sTOS upgrade in TOSv2
How TOSv2 affects the sTOS mechanism
Special thanks to Keven.J, Suah.K, Praveen.S, Zena.P, Ale.S, and Darren.K for productive feedback on the posting
You can check the Korean version of the article here.
As we upgrade the TONStarter platform, many changes which can immensely affect the ecosystem will occur. In this article, I will exclusively cover modifications in the sTOS mechanism.
What is sTOS?
sTOS is the governance token of TONStarter. As the TONStarter governance goes through an overhaul, sTOS holders are expected to vote on various governance proposals within the ecosystem. They can also participate in IDOs of promising projects on the platform. Sharing a part of the profits generated by projects via airdrop is possible, too.
How do I get sTOS in TOSv2?
We first have to clarify the relevant terminology.
Staking
You stake TOS and obtain 10% interest in annualized terms. You can unstake TOS at any time.
Locking
Locking is similar to staking, but there exist two differences.
First, If you lock TOS, you can take not just interest but sTOS. Plus, you must set the lock-up period, during which unstaking is not allowed. Lock-up periods are up to 156 weeks and always end on Thursday(00:00 UTC+0) due to the original design of sTOS.
The bottom line is that you lock TOS and get sTOS with LTOS.
Notably, in TOSv2, users can also get sTOS through bonding. Bonding supports 1) five days of lock-up and 2) longer lock-up ranging from 1 week to 156 weeks. sTOS is given to bonders who choose the latter option.
How many sTOS do I get in TOSv2?
The amount of sTOS a user gets is proportional to the amount of TOS locked and the lock-up period:
# of sTOS
= (# of TOS locked*(1+staking APY)^(lock-up period/52)) * (lock-up period) / 156.
- Before TOSv2
In the graph above, the blue dotted line denoting the amount of TOS before TOSv2 is flat. In other words, after the lock-up period, you get the same amount of TOS back regardless of the lock-up period due to the absence of staking APY:
(# of TOS locked*(1+staking APY)^(lock-up period/52))
= 1,000*(1+0%)^(lock-up period/52) = 1,000 = # of TOS locked.
Consequently, the amount of sTOS before TOSv2 is calculated linearly.
- After TOSv2
In contrast, in TOSv2, staking APY is 10%. If you look at the red dotted line, the amount of TOS is geometrically proportional to the lock-up period:
(# of TOS locked*(1+staking APY)^(lock-up period/52))
= 1,000*(1+10%)^(lock-up period/52).
Therefore, the amount of sTOS after TOSv2 is calculated geometrically.
How fast does my sTOS decrease in TOSv2?
The amount of sTOS linearly decreases as time progresses. If we express the amount sTOS left after x weeks since locking numerically:
# of sTOS left after x weeks since locking
= (# of sTOS a user gets) * (lock-up period-x) / lock-up period.
What about sTOS I already have before TOSv2?
Do not worry. Your sTOS does not vaporize. Instead, sTOS in the existing TONStarter DAO gets integrated into TOSv2. Additionally, the amount of sTOS for existing sTOS holders increases with the updated sTOS calculation. You can check the relevant details in the Integration of sTOS into TOSv2.
Implications
Users can get more TOS and sTOS in TOSv2 thanks to a 10% staking APY.
More importantly, the benefits of staking APY go mostly to long-term TOS holders. It is thanks to the fact that staking or locking rewards are calculated geometrically. The longer the staking or lock-up period is, the bigger the extent of increase in the amount of TOS and sTOS. You can check this in the graph above, as the difference between blue and red lines is proportional to the lock-up period.
It is beneficial for the TOS ecosystem for the following reasons:
- It encourages TOS to remain longer within the ecosystem, which can act as a buffer against abrupt shocks.
- If we allow long-term sTOS holders with many sTOS to exercise more voting rights, the TOS governance will be more resilient to near-sighted behaviors.
