PDIP 18.2 - Repositioning the PDT Staking contract for the future

ParagonsDAO Improvement Proposal
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Authored by: Treasury Council, with input from the Paragons Council, Felix, and ParagonsDAO community

Summary

This proposal introduces the need for a new PDT staking contract that will remove multipliers, address contract inefficiencies, and be deployed on the Base L2 instead of Ethereum Mainnet.

Abstract

The previous version of PDIP 18 identified issues we needed to solve with our current staking model, however, it also proposed significant additional changes to the model. After consulting with the community through various channels, we concluded that we should instead go a different route—the path of simplicity.

This proposal focuses on addressing key issues that need to be solved—issues that resonated with the community via discussion. It also outlines migration considerations in line with the theme of simplicity.

Motivation

ParagonsDAO’s Staking program requires changes. While the core tenets of the staking program (e.g. earning a percentage of ParagonsDAO’s revenues) are well received and popular with stakers, stakers’ multipliers perpetually grow uncapped (and cannot be capped in the current contract), which will soon lead to disproportionate rewards for early stakers that discourage new stakers and staking events.

In addition, gas prices on Mainnet prevent many users from acquiring, staking, and claiming their rewards—this has become more apparent with the combination of increasing ETH prices and transaction fees.

Specification

Deploying on Base to reduce transaction costs for users

Deploying a new contract provides an opportunity to greatly improve the user experience and minimize staker expenses through cheaper transactions.

The single greatest opportunity to do this is by deploying the new staking contract (and therefore PDT) on a layer 2 (L2) blockchain. We propose this L2 be Base, for these reasons:

  • Base is among the top L2s with an opportunity to onboard non-crypto-native users (one of our primary future audiences), through Coinbase.
  • Parallel and the $PRIME token, the primary ecosystem we support, supports Base and will eventually be fully migrated there.

By deploying on Base, gas costs to interact with the staking contract should be significantly cheaper, allowing a wider range of people to participate in our ecosystem (including significant large player bases in developing countries), and aligning to one of our key guiding principles - reducing the financial barrier to participating in web3 gaming.

ParagonsDAO should enable a bridge between ETH Mainnet and Base, and will explore the feasibility of building a migration process from the current contract to the new contract directly through this bridge.

Removing multipliers

The new staking contract will be much simpler, removing the concept of the multiplier altogether. This ensures rewards from each epoch’s finite pool remain attractive for all stakers and staking events, allowing users to enter and exit their staked positions as they please—ensuring fairness for all, liquidity of one’s holdings, and promoting a healthy and attractive future ecosystem.

It also allows users to more flexibly explore how to use their PDT, such as providing liquidity to the LP when that seems more attractive, or even lending against PDT with external providers.

With a move to Base, our Bond soon to launch, and an expected major influx of new Parallel players, we’re entering a new era of ParagonsDAO, and with that, will offer a fresh opportunity for everybody to be an “OG” and share in multiple rewards, including $PRIME, $PROMPT (when we know more), and potentially more like $AERO (see TIP 3), $DATA and future tokens.

From a technical standpoint, multiplier requirements add complexity to the staking protocol, and in turn higher gas costs. For example, in the current contract, the multiplier causes significant gas inefficiency on user claims—it means the user is paying gas for some of the calculations to take place, and also makes it more expensive for users to make claims as more epochs pass since their last claim (or on their first claim).

This approach also significantly simplifies development and reduces risks associated with the migration/bridge to Base.

Assessing the current user impact of removed multipliers

Though the concept of removing the multiplier may feel like a “loss” at first glance, the reality is that a majority of staked PDT is already being rewarded at a high multiplier from a limited pool, so all things equal, the impact to those with high multipliers is relatively small.

If all current stakers migrated to the new contract, stakers’ current “Take” of epoch rewards would be impacted in the following ways:
image

The maximum reduction of any given user’s “Take” (i.e., stakers with highest current multipliers) would be a 23% reduction. Those impacted most negatively have, by nature, already received significant PRIME rewards through their staking history (approx. ⅔ of their currently staked PDT amount at current market rates).

26% of current stakers would have a neutral impact to their take (within 10% of current, positive or negative). And 47% would have a positive impact on their take, ranging up to a 197% increase.

If any users don’t migrate, negative impacts would lessen and positive impacts would increase for those who do migrate.

Other considerations

Deploying a new contract will be used as an opportunity to:

  • Ensure the new smart contract can support multiple reward tokens and is upgradeable.
  • Revisit and update inefficient smart contract functions to maximize gas efficiency.
  • Deploy a transferable staked/receipt token to improve the user experience, providing the flexibility to move staked amounts between wallets.

Rationale

Following community feedback on PDIP 18.1, we considered multiple alternative paths, including several interesting concepts contributed by the community.

In the end, one key sentiment resonated most strongly—simpler is better. This new proposal aims to follow that mantra, introducing a simplified framework that we believe position our staking program more strongly for the new era of ParagonsDAO.

Certain other themes explored in the prior proposal (e.g. governance for staked tokens only; directing liquidity of playable assets through governance) can be presented in the future as standalone proposals, as relevant.

Copyright Waiver

Copyright and related rights waived via CC0.

4 Likes
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I like the simplistic route. This seems to make sense. Although here there is only the mention of removing the Multiplier but no explanation of how you have come up on the impact of this number. What will be the calculations on the future yields. A total % of DAO revenue distributed in % of PRiME/PROMPt/AERO/DAtA? Will all staking rewards be paid in $PRIME on BASE or is this gonna result in different pools/rewards if the DAO has better returns on these new tokens?

3 Likes
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Removing multipliers streamlines the staking process and fosters fairness, which is crucial for maintaining stakeholder trust and engagement. Imo, the proposal not only tackles the current issues effectively but also lays the groundwork for a more sustainable ecosystem.

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Strong proposal and I am in favour of it. From the beginning, it was always likely that in future we would need to revise the multiplier to become more attractive/fair to newcomers.

That said, I guess the initial purpose of the multiplier was to remain competitive and encourage people to keep their PDT staked rather than seeking opportunities elsewhere or perhaps just buying the game assets directly/manually engaging in the games, especially as ‘only’ 30% of total PDAO PRIME emissions are currently given to stakers.

Additionally, a multiplier for your staked PDT should be as much of a reason to stake for new stakers as it is beneficial to old stakers. Perhaps then we could aim at periodic multiplier resetting.

Otherwise if it becomes an issue that people are less incentivised to stay staked, perhaps we could propose an increase in PRIME emissions for all stakers or otherwise bring back a limited, periodically-resetting multiplier.

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The impact was calculated using data from all stakers on March 26, based off their current “Take” of an epoch’s reward pool (i.e. the % of rewards they receive from an epoch’s pool, based on their PDT staked and time staked/multi) vs. the weighting of the rewards they’d receive from the same pool if everyone had the same multiplier.

Future yields will be calculated by the funding for each epoch’s pool. Our current working design has been that 30% of our game token revenues would fund staking rewards, payable in the tokens we receive them in. Right now, we’re funding more than that.

As Bonds (and their revenues) are soon to launch, and multiple tokens become a near-term reality, you can expect a different proposal to capture the topic of future multi-token revenue shares.

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Like this proposal more than the previous version.

Would a slight incentive to keep tokens staked be a good idea? Either you have a 1.1* mutliplier after staking for 1 epoch without unstaking or you don’t?

So a fixed multiplier that cannot be increased if you stake for a period of time without unstaking.

Or does that negate all the calculation optimizations. Seems like a simple if/else statement on the contract level but I’m not a solidity dev :smiley: