Unstake SPS Early with Penalty
33694b23e0e7c508268c2803bb6c88da9140a19d
The Proposal
We will introduce an early withdrawal option for staked SPS tokens, allowing users to retrieve their tokens before the staking period's completion. To enable this feature, users will incur a cost in the form of SPS tokens, and all tokens used for this purpose will be permanently burned. Additionally, we will provide users with the choice to opt in for a lock period, offering an added layer of security for those who wish to safeguard their holdings in the event of a security breach.
EDIT: If the user has any proposals they have voted for, an instant withdraw will "power down" their votes, similar to how you can "power up" your vote if you increased your SPS stake during a voting period.
Summary
This proposal offers the following benefits:
Flexibility and Convenience: Users can unstake their SPS tokens at their convenience, aligning with DAO standards
SPS Burning: Early unstaking with a
4%5% penalty provides a valuable opportunity for SPS token burning, especially bullish market phases.Instant Rewards: Users can instantly withdraw rewards without the need for third-party services.
Potential downsides are addressed in further detail below:
- Staked SPS no longer out of circulation
- If someone wants to unstake to sell, I would prefer a seller to sell
96%95% now than 100% over 4
- If someone wants to unstake to sell, I would prefer a seller to sell
- Using early unstake to affect DAO votes is simply too expensive since there are no SPS flashloan services, calculations explained
- The exact penalty rate can be tweaked in the future if there are not enough users, or too many users
Implementation
Following the implementation of this new function, all users will have the ability to instantly withdraw their SPS tokens. For added security against potential hacks, users can opt to 'lock' their SPS tokens for a specified number of days after an instant withdrawal, similar to the concept of card locking. This choice will effectively reduce the number of days required to unstake from the current 28 days to the selected 'x' days, if a user chooses to pay the early unstake fee. In the event that users choose to disable this lock, they will still be required to wait for 'x' days. During this waiting period, the lock will remain enabled as a protective measure.
Penalty Rate Calculation
Determining the appropriate penalty rate is the most challenging aspect of this proposal. Striking the right balance is crucial; the rate must be substantial enough to dissuade users from early withdrawals, yet not overly harsh to the point of discouraging its use altogether.
In my personal view, I lean toward a more lenient penalty rate. This approach aims to incentivize a broader user adoption of the early withdrawal function and offer new stakers a degree of flexibility when they initially stake their tokens.
Considering these factors, I propose a penalty rate of 1.25% per week. This equates to a 4% 5% penalty for a 4-week early withdrawal, and all SPS tokens subject to the penalty will be permanently burned.
Rationale of Proposal (Pros)
This proposal fundamentally aims to enrich the SPS ecosystem by granting users the freedom to unstake their tokens at their convenience. This aligns with industry best practices observed in many other DAOs. Users may have unforeseen expenses, emergencies or simply sell out of anger when your card doesn't stun 4 times in a row but the enemy retaliates every time… because your card never stunned...
Moreover, this innovative feature represents a substantial opportunity for SPS token burning, especially during bullish market phases when users seek to 'catch pumps.' Early unstaking, which carries a 4% 5% penalty, enables users to capitalize on price movements while reducing the total supply of SPS. This is particularly advantageous during random Hive token pumps that often impact SPS prices, offering users the chance to reinvest at lower prices following retracements, which typically happen (NFA).
Lastly, the proposal introduces a seamless avenue for users to instantly withdraw their ranked, lands, TD, and node rewards without the need for long waiting periods or reliance on third-party services. Although third-party alternatives may still exist, they would simply need to offer rates more attractive than the 4% 5% penalty imposed by Splinterlands, positioning Splinterlands as a competitive and user-centric platform within the ecosystem, without killing off all third party competition.
Addressing Potential Downsides of Proposal (Cons)
With any proposal, it's crucial to acknowledge the potential downsides, and one valid concern is that a low early unstaking penalty may lead to the perception that staked SPS is no longer effectively out of circulation. I understand and share this concern to some extent. However, my perspective is that if a user is determined to sell, they are likely to do so regardless. I prefer a scenario where they choose to sell 96% 95% of their holdings instantly, with 4% 5% being permanently burned, as opposed to selling 100% of their holdings over a 4-week period. It's worth noting that certain entities, such as botnets, may use this system to constantly instantly unstake and sell. Nevertheless, it's my belief that they will extract value from the ecosystem in any case, so allowing them to do so at a penalized rate, if they opt for it, may help mitigate their impact in the long term.
Another potential issue involves the misuse of DAO proposals. Users could potentially buy SPS in the last minute, stake it to influence a vote, unstake, and sell it back on the market. To address this, we must assess its feasibility and whether it's a significant concern. The closest proposal we have had so far is #39, where a vote of 5.627 million SPS would have swung the vote from yes to no, to be safe let's use 6mil as an example. To purchase this much SPS, it would best be done through all LPs and Hive Engine order books. Assuming approx 1.5mil from SPS/ETH, SPS/WBNB and SPS/SWAP.HIVE can be bought and the remaining from Hive Engine, this would incur roughly 4-5% price impact (including fees), a sale would incur roughly the same price impact but let's not even consider that and assume that users do not sell enough SPS for the price to retrace exactly back to before. This accounts to roughly 240-300k lost SPS just from the buying/selling process. Bridging to and from the game from BSC and ETH will cost 1% for two way transactions for the 3mil bought via ETH and BSC, that is 30k SPS. The instant unstaking fee for 6mil would be 240k. Therefore, the total fee associated with this is roughly 510k-570k SPS, or roughly $7k to $7.8k USD, which is not a reasonable fee to spend for most people to swing a vote, and this is how much it would cost for the closest proposal in Splinterlands history. Therefore, I do not believe to be a real concern. In fact, the main cause of DAO exploits is due to flashloans, which do not exist for SPS.
EDIT: A valid concern raised by @udow is the potential for individuals to unstake and cast votes across multiple accounts using the same amount of SPS, effectively reducing the fee to 5% or 288k SPS according to the calculation above. While I remain optimistic that this will not evolve into a significant issue, given the rarity of such close calls, even if such instances arise, I truly doubt anyone would be willing to spend such a substantial portion of their personal wealth to influence a vote. I will also consult with Matt to explore potential technical measures that could be implemented to mitigate this risk. One example could involve automatically "powering down" the votes of individuals who choose to early withdraw, thereby addressing this potential loophole.
Lastly, user perception of the penalty rate may vary, and finding the ideal rate isn't an exact science. However, I am open to proposing changes to the penalty rate in the future if we observe that the system isn't being used as intended or if staked SPS no longer effectively contributes to the overall ecosystem's stability and value.
Matt’s Feedback (Summarized by @cryptoeater)
Matt's main concern is not enough people will use it so developing this may not be worth the effort, but should the proposal pass this will not be too hard to implement from the tech side. Overall, Matt is in support of this idea but does not see it as a top priority.
Please note the suggestion to include an additional "lock" option was suggested by Matt to mitigate the effect of hacks, should the user choose to protect themselves.
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Huge fan of this proposal and I hope you get lots of votes. I wish I could help but I don't have much SPS. But good luck, it can be hard convincing people to vote for your proposal. My one still has barely any votes.
Posted using Splintertalk
"Therefore, the total fee associated with this is roughly 510k-570k SPS, or roughly $7k to $7.8k USD"
When I understand the system correctly the weight of SPS is taken when you vote and won't change anymore (why otherwise their is the Power-Up-Tab ?).
So in this case you can unstake the SPS with 4% fee, send them to another account and vote with this acoount a second time with the same SPS (or than only with 96% of the SPS) - in every case it would make it much cheaper than you calculated, so it would be "only" 240k SPS instead of roughly 510 till 570k SPS - or how you plan to prevent this ?
Indeed, very good point.
From my understanding there is no way to prevent it in the proposal but it could be mitigated by checking the actual SPS holding of each voting account at vote closure time.
It would prevent this hack as the SPS transferred would account only for the 2nd account and not the first one anymore. It would also remove that strange need to "update" your vote.
Still that's a lot of work for this feature, it would be nice to assign a priority level to a proposal when voting just so we are sure it won't impact the development of core game features.
Easiest option is to simply "power down" your voted SPS each time you instant withdraw.
Indeed, that works as well but the important point is that at the end of the voting time, each voter is accounted for it's true amount of stacked SPS.
But yeah, 4% or 5% now is still way too much money for swinging a vote, and it will further increase is the SPS value increases as well.
Great point, I will speak with Matt about how we could potentially circumvent this from a technical standpoint. Furthermore, it seems most people believe 4% is too low, so I may just increase the proposed fee from 4% to 5% and this will increase the cost by 20%.
With that being said, even 240k SPS (or 288k SPS if 5%) is still a fair bit to be honest, and there will be very few proposals that are even that close for this to be effective.
However, you still make a great point I will include in the article
Add a penalty for the SPS vote, the option is the same but your vote it's reduced a 50% for 7 days, for example?, just my two cents. I don't think it's a bad idea to give options, so I'm voting favorably if this gets implemented, without a limitation in the votes, I would fear for an exploit.
Matt has confirmed that it's possible to "power down" the vote if it gets instant withdrawn, so this issue is no longer valid.
Confirmation of powering down votes upon insta withdrawl/unstake combined with a couple security features like "opting in" & having a visual cue for it easily visible on your account as stated by @davemccoy has made it a yes for me (:
👍Good to know, I will upvote the proposal then.
The following edit has been added:
"A valid concern raised by @udow is the potential for individuals to unstake and cast votes across multiple accounts using the same amount of SPS, effectively reducing the fee to 5% or 288k SPS according to the calculation above. While I remain optimistic that this will not evolve into a significant issue, given the rarity of such close calls, even if such instances arise, I truly doubt anyone would be willing to spend such a substantial portion of their personal wealth to influence a vote. I will also consult with Matt to explore potential technical measures that could be implemented to mitigate this risk. One example could involve automatically "powering down" the votes of individuals who choose to early withdraw, thereby addressing this potential loophole"
This can be a significant issue. This can be a potential exploit please edit the proposal to include a fix while talking to Matt otherwise this doesn't work
The potential fix I will speak to Matt about is simply ensuring when a user instant withdraws, it also "powers down" their votes, similar to how you can "power up" if you stake more. This means this exploit will no longer work.
If you unstake currently you do not "power down" as you cannot make it liquid before a vote ends anyway, so the normal unstake function does not need to change.
If the penalty was bigger I think I could vote for it but 4% is almost nothing. 15-25% is the range id look at if you wanted to avoid the 4 week unstaking process
I think 15-25% will make no one use it, or very few people. It's true there are protocols that charge nearly or even upwards of 50% penalty for a maximum stake early withdraw, but those protocols may also have 1-2 year staking periods.
For now, I am happy increasing the proposed fee to 5% and see how that goes
I think 5% is still to low. Some people dont even get outta bed for 5% (shark tank joke)
I just feel like if someone really wants to avoid the 4 week wait they should pay a penalty, 5% is a processing fee not a penalty. I think the minimum I could support is 2.5% per week for a total of 10%.
Its a tough cookie to crack tbh because you honestly dont want a ton of people using it because if they are that probably means things arent going well. One of the best things about SPS is the amount locked up IMO. You dont see a ton of projects with over 50% of its supply out of circulation and thats not even including the unstaked amount we have in the Dao.
I think it's 4% or 5% per week. So, Let's say I unstake 100k SPS (25k per week), if I quick unstake on week 1, that's 4% * 4 [weeks] = 16% = 16000 SPS penalty
I may be wrong but that was my understanding.
If it was 5% all throughout, then I do agree that it is too low and the minimum should be around at least 10% for the whole 4 weeks. Then put 5% burned and 5% transferred to DAO for other projects.
@cryptoeater I'm not against this proposal but I think it needs some tweaking. I agree with @hewitt 5% is waaaaaayyyy too low. That's not even an inconvenience. Having the ability to unstake without waiting can cause massive dumping, and a negative snowballing affect on the token price. That is why unstaking over 4 weeks reduces the downward pressure of a token and spreads it out over a longer period of time as to not destabilize the price action. The point of an early unstake fee is to make them FEEL THE PAIN of unstaking early if they really want it that bad.
20-25% seems reasonable to me. You REALLY need to want those tokens, to unstake and loose 25%. 🤑 If the market pumps and SPS goes to stupid high prices, the amount of burning that will happen near the top will be legendary... AND cause a snowball deflationary event to the token.🔥 LOL
I like the idea, but I think 4% might be a bit too low.
You said your idea was 1% per week so for 4 weeks 4%.
My idea as a suggestion would be to raise 1% for every week.
so first week is 1%, 2nd week is 2% . . . and so on.
So then for a 4 week reduction, it would cost 1%+2%+3%+4% = 10%
This could also allow to maybe add an option where you can do less than 100% time reduction unstaking, meaning for example you burn 3% and get 50% instantly, but still need to wait 2 weeks for the extra 50% or you burn 1% and get 25% instantly, but need to wait 3 weeks for the extra 75%.
Just my idea on how to improve this proposal potentially.
For now I will still vote Yes for this proposal as I like the freedom it would bring to people regarding their SPS holdings and also a nice SPS Burning mechanism.
Issue with this is someone can withdraw 25% instantly for 1% fee, then another 25% for 1% fee, then another 1% for 25% and so on.
However, I do tend to agree we can increase the fee slightly from 4% to 5% and see how that goes since everyone seems to want that
As purposed the *1% per week still equals to an overall cost of 1% on total tokens cashed out. Some are calculating 1 x 4 because of the four week unstake but imo that isn't the correct calculation. Wouldn't there be a one and done cashout (unless used multiple times) making the 1%/1.25 % fee a straight fee and not a compound fee.
Ex. If I cash out 100 SPS / 25 a week using the current system and get charged 1% for doing so that is 1% on 25 and the same 1% fee on the next three 25 weekly cashouts. That still equals to 1 SPS or 1% of the total casheout amount. . A minimum of a straight 5% fee would be much more reasonable.
Good idea. I have wanted to buy other SPL assets before and would have happily paid a 5% fee to have quick available funds.
As long as other stuff isn’t gunna break, I’m for it.
Great to know there will be usage of such a feature!
I generally don't mind the idea. I don't mind if people pay a fee to get access to sell their SPS early. I don't have a big issue with the 4%, I see other comments that feel it should be a bit higher and I'm ok with that too.
I think this will come into play when people want to take advantage of a "pump" in price and also when people that play and sell their SPS daily want instant liquidity. So I think it might be used more than people would think.
I'm not strongly for or against it, but I will vote for it as long as we can also have a good set of security features. Like it should require a person to "activate the feature" first and clearly show its activated for a few days before any such withdrawals can happen. I say this because its unlikely I would ever turn it on, so I don't want anyone to hack into my account and have instant access. (please note: anyone likely to use this feature will know well in advance if they want it as a "live feature" or not, thus making it not so much a problem for them to enable it well in advance of using it.
Thank you for participating in SPS DAO Governance @cryptoeater!
You can place or monitor SPS Stake Weighted votes for and against this proposal at the link below:
Link to this Pre-Proposal
Updated At: 2023-11-18 14:13 UTC
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My only concern is that noobs getting wrecked by hackers, invites more hackers.
Their problem becomes our problem.
I'm with Dave's suggestion. I'd like this feature to be off by default, and need to be deliberately turned on (with cooldown) in a menu somewhere, maybe with a popup warning.
Then daily notifications while the cooldown expires.
"Your account has been opted-in for instant unstaking. If you didn't do this, or you don't understand this message, please click here"
If we want to be the on-ramp for noobs, we need to be as safe as possible.
Thanks for posting the feedback! If more people agree with this opt out by default and choose to opt in I will update the proposal. I can't imagine that would be a difficult technical implementation.
Hey CE, I would personally be much more comfortable if I had to opt in and also it was clearly shown in the UI that this feature was "on". That way I would feel safe if I never turn it on. And if I do, then I know to check for hacks regularly.
I think you will lose votes that would vote for it if they feel worried it would create a security risk. Since its still in the discussion phase, then this would help sway a few more to vote for it imo.
By "daily" I do hope you mean once a day not once every time you login. The constant reminder that there's a new proposal is annoying enough that it doesn't leave even if I vote or not.
I don't want another popup just for another reminder that I don't need. Of course, this can easily be solved by adding a notification setting in the game to turn off this notification.
Daily would be best, but if it popped up every time the player refreshes, for the 7 day cool-down period, at least it would only be once. Then their account would stay primed for instant unstaking, no more notifications about it.
Can you please explain the opt out process for this so a hacked account is still secure from the early un-stake process? The wording you have in the proposal is not clear to me as to how it works.
Hi, at this stage the default is opt in, so all users by default allow early unstake unless they manually lock their SPS. Perhaps a warning should pop up when this implementation goes live and asks the player if they want to opt in or out?
It's not a great security measure if the default is to opt in. What is the reason for the default to be opt in?
That's true, I will include this in the proposal that the default is opt out
I love the idea, but 5% is too low IMO. I think I would want 10% minimum before I'd vote for it, and I'd really prefer 15%.
Also, I think things should be taken a step further, regardless of the %. Since most people are doing this to fund other purchases in game anyways (and that's really the only type of cash out we care to aid in anyways), 100% of the SPS should be burned and converted to X% DEC. So we force the use of the flywheel on top of the penalty.
🔥🔥🔥🔥🔥🔥
I personally think 5% is reasonable, but we'll see what the community thinks, generally it seems more people are interested in a higher penalty though.
In terms of burning it into DEC, it would only make sense if it's DEC-B perhaps? Otherwise they can just sell the DEC as well
I suggested an amendment to completely disregard any unstaking of SPS, and rather, allow players to burn SPS for DEC out of their claimable SPS rewards only, before claiming it and having it get auto-staked.
This will make the flywheel much more accessible, and I think we would see a big increase in burning of SPS if this was allowed so players don't have to wait for unstaking and can burn before claiming.
Clay created this in the Draft Proposal Suggestion thread if you want to take a look:
https://discord.com/channels/447924793048825866/1169932884807794748/1176926508690980885
The idea sounds fine to me, but this penalty is way too low. It should be at a minimum 10%.
Thanks for the feedback, that seems to be the general consensus that it's a bit low. I will keep this in mind and we can always create another proposal to update the fee if needed if this one pass
I like the concept. I'll also say I think 5% is too low but I don't agree with those suggesting 15%+. I would like to see it closer to 10%.
Ideally the way I'd like to see this is that 100% of the SPS is burned for DEC and there's a 10% fee assessed. But they could have the option to get credits instead and only pay a 5% fee since credit can only be spent in game.
There's just something interesting about the idea of a coin that when people want to panic sell, they literally have to burn it instead.
i think 5% is good because the third party providers also take 5% for the service. offering the service for more could be a waste of time because people will just go to the ``competition''
Good point, but one thing to note is that third party providers will never be able to unstake already staked SPS, they can only offer liquid rewards for new earned SPS.
I like this idea if the Unstaked SPS is instantly burned for DEC I also like it if the fee was higher. I'm concerned that instant Unstake could provide a neg price impact on the SPS
It may have a negative impact on the short term price, but in the long term with a lower maximum supply of SPS, it will have a beneficial impact
i will vote No unless the SPS is instantly burned for DEC and at a higher penalty than 5%
What is the penalty percentage based on? Is it a percentage of the amount to be unstaked, or a percentage of the total amount that the user has staked? I assume it's only a percentage of the amount to be unstaked but that needs to be very clear in the proposal.
Yes correct it's a percentage of the amount being instantly withdrawn
This is way too late to do as this should have happened after daily airdrops of SPS stopped. I am actually surprised nobody thought of that at the time when it was most crucial. Also, 5%? That's like a normal range for a fee anywhere, I see a lot of companies take 5% just for using their platform to sell anything you want to... It should be more within the ~12-20% range
Also, something needs to be implemented for the case of DEC-B which I cannot even access after all the hype about it.
Thank you for your feedback, it seems the community generally wants a larger penalty. I am personally in the boat that a 5% fee is adequate at this stage and is a valid penalty to disincentivize people from using it freely. It is designed to be a slap on the wrist and not something prohibitive so that no one ever uses this feature.
However, if we find people to be using it too often, it is definitely possible to increase the fee with another proposal.
Regarding DEC-B, once lands 1.5 comes out I believe there will be more uses for it.
The main raison we have unstaking time of 4 weeks is what make "staking" powerful. It assure that anyone that commit to staking know upfront that it's a long term investment of their asset and it prevent anyone from panic selling while also generate scarcity.
This same scarcity is what make SPS rare on the market and have a chance to push the price of it up when there is a demand. Adding such a "early withdrawal" system kill the entire purpose of what makes SPS scarce and it only a false good idea for people that want to dump on the market quickly and do trading which would have disastrous repercussion on our global economy and on the future of the flywheel itself.
For these reason I'm voting 100% no to this calamity and hope people greed won't blind them from the reality of what they are trying to change here.
I should also add that being able to unstake for 5% = bots that grind daily SPS will instantly dump them on the market daily to assure their daily earning while 100% tanking the price of SPS.
Add the fact that land is hopefully soon to be live and when that happen, you don't want people that make thousands of SPS from land daily to be able to dump them on the market as well etc.
I understand that at first glance this seems like a good idea for everyone to be able to dump on the market at their own convenience but everyone that agree right now don't seems to see the effect such a change would have on the price of SPS.
Another factor is that this 4 weeks unstaking create an extra layer of strategy for players to try and read the market and decide if they want to keep their SPS staked for extra reward and dividend or if they should unstake ahead in case there is a huge bull run in order to have those assets ready to be sold for profit etc.
In the scenario of a 1$ SPS overnight, such a dumb system would make everyone not care about that 5% and everyone and their mother would go and dump on the market, making such a run an instant pump and dump of the entire SPS while if we still have this 4 weeks in place, this prevent such a massive down pressure as the price goes up and force people to take informed decision about if it's better to stay staked or if it's time to slowly unstake in order to take profit.
Again, would you prefer bots to sell 100% over 4 weeks or 95% now, with 5% going to burn? If bots will sell regardless, so why not give them the freedom to sell when they want for a small penalty?
If SPS pumps to $1 overnight, and everyone unstakes to sell, we would have burned a LOT of SPS, reducing the overall maximum supply, creating the potential for us to pump even higher next time.
I'm worried all of your arguments are very short term oriented, if you try to see the bigger picture there are only two things a long term holder usually cares about:
Essentially, their percentage holding of SPS tokens.
The bottom line is this proposal increases the amount of SPS that can be burned, without introducing a new source of inflation of any asset, thus creating a net benefit for the ecosystem.
I would have them sell over 4 weeks for suuure... @cryptoeater I think your not valuing the danger of getting "95% NOW". That creates violent drops in the price which could destroy the price action and overall health and confidence in the token/project. Imagine if the price of SPS went to $1... you would see massive spike dumps happening immediately.
A 5% slap on the wrist to see a huge dump on the charts by whales during a bull market is not worth it... now a 25% punch to the crouch... I can live with that. 😉
That is a price worth paying for potentially harming the health of the token and price action. Remember these massive dumps destroy the charts, kill confidence in the stability of the token, and in turn, bring up questions of scams, rug pulls etc. There are also optics to this as well. Both from traders, and newbies looking at the project from the outside. The charts do not only reflect the token price but the perceived stability of the project in general. VERY IMPORTANT
If you are going to allow people to opt-out... (which I'm not against) the FEE/PAIN needs to equal that of the potential negative sentiment that will be created from a whale dumping on the market.
Or at least 10% should be a good penalty. Although higher would be better since the reason for the SPS is really the staking part and not to sell it.
The longer you make people stake SPS, the better for the game, is what I understood ever since I played the game. If the purpose of SPS is to hoard and sell then dismiss my comments on all threads.
Also, I disagree on your term "scarcity" for the SPS because if SPS is really "scarce" then its price should've spiked up by now and yet it isn't and every week it goes down more.
Staking does not equal locking necessarily, I firmly believe that is a false equivalency. For example I was informed Cardano is apparently not locked for staking, and there are various DeFi protocols out there that offer early unstake.
I agree locking does help with short term scarcity and the price stability of a token, but it does not help with the long term scarcity of the token, nor the innate value of a token.
You seem to mention price and scarcity a lot, but it is all within the context of the short term. If someone wants to sell, they will sell. Would you rather someone sell 100% of their holdings over 4 weeks or 95% right now, burning 5% in the process? I would think any rational long term holder would prefer to see a 5% burn, since short term price is completely irrelevant to a long term holder. Short term scarcity or false scarcity does not help with long term price of a token since it can always be dumped at a future date, only burned tokens is out of circulation forever.
You also mention the "disastrous repercussion on our global economy and on the future of the flywheel itself", but the price of SPS is completely unrelated to the "flywheel", that is purely dependent on the price of DEC.
While I get you are trying to justify a 5% sink as a good thing over a long period of time but the reality is that the game itself should the be one creating those sink to help reduce daily that SPS and DEC supply. We should not have to implement such a thing to justify it being a 5% sink.
Secondly, Yes I would rather bots selling 100% over 4 weeks and keeping the price of SPS stable VS allowing them to dump on us daily with a 5% sink where they can just stake for a few days at 10%+ APY in order to counter that sink and simply bypass any fees while tanking the price of SPS.
I also don't understand where you tell me that I'm looking at this from a short term perspective when clearly, this entire proposal is a short term pump and dump tool getting in place right in time for the next bull run to make sure everyone can dump at the highest instead of keeping that 4 weeks component as a tool to avoid that downward pressure and making sure that staking stay an important commitment to the game in the long term as I do see.
My point here is that what will make SPS keep is value is that mix of if you decide to stake it in order to gain APY% and in order to have as much as you can staked SPS to gain more reward from playing the game.
It should remain a commitment so that when you decide to unstake, there is a both a lost of value coming from unstaking in terms of rewards and APY% but also a lost in time that avoid people chasing green candles and just doing daily trade.
I would agree to such madness only with at least a 20% fee on early unstaking to avoid any traders to use such a tool to do day trading.
As for the 4 weeks themself, considering how many time the SPL team did push back on delivering, if we were to have such a thing in place, we would have a 0.0001SPS right now form all the panic selling from the weak hands out there that would have took that 5% lost just to sell away from the game while them being force to sell over 4 weeks mean they can also take that time to reflect on the new reality of what is changing and potentially have them change their mind half way (yeah life is like that, some people are emotional and act on FUD or on frustration and such a tool in place make sure these people get some time to cool off and it does protect the price of the token.
I'm still voting No to this as I don't see 5% as big enough to justify such a pump and dump mechanism that can and will be used for margin trading and market manipulation which will have repercussion on the overall short, medium and long term market then the 5% burn it provide.
The SPL team should be the one creating more sink, not us via the DOA creating potential long term impact on the value of SPS when we could simply wait for the team to finally deliver everything they have left on the to do list that will organically fix this non issue you are trying to solve by creating other issues.
Don't get me wrong, I got nothing again trying to find good ideas and trying to improve the DAO and find ways to create value for SPS but IMO this one break the fundamental of a system that is in place to protect SPS value overtime.
I think there should be tiers for several instant withdraws. Pay 15% and get your stake now. wait 1 day pay 10% wait 3 for 6% and wait 7 day for 4% just a quick example. if someone wants their stake to be instantly liquid they should pay at least these fees. I wouldnt't even burn it but feed back a portion in the reward pools, and pair the rest with a stable on a dex for liquidity.
This is something I did personally consider originally, but for the sake of technical simplicity I decided to do a simple system. Due to the company's limited resources I did not want to over complicate things but I do agree this could potentially be a better approach.
If this proposal fails or even should it pass, I would not be opposed to another proposal with these new terms.
Anything less than a 15% penalty i will vote against. 5% is more like a processing fee or market fee not a penalty.
Thank you for your feedback, it seems the community generally wants a larger penalty. I am personally in the boat that a 5% fee is adequate at this stage and is a valid penalty to disincentivize people from using it freely. It is designed to be a slap on the wrist and not something prohibitive so that no one ever uses this feature.
However, if we find people to be using it too often, it is definitely possible to increase the fee with another proposal.
I'd prefer if the unstaking were done daily (3.57% per day for 28 days) instead of 1 time per week. Your proposal will give an advantage to those who act faster if a pump occurs, rather than allowing everyone to benefit equally.
In any market those who react fast will always have the advantage, which is why bots are so popular in trading. However, that is not something we want to discourage either (since it's against the spirit of decentralization).
Furthermore, no one (not even bots) know how high a "pump" will go, so despite faster reactions having an advantage to sell first, selling may not even be the correct choice.
The ultimate equalizer from this proposal that will benefit everyone is the burning of SPS, if you don't want to trade and play with pumps, let the bots do that and you can enjoy watching your ownership of SPS increase as more and more SPS is burned!
Maybe it's good for investors, who can get out quickly if something goes wrong...
I like the idea but fell the fee is too low.
I would prefer if it was 6% but will vote favourably either way.
Thanks for your support, it was originally 4% but I updated to 5% from the feedback. I am not opposed to a secondary proposal to increase fees should this pass (or not pass)
The overall concept is fine, but 5% is way too low & convenient for the token instability it'll encourage. We know this. If this was a bank, 5% is high. This crypto, and that's practically free.
After alllll this time staking with the original structure, instantly undoing that for a mere 5% slap on the wrist, while encouraging selling/price instability, feels brutally low. Offensively low. Also, the fee up "20%" from 4-5 is spinning numbers, akin to going from 0% to 1%. This burning will not put much of a dent in SPS inflation, but not much does. If whales want the flexibility to get out any time, they should feel some real pain - not a convenience fee for the flexibility to dump at any time due to lack of proper unstaking plans. This is a micro cap token with paper thin liquidity. Removing the flood gates will not be healthy at all, and just give people peace of mind that they can get out when the getting is good - thus creating the next generation of bag holders.
Penalty is too small. At least 10% to be a significant deterrent (which it should be - if it doesn't deter people significantly why have the 4 week cooldown at all).
Personally, I believe 5% is a rather large deterrent already and would personally not use this feature unless something drastic is happening in the market.
The point of this proposal is to enhance the flexibility of stakers while providing us an additional source of SPS burn.
With that being said, it does definitely seem like the majority of the people commenting prefer a larger penalty. Even if this proposal passes, I would not be against a follow up proposal to increase the fee
5% is a market fee. It's literally what splinterlands charges people selling their cards on the site. And it's not a deterrent. If this fee isn't a deterrent (which I'd argue 5% isn't, and splinterlands' own website shows they don't either), then the 4 week unstake period effectively ceases to exist. It only works if the fee is somewhat punitive.
penalty should be much bigger than 5%, more like 25-50%
for that reason I dont think this is good, will lead to gaming the system at expense of those who are unaware. IF the 5% changes to 25% or more, I will amend my vote to support. Otherwise a novel and interesting idea.
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Could you further elaborate on how the system could be gamed? The number one priority is to ensure there are no exploits from this proposal
To me it sounds like this proposal would diminish the value of staking sps as being not in circulation, this affects all holders.
For those who are unaware of this feature, they would bear the cost of this action when those in the know quickly unstake and sell their sps into the market upside. IF the amount burned is below 10% I dont see staking as being meaningful in the future in terms of removing supply from liquidity and encouraging long term holding.
This also adds significant quick sell side pressure to any upside move in SPS in the future, which will lead to large spikes up and huge collapses down, not unlike we see hive spiking and collapsing over the past 2 years.
Who exactly benefits here? People who want to cash in and sell out on splinterlands?
I see this as benefiting hot money investors at the expense of long term investors in splinterlands and the sps price itself.
Just my 2 cents, best wishes.
I support this proposal and think the 5% fee is in line with options already available in 3rd party systems. However, I would have liked to see only half of the SPS burned, with the other half going to the SPS DAO.
I know it is too late to say anything now that the finished proposal is already being voted on, but if this ever gets reconsidered to change the rate, I would like to maybe reconsider splitting the penalty with the DAO as well as the burn (null) account.
Thanks for the feedback, this was initially considered but I chose burn because
However, once the DAO runs out of SPS incentives for necessities like LP rewards, ranked battle rewards etc., I foresee a huge shift of revenue which is currently burned going towards the DAO instead... but that's a tomorrow's problem :)
What are the drawbacks of allocating part (or ALL) of the fees to the DAO rather than burn? It's not like those DAO SPS tokens would hit the market anytime soon, and it would help the DAO build its stockpile for the coming years when SPS will stop being printed and the rewards will have to come from the DAO buying from the market.
I think at token burn for the sake of burning is just a short-term solution to drive the price up a bit, but long-term we're going to want the DAO to have those tokens for sure.
Personally, it's the market cap. People see the marketcap of a token to buy or not, typically the lower the better (more upside potential). If it's held by the DAO, it's still technically existent so the marketcap will be higher, but if it is burned the fully diluted value (FDV) will be lower, thus becoming a more attractive token to buy.
In the long term it's good for the DAO to have tokens, but I don't believe the more the better. The DAO owning a portion of tokens is always at risk of bad governance leading to bad spending, or even a hack or something like that. Burned tokens are gone forever, no questions about it, so it's a bit safer in my opinion to have some tokens go to DAO and some burned, but never all to DAO or all burned.
So at least we agree that it was probably best to split the fees between null and dao.
I also think the penalty should be at around 8%+
I originally voted no because I thought the % was too low, but I switched my vote because I do agree that it should be easier to get the SPS that you earn to liquid form if you want. It's better than just switching to rewarding liquid SPS or something more drastic like that.
There are significant dangers that exist when it comes to this but if we can make it 8% i can support it.
The 5% loss isnt significant enough not to make this the preferred option for unstaking 100% of the time.
If this happens, I would prefer to see a higher penalty like 10-12%
I’m sorry, 5% fee is too low, making it tempting for the bot lords and risking pump and dump exploits. If it were 10% or more I’d vote for the proposal, but now I’m voting against it.
This is dangerous in bank-run like scenarios and would make SPS plummet insanely once people get nervous.
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That is still just a 1.25% fee on overall tokens withdrawn. Way too low in my opinion. Abuse will take place as noted in your edit. However I do like the idea but the fee needs to be substantially higher. 5% fee on all and any withdrawals made using this "quick cashout" feature would be the lowest I would recommend. Could even go a little higher than 5% and hand a portion over to the @sps.dao treasury.
Ex. 6% straight fee on any tokens withdrawn using the quick cashout feature/ no wait period so no need to count weeks with 2% going to the treasury and 4% burned.
Some might think 5-6% fee is high but it isn't considering we need the fee high enough to fight abuse. We also need it high enough that its worth implementing (enough SPS gets burned in the process). If the fee is too little there will be no reason not to use the feature anytime SPS slightly pumps thus putting immediate sell pressure on the token (sellers should be charged a premium for this). Due to the low fee I will have to vote no.
Edit:
Ex. If I cash out 100 SPS / 25 a week using the current system and get charged 1% for doing so that is 1% on 25 and the same 1% fee on the next three 25 weekly cashouts. That still equals to a fee of 1 SPS or 1% of the total cashout amount. . A minimum of a straight 5% fee would be much more reasonable. Just because the fee takes place over 4 weeks doesn't mean it compounds to 4/5%. Unless I'm missing something here;
What people are not understanding with this is that there is already a 3rd party market for this that also charges 5%. With that in mind, why would you not want it burned instead or partially going to the DAO. The service already exists and is being used by many people.
A larger fee would be more attractive overall. 5% in a bull market would be very low of the overall proceeds from buying and selling properly. The overall decrease in supply is attractive but 10% would be more fair for both the holders and the seller.
Considering the volatility of low cap coins, it wouldn't take much capital to pump the price fairly high and everyone could just exit instantly which could create massive pump and dump scenarios.
Dynamic Scaling: Instead of a flat penalty rate, introduce a graduated scale where the penalty decreases over time. For example, a higher penalty in the first week that gradually decreases over the staking period.
Incentivize Longer Staking: Offer reduced penalties for users who have staked for longer periods, encouraging longer-term investment in the ecosystem.
2.** Enhanced Communication and Transparency**
Educate Users: Clearly communicate the reasons for the penalties and how they benefit the ecosystem. Educating users on the importance of staking for the long term can help mitigate the perception of SPS being out of circulation.
Regular Updates: Provide frequent updates on how the burning mechanism is impacting the SPS token economy, reinforcing the positive aspects of the system.
3.** Monitoring and Adjustment of Penalty Rates**
Feedback Mechanism: Implement a system to gather user feedback on the penalty rates and their impact on investment decisions.
Flexible Adjustment: Be ready to adjust the penalty rates based on market conditions, user feedback, and the overall health of the SPS ecosystem.
4.**** DAO Voting Safeguards****
Time-Locked Voting Power: Implement a system where the voting power from newly staked SPS does not become effective immediately. This can prevent manipulation of DAO votes through quick staking and unstaking.
Vote Power Decay: Introduce a decay mechanism for voting power immediately after unstaking, further discouraging manipulation.
Additional Security Features
Multi-Factor Authentication (MFA): Encourage or require users to enable MFA for unstaking transactions, adding an extra layer of security.
Notification System: Implement notifications for unstaking activities, allowing users to quickly detect and respond to unauthorized transactions.
Community Engagement
Regular Polls and Surveys: Conduct regular polls and surveys within the community to gauge sentiment and gather suggestions.
Community Governance: Allow the community to have a say in future adjustments to the system, fostering a sense of ownership and involvement.
Limiting Market Impact
Staggered Unstaking: Introduce a system where large unstakes are processed in a staggered manner over several days to prevent sudden market impacts.
Partnerships and Third-Party Services
Collaborate with Exchanges: Work with exchanges to provide liquidity options that might be more appealing than early unstaking, offering users alternative ways to liquidate their holdings if needed.
Additional Rewards: Offer additional rewards or benefits for users who stake their tokens for longer periods, incentivizing long-term holding.the following and use great detail to explain
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