SIP-9 Introduce SI Staking

Proposals
#1

Now that TGE is behind us, there has been a lot of selling pressure from early liquidity providers. They deserve the rewards for being early and taking the risk. I propose to start a staking pool for SI tokens. A staking pool for SI will help absorb some of the sell pressure and also because at the moment SI token doesnt have utility.
The rewards for SI staking should be significantly lower than the rewards emitted for SI-ETH Uniswap pool as that pool has risk of IL. However the rewards should be large enough to be meaningful so that gas costs to stake and claim are met.

This approach is very similar to that of Barnbridge project. They too faced a lot of selling pressure from LPs at the beginning. Later on once Pool2 and Single staking pools were introduced, not only did it stem the selling pressure, it did see some buying as well.

Why a staking pool is required if Pool 2 is already live?
A pool 2 does not cater to the risk appetite of everyone because of the risk of Impermanent Loss. Also one may not have the 2nd asset (ETH in this case) in equal proportion. He is forced to sell half of SI tokens to have enough ETH to be an LP of pool2.

Happy to discuss.

5 Likes
#2

The idea looks quite solid as IL is a big concern for no utility coin & it will simply reduce the sell pressure & help in gaining momentum.

Don’t find cons here.

#4

I would totally support this as it gives SI tokens more usecases in addition to governance and fee sharing.

#5

Our concern with this proposal is that although it might temporarily benefit existing SI holders it doesn’t add any useful function to the protocol / broader community. For example, our AMM pools reward LPs for making it possible for traders to buy and sell options. Our Uniswap staking contract rewards people for providing SI liquidity in the market.

Some ideas on how to make SI staking more useful:

  • Create a SI calls pool that underwrites SI call options. That way staked SI can be used to enable a new options market on the platform.
  • In the future if the governance decides to enable protocol fees SI tokens can be staked / locked in order to receive the fees.
2 Likes
#6

I definitely like the two ideas mentioned above by @seafi

Implementing measures that benefit existing SI holders may very well pay off in the long term as well since SI holders will be the ones recommending the product and talking about it to their friends, social media platforms and trading communities.

Staking is a big part of the crypto space and a good implementation within the protocol will consequently bring liquidity to the option markets and more traders to use the protocol. Also, let’s not forget that a higher token price will rank Siren Protocol higher in the crypto rankings giving us extra exposure and publicity, which it will also help to get more users into the protocol.

In my option, holders of governance tokens (not only SI) will eventually ask for some sort of financial incentive coming from utilization of the protocol to keep the demand for the tokens, thinking in the long term sustainability here since LP rewards won’t last forever.

These kind of debates are already taking place in other communities such as Uniswap, Compound, among others. It’s a matter of time that those protocols will reward token holders via staking to receive the fees. In fact, Sushi is already doing it very successfully.

I believe it could work also in the same way for Siren Protocol and make this project another great success in DeFi.

1 Like
#7

Keen to support this option, can we get this added in after SIP-10 in the interim till fees are turned on and SI can be staked. (Do we know a potential time frame for this?)

#8

I would like to add a suggestion to the second bullet. For those staking SI for fees I think that SI should be repurchased from the market and distributed to SI fee stakers proportional to their stake.

1 Like
#9

Agree with Johndoh. Buybacks from the market should be implemented if this goes through.