble opinion, the cohort that got access to the arbitrage strat got its reward already, since it was always publically announced that the arbitrage strat would not be profitable forever. We even subsidised the yield of this strat for a very long time after it started being unprofitable. So I don’t think those were fooled in any way.

The first cohort though, was eligible to this 0.1 SDT per block stream, and yet saw its rewards stop one day, because the guy in charge of the distribution calculation (which was off chain) left, and took his scrypt with him. Also, it was less relevant when we shipped the locker.

For the last cohort, I would need to double check because I don’t remember clearly, but I don’t think we ever sold any on the primary market, they were only received for free with points from the Palace. I also don’t think we ever announced any power. So I don’t think those are missing anything. However, I might be wrong, so please excuse me and correct me if it is the case, this was a long time ago.

To wrap it up, I think only the first cohort should benefit from the one-off airdrop, so Tempest and Pythia. I precise it’s the only cohort for which I don’t hold any NFT.

[Xutyr]

Thank you for bringing this discussion to the table. This subject, I believe, requires a lot of work, but it’s worth it to outperform other similar protocols. To be honest, I was drawn to StakeDAO because of the powerful NFTs, but unfortunately, this has ceased (I also withdrew my Pythia due to the cessation of rewards, unmaintained UI, and to avoid contract risk).

In my opinion, we should move away from all rewards in SDT, as I believe the future lies in real yield, similar to what ParaSwap, LooksRare, or even the veSDT rewards are doing. We’ve been experiencing selling pressure for months, and it’s time to leverage the reduction of inflation to introduce this new model.

Regarding our collections, as you’ve aptly described, we mainly have three collections/seasons. It would be beneficial to assign one major advantage per collection, plus a bonus for owning one from each collection. For example:

• Staking 1 Pyhia/Tempest could grant Idea 3
• Staking 1 Tamiel/Leviathan could grant Idea 4
• Staking 1 Pondergeist/Stark could grant Idea 5
• Staking one of each (Pyhia/Tempest, Tamiel/Leviathan, Pondergeist/Stark) could unlock a special bonus

However, I’d advise against creating contract conditions that penalize users who don’t have NFTs, as they would end up paying more gas for something irrelevant to them.

To further develop this idea, we need the actual numbers of how much the protocol is earning to avoid disproportionately allocating funds to users.

[Tube]

I fully agree with what you say, the best model is to have an idea that benefits each cohort. However, it is much easier said than done. The problem is that most ideas (am open to any that ain’t like that) can benefit either veSDT or NFTs. When it comes to choosing whom it should benefit, I believe the focus should be to bring as much value as possible to veSDT.

My personnal belief is that it is worth locking SDT for 4 years if you manage to get back your money in one year (in other words, 100% APR on SDT locked for four years). That way it makes sense increasing lock over and over. To reach this 100% APR, on the current 15m veSDT, that means that the flow of money should be around $5m per year towards veSDT holders (if you account for the profit that benefits those who use veSDT boost to increase their sdTKN votes). That’s a lot of money, and with a current cost amount of approximately $2m per year, we don’t have currently enough revenues to bring value to veSDT + NFTs.

What I propose is, we do this one off SDT airdrop (probably under the form of veSDT) to pythia and tempest holders. All NFTs benefit from future airdrop. And when we fine ideas that could benefit NFTs without being at the detriment of SDT, we can add those utilities. But no pressure to do so until we manage to bring significant cash flows to veSDT.

I would be way more happy with SDT back at $1 than with some rewards on my Leviathan…

[Xutyr]

@Tube

My personnal belief is that it is worth locking SDT for 4 years if you manage to get back your money in one year (in other words, 100% APR on SDT locked for four years). That way it makes sense increasing lock over and over. To reach this 100% APR, on the current 15m veSDT, that means that the flow of money should be around $5m per year towards veSDT holders (if you account for the profit that benefits those who use veSDT boost to increase their sdTKN votes). That’s a lot of money, and with a current cost amount of approximately $2m per year, we don’t have currently enough revenues to bring value to veSDT + NFTs.

Although I might agree with you on some points, I’m really not a big fan of the VE model. In my opinion, it’s the worst. It requires too much gas and effort to support, and it doesn’t offer advantages to early users, benefiting only the richer.

@Tube

What I propose is, we do this one off SDT airdrop (probably under the form of veSDT) to pythia and tempest holders.

We can begin with this approach as a short-term solution, but it’s important to take a snapshot before implementing this topic. This is to prevent any potential pump-and-dump schemes related to the SDT airdrop, which would only add more selling pressure without any real benefit.

@Tube

All NFTs benefit from future airdrop

You might also view this bonus at the detriment of SDT. To be honest, I had thought that the airdrop would be distributed to veSDT holders.

Ultimately, the way you see it, the NFTs should be used for protocol bonuses, such as:

• No or 50% reduced withdrawal fees
• No or 50% reduced performance fees
• Automatic relock of veSDT

[Lucio]

I had some thoughts and here is my penny on this discussion:

1. As far as Leviathan NFTs are concerned (I own two of these since October/November 2021) I remember that entering the arbitrage strategy required to invest in the vault a significant amount of minimum 3000 SDT @ 3$ each in october and @ 2$ each in november - which I did on two wallets. I minted the first Leviathan and I bought the second one 1.55 ETH @ 4600$ per ETH, ie 7000 $. The return on the first wallet with an investment of 9600 $ was 2800 $. On the second one, the total investment was 13000 $ and the return 2000 $. That means eliminating Leviathan/Tamiel NFTs based upon the assumption that the rewards have already covered the investment at that time is not entirely accurate. Even the value of only one NFT was not covered.
2. To be clear, this move on NFT is a pain in the neck for Stake DAO as there is no obvious good solution to keep on. But I agree it is a balance of value between NFT and veSDT. That means it is a discussion between my left pocket and my right pocket (of course, a bit emotional for my left pocket).
3. I kept my bag of SDT and made it grow a bit being still a supporter of Stake DAO which allowed me to perform better in other areas.
4. I bet that playing for the value of SDT, ie my right pocket, even if it is against my left pocket short term benefit, would probably get a better chance for success, in a moment where the bridge of SDT to other networks and decentralization are coming in 2024. It is better and simpler in an already complex environment of crypto, to get SDT only as a one unique instrument for sharing financial benefits, in addition to governance.
5. If NFTs can retain some goodies such as future airdrop, fine.
   Conclusion : As we need to move on, I would go for the one off airdrop of SDT in the form of veSDT to prevent dump, to Pythia and Tempest holders.

[L0G1C]

Put my hat in the ring for veSDT going to NFT holders but not as a traditional airdrop. What I propose is fairly simple:

• associate “airdropped” veSDT with all NFTs at the contract level (I’m hoping/assuming this is possible), amount based on rarity not on type of NFT
• create way for NFT holders to claim yield from the associated veSDT
• send royalties from NFT trades (whatever this looks like) to veSDT holders as yield

With the NFTs the DAO would basically be creating a new market for locked SDT and the associated yield. veSDT holders benefit from the royalties.

[Lucio]

I think the efficiency is in the simplicity. The reading of all comments in the inflation discussion and on the NFT discussion makes me take the conclusions that 1) there is not enough revenue perspective for both NFT holders and SDT holders 2) the inflation is too high and 3) there are costs structure associated with 11 FTE taking care of the operational aspects. I would suggest to keep it very simple, focus on capturing the value in SDT and not creating complex and additional operational tasks around NFTs.

[Xutyr]

@Lucio

As far as Leviathan NFTs are concerned (I own two of these since October/November 2021) I remember that entering the arbitrage strategy required to invest in the vault a significant amount of minimum 3000 SDT @ 3$ each in october and @ 2$ each in november - which I did on two wallets. I minted the first Leviathan and I bought the second one 1.55 ETH @ 4600$ per ETH, ie 7000 $. The return on the first wallet with an investment of 9600 $ was 2800 $. On the second one, the total investment was 13000 $ and the return 2000 $. That means eliminating Leviathan/Tamiel NFTs based upon the assumption that the rewards have already covered the investment at that time is not entirely accurate. Even the value of only one NFT was not covered.

I am in the same situation as you. StakeDAO has been, by far, one of my worst investment, but that’s beside the point.

@Lucio

To be clear, this move on NFT is a pain in the neck for Stake DAO as there is no obvious good solution to keep on.

In my opinion, it was a smart move that was halted without any specific reason when the LL versions were introduced. There were too many promises made regarding those NFTs that could make some huge marketing.
If you think it’s becoming a burden, perhaps we should consider to burn them in exchange for veSDT, the amount should be worth it ofc.

[ykplayer8]

I remember times when Stake DAO future was unclear, sdtokens traded with 50-60% discounts and most of the DAO actions were offchain. Then new people joined to StakeDAO team and we see continius changins in better way. New era of StakeDAO looks bright. SDT NFT rewards distribution stoped long time ago and for me NFTs already memorable goods without any benefits. I am very surprised that SDT inflations still acamulating and around 250k SDT waiting for distribution. ANY SDT (veSDT) distribution sounds like late Christmas gift. Idea of one off SDT airdrop (in the form of veSDT) to Pythia and Tempest holders is fair. NFTs (all series and rare types) right for share from future airdrops for StakeDAO is awesome. The main goal is increase power of veSDT and value for other projects to make more airdrops for StakeDAO in future.

[LittleKitCat]

Thanks all for your responses. I’ll try to give feedback on each of them next week.

Thanks Tube for the feedback.
About the one off aidrop of sdt coming from the 0.1 sdt/block I agree that only the first cohort should be eligible i.e. Tempest/Pythia
Moreover, the distribution was done based on the “commitment” of users into the protocol i.e. how much they have locked and for how long. I think it would be fair to keep this mechanism as it was used for the previous aidrop. But let’s see what’s possible on that.

Below is a new option/ option 8, inspired by TheLlamasDAO.

Each NFT holder could have a share of a pool having a position in LLs.

To initiate this pool we could put a part the saved sdt following the reduced inflation. As an illustration, a full year of reduced inflation (-0.63 sdt/block) is saving 1.6 M sdt.
Then what advantage for each NFT? This has to be discussed.

Some ideas below:

Sophisticated approach

This pool could be boosted by vesdt from the one off airdrop for the Pythia/ Tempest and associated to these cards only.
Therefore, Pythia/Tempest (1st collectiion) would be equivalent to XXXX vedst.

A card from the 2nd or 3rd collection would give access to a position without boost from one LL.
A card from the 2nd + a card from the 3rd collection would give access to a position without boost for all LLs.
A card from the 1st + a card from the 2nd + a card from the 3rs collection = boosted position for all LLs.

All reward would be automatically reinvest in the LLs.

Claiming its share would burn the NFT.

Advantages:
It makes the NFT quite sexy to hold.
It encourages to have 2 or 3 nfts.
It ensures the lock of the one off airdrop for Pythia/Tempest.
Participate in the success of the LLs.
The code from TheLlamasDAO could be reused to put that infrastructure in place (could we even imagine to integrate the stake DAO nfts into their DAO ?)

Simple approach

Gathering the one off airdrop + an amount of sdt based on the savings due to the reduce inflation. Maximize the yield by vesting part of the sdt and buy with the rest positions into LLs.

As the first collection would have dedicated the sdt from the airdrop it would have a more important share. The 2nd collection a more important share than the 3rd as the 3rd has never got a specific advantage.

Something like: factor 1.25 for first collection, 1 for the 2nd and 0.75 for the last one.

Another option (option 9) would be to offer a lottery to access la degen and other events tickets.

These are options to be discussed, to be completed. They can be cumulative.

[Tube]

@Xutyr

Although I might agree with you on some points, I’m really not a big fan of the VE model. In my opinion, it’s the worst. It requires too much gas and effort to support, and it doesn’t offer advantages to early users, benefiting only the richer.

This will be less true when there are some aggregators coming live. sprSDT is already a solution, cvgSDT is coming, and maybe others. I look forward to see those in action, and maybe others.

@Xutyr

We can begin with this approach as a short-term solution, but it’s important to take a snapshot before implementing this topic. This is to prevent any potential pump-and-dump schemes related to the SDT airdrop, which would only add more selling pressure without any real benefit.

Yes, makes total sense.

@Xutyr

You might also view this bonus at the detriment of SDT. To be honest, I had thought that the airdrop would be distributed to veSDT holders.

Ultimately, the way you see it, the NFTs should be used for protocol bonuses, such as:

• No or 50% reduced withdrawal fees
• No or 50% reduced performance fees
• Automatic relock of veSDT

I understand what you mean, but it’s kind of the same with benefits: reduced fees mean less value for veSDT as well. More benefits means there are some benefits that we could offer to everyone but wouldn’t, making our product not as competitive as it could? Not an easy question.
I used to agree with you, but in practice, I came to learn that whe you design a product, you think about how to make it as good as possible, and as gas efficient as possible. Adding complexity (e.g. logic to add NFTs having certain roles) add also gas costs etc.

But maybe, we could find ways in the future. I don’t know, something like “only NFT holders can harvest this strategy” or whatever. But that means wait for sure, and I think people are tired of waiting (we keep receiving “when NFT usecase” in the tg)…

[Tube]

@Lucio

That means eliminating Leviathan/Tamiel NFTs based upon the assumption that the rewards have already covered the investment at that time is not entirely accurate. Even the value of only one NFT was not covered.

SDTs weren’t burnt, so you need to look at the profit versus the NFT investment. You had a total profit of 4800$ for a 1.55 ETH investment which then was worth 7k$, but would today be worth 3400$. The way I see it, it wasn’t a bad investment necessarily.

@Lucio

To be clear, this move on NFT is a pain in the neck for Stake DAO as there is no obvious good solution to keep on. But I agree it is a balance of value between NFT and veSDT. That means it is a discussion between my left pocket and my right pocket (of course, a bit emotional for my left pocket).

Exactly, you totally see where I am also. I also own NFTs, but I am personally biaised towards SDT because I believe my mission is to bring SDT as high as possible in the long term. It’s a tricky problem, and as you said, a pain in the neck, that I would love to see disapear one day…
The problem with use cases, is that there will never be good enough. The arbitrage strategy is a good example. Some people bought NFTs up to 150k$, and unfortunately, we will probably never be able to make them whole, despite them being generally the most faithful and supportive to the protocol… It really pains me when I think of it… My hope is that if we manage to get back SDT at 3$, their “right pocket” will help them forget their “left pocket”…

@Lucio

It is better and simpler in an already complex environment of crypto, to get SDT only as a one unique instrument for sharing financial benefits, in addition to governance.

That’s very true. Our product is extremely complex already. We need to do anything to make sure there is no useless complexity. That’s why focusing on SDT is way easier…
I don’t imagine being able to sell Stake DAO NFTs to the likes of Aave, or Paypal… SDT however, they will come to it, or at least rent its power, and paying the tribute…

@Lucio

If NFTs can retain some goodies such as future airdrop, fine.
Conclusion : As we need to move on, I would go for the one off airdrop of SDT in the form of veSDT to prevent dump, to Pythia and Tempest holders.

@Lucio

I would suggest to keep it very simple, focus on capturing the value in SDT and not creating complex and additional operational tasks around NFTs.

Thanks Lucio. Yes, simplicity is really the key. Otherwise everyone will get lost, and decentralisation will be impossible to achieve. Thank you so much for those valuable comments !

[Tube]

@L0G1C

associate “airdropped” veSDT with all NFTs at the contract level (I’m hoping/assuming this is possible), amount based on rarity not on type of NFT

Not sure I understand how this would work… Could you clarify a bit please?

For royalties, they have been sent to veSDT holders I think, but it hardly represented anything. Not much volume there anymore.

[Tube]

I understand your idea, but in my opinion it’s not the best you’ve had on this topic. If I understood correctly, you’re basically suggesting we increase inflation from 0.1 to 0.63 SDT per block for NFTs, and then create some kind of the Llamas like NFT project backed by SDT.
I think the issue we are trying to solve is that we don’t really have an NFT culture/mindset. Perhaps the founding team had. We all know that Julien is quite an expert of NFTs, with Blackpool, and also Hatashi who started by drawing giraffe NFTs or something like that.
But the current team of active contributors is mainly comprised of devs, experts in DeFi, focusing on decentralisation. It’s why it hasn’t been able to maintain and develop those NFTs, and it’s also why it built so competitive products, bringing Stake DAO from 3m CRV to 62m and counting.
Trying to recreate some kind of NFT project is going to lead to issues, slow decentralisation, and divert us of our focus which is creating value, bringing value to our products.
In the end, NFTs are a way to distribute value, not really to create it, apart from their artistic value. Creating value is, I believe, what’s going to enable us to make it.

[Xutyr]

@Tube

This will be less true when there are some aggregators coming live. sprSDT is already a solution, cvgSDT is coming, and maybe others. I look forward to see those in action, and maybe others.

Completely not agree with you. If you think that adding layer/protocol is a solution to the veModel means that the veModel is not the right one ^^. You take more smartcontract risk and concentrate voting power into the same place.

@Tube

I used to agree with you, but in practice, I came to learn that whe you design a product, you think about how to make it as good as possible, and as gas efficient as possible. Adding complexity (e.g. logic to add NFTs having certain roles) add also gas costs etc.

It’s what I want to avoid but look like all ideas proposed could be added to the veSDT instead.

@Tube

But the current team of active contributors is mainly comprised of devs, experts in DeFi, focusing on decentralisation. It’s why it hasn’t been able to maintain and develop those NFTs, and it’s also why it built so competitive products, bringing Stake DAO from 3m CRV to 62m and counting.
Trying to recreate some kind of NFT project is going to lead to issues, slow decentralisation, and divert us of our focus which is creating value, bringing value to our products.
In the end, NFTs are a way to distribute value, not really to create it, apart from their artistic value. Creating value is, I believe, what’s going to enable us to make it.

Maybe the solution is just to make a burn contract in exchange of veSDT, with that all NFTs will be gone for ever and not selling pressure. The amount of veSDT should be attractif like was the Ohm discount year ago. Like that people will have the choice to sell on the secondary market their NFT for Eth, etc. or to get a good deal in veSDT (that depends on the NFT rarity + the lock time specify).

[chago0x]

The ideas for Stake DAO’s NFTs sound cool in theory, but they’re mostly too complicated to set up and would need a lot of upkeep. This wouldn’t be the best use of Stake DAO’s resources. I’m on the same page as @ykplayer8 and @Lucio about keeping things simple and sticking to what we’re already doing well.

I am also curious about our idea @L0G1C.

[Tube]

I think we don’t need to burn the nfts, just to a veSDT airdrop and NFTs become collectible.
Not sure I see the link with OHM though, and not sure why rewards should be higher than the one disclosed from the start.

[L0G1C]

Apologies for not being clear. I was suggesting locking the veSDT destined for NFT holders in a single contract similar to how veCRV is locked now. A DAO management harvest task could be added to harvest the accumulated sdFRAX3CRV yield and possibly extend the veSDT lock. NFT holders could then claim their portion of the sdFRAX3CRV yield.

That said, I realize even this would not be trivial to implement and I agree that the NFTs alone will never bring massive value to the DAO. Personally, I would be sad to see them die off but an airdrop would ease that pain.

[Tube]

I understand the logic. Not so trivial though, and given the sdfrax3crv yield is quite low, this would give peanuts to NFT holders… But good idea in principle!