Skip to content

Latest commit

 

History

History
44 lines (35 loc) · 4.83 KB

SIP-0077.md

File metadata and controls

44 lines (35 loc) · 4.83 KB
Raw
SIP Title Author Status Track Created
0077
Enhancement of Staking Rewards and Governance Mechanisms in Anticipation of BitcoinOS
Yago (@YagoBit)
Approved
Contract
2024-02-04

SIP-0077: Enhancement of Staking Rewards and Governance Mechanisms in Anticipation of BitcoinOS

1. Abstract

This SIP proposes enhanced SOV yield to the Bitocracy rewards mechanism and governance structures in anticipation of the deployment of BitcoinOS products and the expansion of the Sovryn dApp Suite across more Bitcoin-related chains. The aim is to align incentives, enhance security, and prepare for a truly Bitcoin-native ecosystem with minimized trust assumptions outside Bitcoin.

2. Motivation

As Sovryn expands its deployment across multiple chains and prepares for the introduction of BitcoinOS, there's a need for revised Bitcocracy participation rewards structures and incentive models. This SIP addresses the complexities of anticipating incentive changes in light of cross-chain activities, the possible reissuance of canonical SOV tokens within BitcoinOS, and the need for increased participation in governance and security of the system through Sovryn Phase Two: Infrastructure.

In particular, this SIP seeks to preempt and counter three identified potential sources of misalignment:

  1. Reduced Focus on Rootstock Bitocracy: The risk of “shiny new thing syndrome” could lead to reduced participation in Rootstock Bitocracy. We seek to avoid this by providing clear assurances of RSK Bitocracy’s continued relevance and equivalent potential rewards. Additionally, we seek to provide Rootstock Bitocracy stakeholders with a head start, befitting their earlier participation.
  2. Reduced Security and Network Participation: Staking rewards and incentives are critical for maintaining the security and robustness of blockchain networks. Without introducing the SIP, the ecosystem might face challenges in attracting and retaining validators or stakers, which could compromise network security and performance.
  3. Slower Adoption and Growth: Incentives play a significant role in encouraging the adoption of new technologies and platforms. The absence of a well-structured incentive mechanism through the SIP could slow down the adoption rate of the Sovryn DApp Suite and BitcoinOS rollups, hindering the project's growth and expansion goals.

3. Specification

  1. Introduction of SOV Rewards on Rootstock: Stakers on Rootstock will begin earning SOV as part of the staking rewards, enhancing the incentives for participation within the ecosystem.
  2. Reward Competitiveness: The SOV rewards for stakers on Rootstock will be designed to be equal to or higher than those available on any other platform, ensuring Rootstock remains the most attractive venue for staking.
  3. Starting Return Rate: The max SOV reward rate will be set at 9% for max stakers, providing a clear and competitive return for those committing to the ecosystem for longer durations. This will be in addition, and supplementary to, rewards earned from protocol fees in BTC and other tokens.
  4. Non-Transferability of Rewards: Initially, the rewards in the form of SOV will be non-transferable. This measure is in place until the reissuance of SOV occurs, ensuring a controlled distribution and utilization of rewards within the system.
  5. Reissuance and Liquidity of SOV: Upon the canonical reissuance of SOV, the earned rewards will become liquid and transferable on the new canonical registry. This will allow for their transfer, exchange and usage within the BitcoinOS system. No newly reissued SOV tokens will be made liquid earlier, ensuring prioritization of ‘legacy’ Bitocracy stakers.

4. Rationale

The proposed changes are designed to secure the system's integrity during a critical expansion phase, reduce uncertainties associated with cross-chain deployments, and ensure that the Sovryn ecosystem remains attractive and secure for both current and future stakeholders. By providing clear incentives for early and sustained participation, this SIP aims to bolster the project's governance and security, while preparing for a seamless transition to a Bitcoin-native environment.

5. Technical Specification

This SIP will make use of the SIP 24 codebase with minor modification.

6. Implementation

PR: DistributedCollective/Sovryn-smart-contracts#536

7. Security Considerations

Enhanced staking rewards and decentralized governance mechanisms are designed to improve system security and resilience. The proposal includes measures to mitigate risks associated with cross-chain activities and token reissuance.
Further analysis and community input will be sought to address any additional security concerns.

License

Copyright and related rights waived via CC0.