Swap the generated CVX bribes into ROOK and use to boost the staking APR for another 8 weeks beyond the end of the current boosted staking program on [DATE]. Revisit at the end of the program or sooner if desired and needed, if we should:
- End it
- Extend it
- Adjust it in any way
Staking is a core aspect of any project. It generates yield for stakers and signals that people believe in the project and are not here just for a swing trade. People that stake are much more likely to stay around and not sell on the first market drop.
The amount of ROOK staked has been growing because the current boosted APR is attractive. The upcoming end to the boosting program is a potential risk to this growth given that current protocol revenues are not enough right now to give an attractive yield to the nearly 240,000 (as of May 5, 2022) ROOK tokens staked. While stakers might be happy with a lower APR, Pai-Sho has confirmed that without the current boosting program, the APR would be less than 1% right now. Even with the next integrations it will take time for the volume to increase enough for a good APR. If we do not act quickly to make sure that the APR will remain attractive people may unstake and eventually sell their ROOK.
Until more integrations come, we should make sure that we have a good continuation to the current boosting program and avoid as much as possible a sharp drop of more than 90% in APR.
Using the CVX bribes to boost the APR for stakers for a limited time has several potential benefits:
- keep the ROOK staked amount high, decreasing the liquid supply which translates to upside potential for the ROOK token
- be constant buy pressure for ROOK both because of new stakers and because of CVX bribes swaps
- keep the community happy and satisfied → the best marketing and way to growth
- generate a constant buying pressure of around 750ROOK per week
APR right now: 26% (as of May 6, 2022)
APR after the current boosting program is over: currently 0.5% - expected to be around 1% by week 8
Average worth of CVX generated bribes per week: $75,000
ROOK currently staked: ~240,000 ROOK
Assuming the current CVX bribe revenue, a slight increase of 250,000 in staked ROOK by the end of the current boosted epoch, and a ROOK price of $100:
Annual bribe revenue: $75,000$ * 52 weeks= $3.9M
Dollar amount staked = 250,000ROOK * $100 = $25M
Boost to APR = 15.6 percentage points
Every 2 weeks, swap the generated CVX bribes into ROOK. Split the amount evenly and use to boost the staking APR for the next 2 epochs (1 epoch = 1 week). Repeat this three times for a total period of 8 weeks, then revisit the program…
This leaves the question of when to put this KIP into effect. The proposal for community consensus is to go into effect after the current boosting program ends. Pai has suggested that in the meantime we use the current generated bribes to accumulate ROOK and use it for a later boosting program maybe when the Swaps launch. To be discussed.
This kip should go into effect either right now or after the current boosting program ends (feedback is welcome).