ASR (Active Staking Rewards) Notes

Thanks to everyone who took part in the DAO Genesis & LFG Vote! It was fun participating in governance with the rest of the community. We have an exciting week ahead with the first Core Working Group budget vote, and we wanted to take this opportunity to discuss ASR before folks resume voting!

Design Goals

When designing ASR, we had a few key objectives.

  • Reward the most active participants in the Jupiverse with JUP, allowing them to accrue more voting power over-time in the simple way possible
  • Boost Participation: Instead of trying to lock-up the most JUP as possible, but rather wanted to boost participation as wide as possible.
  • Simplicity: Keeping it simple was key in onboarding a large userbase, as a majority of JUP holders are participating in governance for the first time.

Claiming ASR Rewards

The first batch of ASR rewards will drop sometime in July, after the first period of March - June has ended. These JUP tokens, when claimed, will be added directly to your existing stake accounts.

  • If your JUP is staked, your JUP will increase your staked balance.
  • If your JUP is unstaking with 15 days left, the ASR rewards will also be available within 15 days
    Thus – you can begin unstaking now and it wont affect your pending rewards.

The key design mechanism here was simplicity and encouraging folks to immediately start voting with their JUP rewards.

Long Term ASR

ASR is an innovative experiment, with the goal to align voters, keep DAO voters active and participating in proposals with 100M JUP in launchpad fees for the first 6 months.

We envision an ASR program that runs in perpetuity, with rewards released to align stakeholders and onboarding a new generation of retail DeFi voters to drive community-decision making on how to grow the jupiverse and the meta together!

This would be a key part of the JUP for JUP initiaitive - where we aim to get JUP into the paws of those who are actively working towards a bigger and better Jupiverse!

We’re excited to continue innovating along these lines and building up JUP DAO, and appreciate all the Catdets joining us on this journey!

88 Likes

That’s cool. Happy to see governance being prioritised!

10 Likes

continue the good work fam! lfg

5 Likes

Awesome. The future looks bright!

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So there is a couple of foreseeable issues that may arise by rewarding voters with liquid JUP, and that this is the same token for voting power.

  • Large stakeholders will have an accelerated means to compound their voting power, and whilst this may seem like a good strategy from a participation side of things, it may lead to price manipulation in order to game the system. It is easily prevented, but at current with standard 30d unlocks – this can lead to a major issue. Ill elaborate further;

JUP 4 JUP with a 30d unlock opens up the possibility for whale collusion to first accumulate larger amounts of JUP, to then hold it out of circulation which typically promotes price increase with ordinary demand. This inturn makes it more expensive for new members to acquire much less voting power (and thus rewards). Up until this point, that is not much of an issue – the real issue is when whales wish to all dump their JUP simultaneously in order to buy up even more JUP for much cheaper. In an isolated speculative market, not a big deal… but because it is also the voting token, now we have an issue where vote buying becomes possible (and incentivized unintentionally).

E.g.
A whale group stakes their JUP, earns much more JUP until they have a significant share to impact the market price. They all unlock after several months of accumulating larger rewards, and decide to dump the market so they can rebuy more JUP and restake it. Essentially they accumulate so much that one decides to reach out to the LFG candidates and offers ‘Vote Buying’. This is an inevitability with the design of ASR and JUP 4 JUP, and will lead to concentration of supply as opposed to greater distribution. all of which undermines the integrity of the DAO.

How to mitigate this?

This can be easily fixed with two simple changes;

  1. Apply a ‘Lorenz Curve’ for Time and Quantity for unlocking. This would mean that the less JUP you have staked, the faster it becomes unlocked. Also, the more JUP you have staked, the longer it takes to unlock.

  2. In conjunction with the above change, add a realtime display on the voting UI to inform people of how much JUP is pending to be unstaked.

What does this do? – Essentially it alerts everyone to large supply unlocks whilst giving the opportunity to front run the anticipated sell off.

Another alternative is to do a mutual vesting swap with the winners of the LFG votes – meaning that the JUP that would otherwise be granted as rewards to voters, is instead allocated to the project winners on a vesting schedule, and this is in exchange for equal value of the winners project tokens to be a vested reward for the JUP voters instead.

So that is my controversial 2-cents.

21 Likes

Sounds like a solid fair plan! This is my 1st time being part of a DAO so i have a lot to learn and understand. I have to say you guys are keeping things pretty clear and simple for us newbies! Stoked to be a part of this!

5 Likes

Could you please clarify that part ?

  • What if JUP is unstaking with less than 15 days left ?
  • What do you mean by “unstaking now and it wont affect your pending rewards” ?
3 Likes

Fantastic feedback. Forwarded this comment to the CWG.

4 Likes

I’d like to add another mitigation strategy. Put a cap on voting power, so after a certain point more stake will not equal more votes. However, some will get around this with multiple wallets

2 Likes

On the same note, these whales may not have the project’s best interest in mind when voting. How will we ensure the common cats with good intentions stay in control of the mission objectives?

Should there be a popular vote that also has to pass the approval of a “House/Senate” of verified good cats to avoid potential sabotage by bad actors?

3 Likes

This is a very thoughtful proposal!

While I understand the intent of #1, I believe whales will find a workaround to split it across wallets to workaround the curve.

#2 makes total sense regardless of what we decided on whale defense strategies

1 Like

I think the “Jup 4 Jup” idea is necessary to reward the early participants. Those of us this early, and believe me, we are still VERY EARLY to where this is heading (Jupiter protocol is heading to become the most dominant one in all web3, and we should be proud of being part of it), so those of us this early, participating and being active in the voting process, deserve to be rewarded with more JUP because those of us here (this early) truly care about Jupiter and what is being done here.

If your worry is that whales are being created because of “Jup 4 Jup”, then the “2-Factor Majority” system that you suggested here: 2FM Suggestion could counter the dominance of these future whales and give the little guy a feeling that their vote counts and is important as well.

I do like your “2-Factor Majority” suggestion and I hope Meow and the rest of the team take a look at it. :+1:

11 Likes

This is the way.:100::dart::ninja:

$JUP4$JUP

:ringer_planet::four::ringer_planet:

1 Like

I would say most whales do have the projects success at heart, they also stand to lose the most if overall confidence in the project is damaged – that is the basic premise of “skin in the game” or “shareholder theory”. In saying that, it is incredibly difficult to manage bias and conflict of interest within any DAO, and so its an evolving process to align the incentives so that we find a good balance between those with more altruistic motives and those primarily seeking power or wealth.

There are many approaches to this – a more well know strategy is the use of Delegation and things like Fractal Voting as describe in Daniel Larimer’s book more equal animals. This has been an area of focus of mine for a long time now – if you’re interested, I shared a novel voting concept here that I believe strikes a good balance.

In my experience, most whales are also a projects biggest supporters (not purely by investment), but this is more aimed towards those that such technology threatens. We can not both assume that family banking dynasties are passive to the development of DeFi, whilst we pursue a world that makes them less relevant. Am digressing a bit here, but lastly I’ll say that its a good thing for team to remain anon/non-doxxed – it is for their own safety, and all the more reason why we need to both decentralized and automate many things to make finance 2.0 resilient and robust against those that seek its demise.

3 Likes

Awesome, governance first!

#2 wouldnt much matter as i imagine whales would split accounts and thus votes. It leads to needing a notification sent or displayed if a high % simultaneously were unstaked. But 3ven that wouldnt matter at all if the curve for unstaking wasnt implemented but oh crap whales would just split accounts and votes so either way. Where theres incentives theres always a chance… at exploits and mechanisms designed to protect us will be seen as a challenge by those who wish to abuse systems. There’s not really any way to prevent accumulation of tokens, or to put to rest fears of dumps and price manipulating.

2 Likes

You’re right – have to be mindful of what problems are created with each solution. I have a fitting quote here by can’t remember who by…

“Solve a problem by making it obsolete”

So I think in terms of the ‘opportunistic nature’ of humans – that if you design something that relies on morality in order to control the desired use, then you can most definitely count on people exploiting it. Its a beautiful thing about crypto – the ol "don’t trust, verify’ sentiment. Essentially it speaks to the corruptible disposition of humans – greed, power ect.

I would argue that many in positions of great power in the world, never intended to become corrupted and went into their careers with an honest temperament. Yet you can not underestimate the power of the situation – there is a great documentary called just that “power of the situation”. Do check it out, and also the Prison Guard experiment by Psychologist Philip Zimbardo. Anyway, enough of my rambling :smiley: Thanks for your feedback.

4 Likes

I would say – let us not do away with an improvement, for the sake of seeking a resolution. You’re right though; its not a full proof measure but does induce a level of cumbersome effort to try and thwart the process.

Essentially all this underpins the issue of sybil resistance/proof. Digital ID may prove useful, but im still skeptical if it can achieve complete sybil proof. Other attempts like social graphing, iris scanning, reputation systems ect are all attempts to solve the same problem.

I think it will take a combination of approaches – do check out my thread on Two-Factor Majority concept, which is but another attempt to give greater power to the overall community consensus.

2 Likes