Community call — rethinking our approach to staking
At our community call yesterday we had a great discussion and talked about the following.
We first talked about the two proposals currently in governance.
- The first proposal is to enable the switching of members’ addresses. Although this is technically a small change, it does mean that we can now integrate with other projects and platforms much more easily. Therefore this also helps us to achieve our goal of greater integration and distribution in 2020.
- The second proposal is for a multi collateral DAI update. This gives Board members approval to update the system parameters from SAI to DAI. The intention is to switch SAI based covers to DAI. So if you buy cover in SAI now, then if there is a claim after the switch it will be paid in DAI.
❔What happens if quorum isn’t met on these votes?
We absolutely would prefer if quorum is met so that we can be sure we are working for our members. However on the SAI/DAI upgrade vote it is set to default to the Advisory Board’s recommendation if quorum isn’t met.
❔Any concerns re: gas fees and voting participation?
We are aware of this but hope that our rewards system for vote participation is enough to outweigh any issues members might face on this.
We also would like to remind members that you are able to delegate your vote to any other member that is accepting delegations.
❔The governance area was a bit slow when voting was in process.
We are fully aware that there some inefficiencies in that respect and are working hard to improve performance overall. This is one of our goals for 2020 and we appreciate members’ patience with the system while we fine tune it.
We then went on to discuss our upcoming proposal to amend the way we reward staking.
We have decided to update this part of our system because we heard user feedback that the current system is complicated and quite confusing, that the 250 day lockup period is quite long and that the rewards are too concentrated among the early stakers. We also had originally modelled the system based on a tried and tested insurance model, but we have since worked to find a more suitable solution for our purpose and one that will reward our members more widely.
Overview
The mutual’s ability to cover new risks and therefore it’s ability to grow is closely linked to the success of the Risk Assessment incentive model.
Experience since deployment has indicated:
- risk assessment rewards are concentrated on relatively few accounts due to the queuing system,
- lock up period of 250 days is too long relative to other staking options available, and
- the unique nature of thestaking process makes it hard to understand rewards, and if it’s worthwhile participating.
Proposed Changes
- Risk Assessment to be conducted on a pooled basis. With rewards and punishments distributed proportionally to the stakers on each smart contract.
- Risk Assessors will be able to allocate their stake against multiple contracts at once, using their stake up to 10x in total, with no more than 1x allocated to an individual smart contract.
- Stakers can unstake at any time but with a 90 day delay; rewards and potential punishments continue for 90 days.
Benefits
- Increases potential rewards for stakers by 10x.
- Pooled system spreads rewards evenly and removes complexity.
- Reduces staking period from 250 days to 90 days.
❔What happens to existing NXM staked with this proposal?
It will depend on the technical specs which we will know more about once we start building. However we are aiming to switch current stakes to the pooled approach.
❔How did you arrive at the 10x decision? [As mentioned in above proposed changes.]
This is probably a conservative level and ideally increase this in the future however, to begin with we want to take a measured approach so we can assess the risk while the system is being used and then make a decision as to how much we want to increase it. It does introduce more risk than the current staking approach and members need to be aware of that.
❔Rewarding early stakers makes sense to me but the queue system isn’t great.
We understand this perspective and we toyed with more complicated structures, which might be an option in the future. But for now we preferred to not introduce too much complexity and keep the rewards proportional, regardless of when staking occurs.
❔Where is the full proposal written?
We have put the rough idea out on our Discord, Telegram, Twitter and Reddit and then wanted to engage with you guys before writing the full proposal. After this discussion we will evaluate the feedback and write the full proposal. It will then be published online, probably on our medium but we will make sure you know where to find it.
❔The current 250day lockup and queuing encourages a HODL mindset.
We appreciate that but do think we can achieve a better balance for all members by updating to the proposed system.
❔How can non-members read and review proposals?
Currently it’s via our Discord and other media channels so that we can capture the diversity of our stakeholders from crypto natives to insurance professionals. In the future however we are considering using Github for this purpose as well. It will always be via a range of options.
❔Where can we talk about/discuss pooled staking?
Primarily our Discord channel until we publish the full proposal document.
❔Please can you put the telegram link on your website?
Absolutely! (You can now see the link on our homepage.)
❔Do you have plans to use the DAI savings rate?
Yes. One of our upcoming goals is to begin investing the pool of funds so that we can earn for our members. However we need to be careful that we take on uncorrelated risk only, so the DAI savings rate and ETH2.0 are our current options. More on that in 2020.
❔Does current cover on Maker DAO contract also cover funds in DSR?
Yes!
❔Have any projects approached to get cover on their users?
Many have got in touch with us and are in the pipeline. Examples of projects already doing so include Totle and Flexa and Paraswap.
❔Was the recent Flexa cover purchase from the team itself?
There was some involvement with Flexa staking on their own contracts but the larger cover purchases weren’t from the Flexa team directly. Read more.
❔Are there any thoughts on prolonging existing cover? Eg, a cover expires and the cap has been met so there is no opportunity to extend coverage.
We are aware that is an issue, and also understand that the current system requires you to remember when your cover expires. We have a few ideas here and will be looking to improve the UX.
The future
Our CTO Roxana also took a moment to thank members for their patience with some recent issues that occurred during our KYC process. We’re working hard to fix any issues that arise and to update our UX/UI and we really appreciate feedback. So if you do have any issues, suggestions or questions please jump into our Discord channel and let us know.
We also explained that our plan for this proposal to update the staking system is to iterate on it in the short term so that we can make sure the system works as expected and is the best option for our members. We then plan to apply the staking model to other kinds of risk in crypto, as well as outside crypto in the future, so we will have a variety of product lines. One main benefit of our approach is that we can cover risk where traditional insurance can’t because the risk is still relatively unknown and there isn’t sufficient data.
You can watch the full video of the call.
Join our conversation on Discord.
