Discussion about current SDT issuance

Summary:

Discussion about the current issuance of SDT tokens and its distribution ratio between LP providers and strategy users. This is more an open discussion rather than a formal proposal.

Abstract:

Motivation:

Currently the issuance of tokens is pretty high: 5 SDT/block, around 33k tokens per day, ~more than 1% of the MC added each day. 50% of the issuance goes straight to the strategy users, artificially increasing their yield in an insane way (majority of the yield comes from the distribution of the SDT token and not from the strategy itself). While this is good to attract new users, it also puts quite some sell pressure and LP providers have to support the dump. The current situation is that strategy users make comfortable and low risk benefits while LP providers take the risk and do not get that much additional gains (122% on the eurs strategy vs 258% for LP). With a rough estimate, it even appears that anyone entering the LP after the first two weeks, has, at current pricing, a loss or a small gain.

While the SDT single stacking might improve the situation, here are a few ideas that could also help attracting long term users and balance things a bit:

  • Partially locked rewards, similar to what Sushiswap does
  • Exponentially decreasing or flexible (based on MC ? on current yields ?) issuance
  • Issuance over a longer period
  • Offer locking with different periods (and different yields) for single side stacking

I’ll be adding more ideas to the list as they pop up in the discussion.

One additional point that directly has to do with token issuance and market cap, is the current supply. Apparently 42M token have been minted with the majority currently in the reward pool. According to the medium post, the final supply will be 100M tokens with 40% to the contributors. When and how will the remaining 58M token be minted ?

For:

  • Reduce pressure on price and on LP
  • Slowly move to a sustainable yield and growth

Against:

  • We may lose some users aftert lowering the incentived yield
11 Likes

Great topic and I look forward to seeing what others have to say about this. In my opinion the SDT single staking will have a very positive impact on this issue, so that’s the main consideration for me here.

2 Likes

I think it’s ok to have partially locked rewards, but not for too long. A month or a few months might be ok. But more than a quarter starts to become a very long time.

It would also be good to give people a reason to hold/stake SDT with some kind of simple reward associated with the locking.

Making it simple and easy would is something that I’d appreciate.

1 Like

Hi First i want to thank you for bringing this topic up
Imo opinion there are different ways to compensate lp stakers for the risk they take
As it was stated in an early medium article sdt tokens that were not claimed during the airdrop can be used in the future to achieve fairness :+1:

2 Likes

This is a very wonderful topic and I appreciate you alot from bringing this… I am in support of majority of your views… The locking of reward idea is good but the time period shouldn’t be long… And as majority of our people said… Creating single SDT staking will go a long way in reducing selling pressure.

I agree. I think we have a few other ideas to reduce selling pressure is well in the pipeline.

This is anyway pretty early. We’ll have to wait and see how does the market react when single staking goes live.

1 Like