Share FCT inflation with token holders via WFCT staking

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Hello everyone!
As many of you know, Exchange Committee is working on FCT staking application.

This major discussion is to determine how much FCT will be allocated as staking rewards.
Please read carefully


We developed a prototype of staking pools using Ethereum smart contracts and Web3 dApp and successfully run it on the Ropsten testnet.
It was decided to use ERC-20 WFCT token for staking because off Ethereum huge ecosystem and easier implementation, rather than native FCT staking.

Goals of WFCT Staking
  • Bring WFCT into DeFi space
  • Make the ground for future collaborations with existing DeFi protocols (e.g. WFCT lending, yield farming in other protocols, etc.)
  • Increase Uniswap pool liquidity (by incentivizing liquidity providers with WFCT rewards / yield farming)
  • Bring staking to FCT (stake WFCT – earn more WFCT)
  • Share FCT inflation with FCT holders (WFCT rewards for pools will be allocated from inflation / grant pool on rolling basis)
  • Bring new investors / DeFi farmers to the protocol
Staking Pools Functionality
Staking pools are deployed as Ethereum smart contracts that allow users to deposit their WFCT and UNI-V2 WFCT-USDC LP tokens into smart contracts and withdraw their initial stake + accumulated rewards.

1633937688670.png


There will be 2 staking pools initially:
1. Stake WFCT and earn more WFCT (staking)
2. Stake Uniswap liquidity position token (UNIV2WFCTUSDC) and earn WFCT (liquidity mining)

Staking of Uniswap LP token will incentivize people to join WFCT-USDC liquidity pool as liquidity providers, thereby the liquidity of our pool will be increased, that leads to less slippage and better trading experience.

Staking Rewards
Staking rewards will be allocated from the grant pool by Exchange Committee every quarter and funded into staking smart contracts as staking rewards.
We need to decide how much FCT will be shared as staking rewards across all stakers within a time interval (e.g. 3 months).

73K FCT are created every month.
According to Paul's dashboard, 1530 FCT go into grant pool daily (45K FCT monthly).

Exchange Committee's proposal is to allocate 20K FCT monthly (27% of inflation) as staking rewards.
Each of two pools will have 10K FCT staking rewards monthly, that will be shared across all stakers of this pools.

Here are some calculations:

1.
FCT $1.50
250K FCT staked
500K WFCT-USDC LP staked

1633939054249.png


2.
FCT $4.00
800K FCT staked
1.5M WFCT-USDC LP staked

1633939277698.png


Action required
Exchange Committee will be applying for community grants to allocate staking rewards from the grant pool.
We aim to launch the first staking pools on Dec, 1 and then fund staking smart contracts on rolling basis every 3 months.

Exchange Committee suggests to start with 10K FCT per pool per month — that's 27% of FCT monthly inflation.
What do you think about this amount?
 
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Hi Anton,

Firstly thank you for the initiative. Getting Factom more involved in DeFi seems a good move to me. I would like to reflect on your proposal and certainly would like to hear others views. Just a few quick questions for now:

What do you think the opportunity cost of committing 27% of FCT monthly inflation would be? In other words what might we forego if we were to do this?

How practical is it to vary the size of the pool? Could we increase in some months and reduce in others dependent on our needs?
 
What do you think the opportunity cost of committing 27% of FCT monthly inflation would be? In other words what might we forego if we were to do this?
Currently funds are being accumulated into the grant pool and mostly are not used.
In recent grant round (2021-2) there were no single grant proposal.

How practical is it to vary the size of the pool? Could we increase in some months and reduce in others dependent on our needs?
Yes, we can change staking rewards allocation every 3 months — increase or reduce.
Initial proposal of 10K FCT per pool per month should be sufficient to attract crypto community and DeFi users by providing high APY and at the same time it's not too big to affect other parts of the protocol (development, infrastructure, etc.).

In other words — it's a good base for the first 3 months of staking, then we can adjust it higher or lower if we see more or less participation than we expect.
 
How would WFCT be handled by a possible shift to Accumulate?
Each WFCT is backed by real FCT.

If FCT shifts into Accumulate's ACME, each WFCT will be backed by the corresponding amount of ACME.
We will need some kind of bridge or exchange to burn-WFCT-release-ACME.

E.g. if qTrade supports FCT hard fork, they will list ACME instead of FCT, convert FCT balances into ACME and enable WFCT/ACME exchange pair like https://qtrade.io/market/WFCT_FCT

So technically it's feasible to support the FCT → ACME transition if it happens.
 
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