[MRC-82] Re-introduction of MARS staking rewards for a period of 2 months

This is a copy/pasta discussion proposal to re-instate staking rewards for MARS stakers. With the upcoming move to Neutron, there is no need for a 12 month schedule.

(original [MRC-1] Mars Hub Staking Rewards)

Re-introducing staking rewards for MARS stakers will cost the protocol very little in the grand scheme of things and will help foster strong community support. Viewed as a marketing spend, I believe this will generate goodwill within the community.

Summary

This proposal aims to 1) obtain 1.5M MARS from the community pool funds and 2) Use these MARS to help secure the Mars Hub by rewarding Mars Hub stakers for a period of 2 months.

Abstract

This proposal suggests that Mars Hub stakers are collectively rewarded 750,000 MARS per month for a total of 2 months (i.e. a total of 1.5M MARS). We also propose here that the Mars Community approve a spend of 1.5M Mars from the Mars Community pool to fund these rewards.

Motivation

There are currently no staking rewards for MARS stakers and therefore no commission generated by Mars Hub validators.

Specification

It is proposed that 2 months of rewards be implemented pursuant to this proposal.These MARS rewards would be taken from the community pool on Mars Hub and rewarded directly to validators/stakers on the Mars Hub.

Implementation

This proposal, if successful, will be binding and enforced as it requires only on-chain infrastructure and can be implemented automatically upon the voting period elapsing. To do so, the MsgCreateSchedule message shall be executed. This will automatically obtain the required funds from the community pool and distribute the rewards to stakers every block

4 Likes

100% support. Can we put this to a vote?

I understand the rationale behind extending staking rewards for MARS token holders, but I believe it may not be in the best interest of mid to long-term holders. My perspective stems from the observation that most short-term farmers are primarily motivated by these incentives, while mid to long-term believers in the protocol hold onto their MARS tokens irrespective of short-term rewards.

Continuing the rewards incentives essentially benefits these short-term holders, potentially diluting the influence of those who have a vested interest in the protocol’s long-term success. It’s essential to consider the transition to DAODAO governance and the impending redesign of staking rewards to align incentives with the interests of Mars users and long-term holders, who are the backbone of governance participation.

While I remain somewhat neutral on this matter, I believe conceptually, it may not be in the best interest of long-term MARS holders to extend staking rewards. As we navigate the ongoing conversation about tokenomics, it’s crucial to prioritize measures that sustainably benefit the protocol and its dedicated community over the long haul.

1 Like

In full support of this proposal for a few reasons:

From my personal perspective, as a long term MARS holder with a low time preference, and also a selfish actor motivated financially- which I do not believe to be mutually exclusive groups- expecting people to lock up tokens for two weeks and participate in governance with (next to) zero reward is not attractive or sufficient. Positive actors and voters within the Mars community should be rewarded for foregoing yield and opportunities elsewhere. It seems to only benefit holders with larger stacks and contributors imo, who can happily sit on their large bags and forego yield and opportunities to accumulate via positive action (voting and staking.)

I also do not believe you can simultaneously argue that short term actors will only dump staking rewards, but yet reinstating rewards will dilute long term holders; the two points seem to directly contradict. If rewards are reinstated, then long term holders will only add to their bags via restaking, and short term actors will continue to dump, rewarding both sets of actors.

Finally, in the grand scheme of things, 1.5M tokens is a drop in the ocean- especially when there is discussion around burning hundreds of millions from the community pool. It is in the best interest of the protocol to reward long term holders, stakers and voters, with inflation until the hub has migrated to Neutron and tokenomics are overhauled entirely. Acting to ‘flush out’ short term actors whilst penalizing long term stakers is the wrong move imo.

2 Likes

100% agree with this

Reconsidering the extension of staking rewards for MARS token holders raises some concerns in my point of view, particularly for those invested over the longer term. It’s observed that transient investors are often drawn by immediate incentives, in contrast to long-term supporters who value the MARS tokens for their fundamental worth and potential.

The strategy of maintaining these incentives seems to inadvertently favor short-term engagement, potentially undermining the contributions of long-term investors who play a critical role in the protocol’s enduring success. Moving forward with i.e. daodao governance and reevaluating staking rewards to reflect the priorities of Mars’ committed user base and long-term contributors should be a priority. These individuals are essential to the robustness of governance participation and the backbone of Mars.

While my viewpoint remains balanced, the strategy to prolong staking rewards may not align with the best interests of long-term MARS stakeholders. As the discussion on tokenomics progresses, focusing on strategies that ensure the protocol and its dedicated community benefit sustainably is crucial.

Why is there so much perceived harm from reintroducing staking for 2 months? This is not exactly a very liquid token, and the price is volatile, so not sure how much of a flood of short term holders would come in from this given the above. And without reintroducing it we are probably going to get more volatility and potential downside price action anyway given how many millions of MARS are being undelegated since the halt of rewards. And furthermore, it’s not like it’s going to truly damage long term holders as they are going to get these rewards too…

And if not, can we just get a * clear * view of what exactly is going to be done with the 600m tokens - some plan with rough numbers attached to them (?)

I’m in favour of this. My reasoning is:

  • inflation rewards stakers with a larger share of the networks value by diluting non stakers, like inactive holders and LP’s. There are plenty of large holders of mars who are not active ‘members’ of the protocol. I think inflation will reward the more active network participants over the less active, as well as improve decentralisation.
  • 750k per month is not a huge amount of inflation relative to supply - its an increase of about ~0.55% in circulating mars per month. I also think the majority of this will not hit the market any time soon.
  • Eliminates the risk of chain security becoming dangerously low.
  • I get more tokens :slight_smile:
3 Likes

Agree with this…need to get this to a vote

I’m personally against this, but don’t feel too strongly either way - also benefiting from it myself since I am a staker. I’ll probably abstain from a vote.

From a chain security standpoint - in general I think paying 750k MARS a month (at current MARS price that’s ~130k USDC) for chain security is a lot. I think we have been drastically overpaying for chain security for a long time considering what the chain is doing (since it never took ownership of the outposts).

The large staking yield does have the benefit of helping to decentralise the token, and also helps offset validator running costs by ensuring they are receiving enough commission that they can sell this MARS to pay for infrastructure costs.

Additionally it gives MARS holders something to “do” with their MARS if they are wanting to hold > short term.

As a downside though, you would expect at least a portion of this MARS to be sold immediately, and also means more MARS on the market to sell in future - with current low liquidity levels of MARS this could be putting a strong relative selling pressure against the token and suppressing it’s price appreciation to some extent.

For the points you mention and above from others, I’m on the standpoint of re introducing staking…while we have an excess of millions of community pool tokens (which we should burn a majority of anyway), I want rewards for being a long term holder

I would vote against this. I dont see a need to inflate the token more and as other have said, would rather see people jeet their bags earlier at these lower values

1 Like