I’ve already voiced this opinion elsewhere, but I wanted to write it here too before the upcoming community call. I’d like to see a larger rewards pool for this program. This project is trying to ramp up marketing and outreach efforts, and I think this is an opportunity to attract many new users to SSV and encourage them to participate. Note that my comments are mainly only in regards to the validator and SSV holder rewards, not the operator rewards (I’ll let them speak for themselves).
I think the current amount of 64k SSV is enough to adequately reward the existing community. But if most of the existing users participate, the rewards rate will quickly drop and do little to attract new people. Therefore, I propose increasing the amount at least 3x to 192k SSV, and I would support as high as 5x (320k SSV). I think this would keep the reward rate high enough to encourage new investors to learn about the project, buy the token, and participate. (I think the APR probably needs to be 10%+ for this)
Simplifying the math, a rough estimate of the expected APR for holding SSV (ignoring the non-SSV rewards pool) can be calculated as APR = 3*(Rewards pool)/(SSV participating). If I did my math correctly, with a rewards pool of 32k for SSV holders (64k total for the program), the APR earned on holding SSV will drop below 10% when only about 1 million SSV is participating. I think the existing community would fill this quickly, and the APR would drop to about 5% (I’m estimating about 2 million SSV contributed by the active community).
With 96k SSV (192k total), about 2.9 million SSV can participate before the APR drops below 10%. And with 160k (320k total), we can accommodate about 4.8 million before it hits 10%. This will keep the rewards sufficiently high beyond the participation of the exiting community, which will leave room to incentivize new users to buy and participate.
This would obviously be more expensive, but I’m not too concerned with the cost since it would be minted by the DAO. We’d be inflating the supply slightly, but since the new tokens will be given directly to the active community and investors that contribute, their rewards should far surpass their small loss of value from inflation.
The people that would be negatively affected by an increased cost are the investors that simply own the token but are not following the project or participating. I’m completely fine with reducing their value slightly to attract new people and reward those who actively help the project. Blox would also be a loser in this case, which I’m not thrilled about (they deserve our support). If we care, we could also mint an additional amount of SSV to be given to them to help offset their loss. Partners will also be affected if their locked SSV doesn’t count toward the rewards, so maybe that SSV should be allowed to be used as well.
However, we should be cautious about how this will affect the market since it has the potential to create sell pressure. Personally I’m not worried, but other opinions would be appreciated. I think that for the duration of the rewards program, a significant amount of buying pressure will be created (considering just the APR offered, let alone the effects from new people discovering the project). And although many users will likely sell their rewards as they get them, there would also be a large incentive to hold or buy more to increase their rewards, assuming the rate of return is high enough (I think the market will probably find some equilibrium for this at an APR of 10% or so). There’s also some concern about the market effects when this program ends, but I think this can be offset by future long-term testnet incentivization programs (if intention is to keep it running) or staking mechanisms that are added to the SSV network. And hopefully a lot of this would be offset by simply attracting new users and growing the project anyway.