Tinyman Governance Proposal: Liquid Staking Enhancement

Proposal Discussion
1

Overview

As Algorand transitions to its new consensus rewarding mechanism, users will have the opportunity to delegate their ALGO to stake pools, thereby enhancing network security and decentralization. In return, they will earn staking rewards. To facilitate a secure and user-friendly staking experience, we have developed a liquid staking solution that is fully integrated into the Tinyman UI.

This new feature allows users to stake their ALGO and receive tALGO in return. tALGO is not only tradable but also offers opportunities for generating additional yield through liquidity provision and farming programs. Moreover, tALGO can be re-staked for further rewards paid in TINY.

Currently, we have allocated 9.5 million TINY tokens to liquid staking. Our goal is to make staking and re-staking on Tinyman even more attractive and sustainable without inflating the TINY token supply. To achieve this, we propose reallocating a portion of the unclaimed airdrop tokens designated for governance rewards from a recent on-chain vote.

We believe that reallocating a share of these tokens to liquid staking will provide greater benefits to our community, solidify Tinyman’s reputation as a trusted staking pool within the Algorand ecosystem, and enhance our Total Value Locked (TVL), making the platform even more appealing to users. We anticipate launching the liquid staking feature on December 2nd 2024.

Abstract

In a recent on-chain vote, the community opted to allocate 34 million unclaimed TINY tokens to governance rewards. This new proposal seeks to reallocate 10 million TINY tokens from these governance rewards to support our upcoming liquid staking feature. This strategy aims to manage TINY token supply effectively, maintain its value, and reinforce our commitment to the platform’s sustainability.

Objective

To secure community approval for reallocating 10 million TINY tokens from governance rewards to enhance liquid staking.

Background

The community’s recent vote confirmed the allocation of nearly 34 million unclaimed TINY tokens to governance rewards. With the new consensus mechanism on Algorand, users can delegate ALGO to stake pools for rewards. Our liquid staking solution seamlessly integrated into the Tinyman UI provides a secure way for users to participate in staking.

Users can stake their ALGO, receive tALGO, restake it for TINY rewards, trade it, and engage in liquidity provision and farming. We aim to further incentivize the Tinyman stake pool by allocating an additional 10 million TINY tokens to this initiative.

Proposed Token Allocation

  1. Liquid Staking: Reallocate 10 million TINY to liquid staking.
  2. Governance Rewards: Retain 24 million TINY for governance rewards.

This approach allows us to honor the recent on-chain vote while also boosting our liquid staking feature.

Community Benefits

Liquid Staking Enhancements:

  • Kickstarts a crucial new feature on Tinyman.
  • Boosts overall TVL on the platform.
  • Increases the utility of the TINY token.
  • Provides sustainable rewards for users engaging with the Tinyman stake pool.
  • Encourages users to lock their TINY for re-staking benefits.

Governance Rewards:

  • Strengthens the Tinyman governance system.
  • Increases rewards for TINY governors.

Implementation Steps

  1. If allocation for Liquid Staking is approved: Reallocate 10 million TINY tokens to liquid staking.
  2. If allocation for Liquid Staking is denied: Allocate the entire amount of unclaimed TINY tokens to governance rewards.

TINY Reward Distribution

The TINY tokens allocated for liquid staking are expected to be distributed over a period of 24 months. This timeline ensures a sustainable and gradual release of rewards, supporting long-term participation and growth within the Tinyman ecosystem.

Community Communication

We will inform the community about the decision and its anticipated benefits, ensuring transparency and engagement.

Potential Challenges

  • User Acceptance: Ensuring community support for the proposed allocation.
  • Market Reaction: Monitoring market responses to the chosen strategy.

Metrics for Success

  • Growth in Total Value Locked (TVL).
  • Increase in staked ALGO amounts.
  • Stability and growth of TINY token price post-implementation.
  • Engagement metrics among governors.

Budget and Funding

No additional funding is required; this initiative utilizes existing unclaimed tokens, placing no additional burden on the treasury.

Conclusion

This proposal aims to launch and incentivize liquid staking as a pivotal new feature on Tinyman while ensuring the TINY token supply remains stable. By reallocating a significant amount to governance rewards, we strive to enhance both our staking capabilities and the governance structure, promoting long-term sustainability for our platform.

Next Steps

Join the poll below and share your thoughts!

We look forward to your feedback and the poll results. Our goal is to launch this proposal on-chain by mid-November. Your input is crucial in shaping the future of Tinyman!

Poll

  • Vote “YES, let’s do it!” if you support adding an additional 10 million TINY tokens to the liquid staking reward pool.
  • Vote “NO, this is not the way” if you believe the current reward allocations for governance and liquid staking should remain as they are.
  • YES, let’s do it
  • NO, this is not the way
0 voters
4 Likes
2

I feel like the minimum amount of tinypower is kind of low for eligibility.

I’m afraid alot of people will just stake their algo, and sell the tiny they get from staking for more algo or talgo.

Rewarding extra tiny according to the amount of tiny power owned makes more sense. Reward more to people who are more heavily invested in tiny, instead of everyone that has a minimum of 500, which is nothing.

3 Likes
4

Hi @Boeieruurd

Thank you for sharing your feedback.

The initial TINY power requirement was designed to strike a balance between inclusivity and commitment. We wanted to ensure that as many users as possible could participate in re-staking, while still requiring a meaningful commitment by locking TINY.

To clarify, while 500 TINY may seem like a low threshold at the moment, more than 50% of current governors don’t yet meet this requirement and will need to lock additional TINY or extend their positions to qualify. This ensures that those who participate are making a solid commitment to the platform.

For new users, we want to encourage long-term commitment. Here’s what new users need to lock to reach 500 TINY power:

  • 500 TINY for 4 years (approx. $15 USD)
  • 2000 TINY for 1 year
  • 5000 TINY for 6 months
  • 10,000 TINY for 3 months
  • 30,000 TINY for 1 month (approx. $850 USD)

Once liquid staking goes live, we’ll closely monitor key metrics like the amount of staked tALGO, the number of governors, the amount of locked TINY, and the average lock times. Based on these insights, we’ll assess whether adjustments to the required TINY power are needed, and we may involve the community in any future decisions on this.

Thanks again for your input! We truly value your perspective as we continue to grow and improve Tinyman!

7 Likes
5

Yeah, i’m not really worried about small holders / accounts.

But anyone could lock 15 dollars in tiny for 4 years, which is coffee money for bigger holders.

Then they could just stake an enormous amount of talgo and get tiny rewards for it to dump, without being invested in tiny at all.

I would recommend to first see how things go, and reward the 10 mill extra at a later stage, instead of throwing it in from the start.

Ideal situation i would want tiny token to only flow to those that are invested in tiny. This is already not the case with farms ofcourse, but this will add that.

3 Likes
6

@Boeieruurd The percentage of tALGO that will ultimately be re-staked remains to be seen. tALGO offers a variety of use cases, and for large holders, re-staking may not always be the most capital-efficient strategy. Instead, they might opt to use tALGO in liquidity pools to join farms or potentially borrow against it on other DeFi platforms. We provide our users with flexibility in how they utilize tALGO, allowing them to make choices that align with their individual strategies. For those seeking higher rewards through active management, they can choose to manage their tALGO positions directly. Alternatively, users looking for a more passive approach to generating additional yield can opt for re-staking.

3 Likes
7

After careful consideration and internal discussions, as well as reviewing feedback from the community forum, we’ve decided to increase the minimum TINY power required to participate in restaking from 500 to 2000.

This adjustment is designed to ensure that restaking rewards are more effectively distributed to users who demonstrate a strong, long-term commitment to our platform. Restaking is a unique opportunity for dedicated TINY governors to earn additional yield on their tALGO, and we believe this change aligns with our goal of rewarding our most engaged and loyal participants.

5 Likes
8

I would say this is a very good call. Honestly cool that we as an community can directly influence Tinyman now. Every project talks about governance and decentralisation, but get no further than discord polls. Tinyman has actually done it.

3 Likes
9

Hi @EricTinyman & fellow governors!

To be honest: I’m completely against this move. Especially so, since you already made the public announcement that 500 tiny power will be enough to restake.
You have to remember that people use your communication pieces to make sound financial decisions and that changing the amount of tokens to be locked -just a few days after the announcement- can be really inconvenient.

I understand that 500 tiny power might not seem much to someone, but changing it to 2000 just a few days later could be really detrimental for the average user, who might have locked already and doesn’t want to make this additional investment.

Given the situation, I suggest you stick to the 500 tiny power threshold that you announced for this governance period, gather data and then, potentially, increase the threshold in the next cycle if proven necessary.

2 Likes
10

Hi everyone,

After reading through the replies and considering the previously announced threshold of 500 TINY Power, I’d like to propose a compromise that balances TINY adoption and inclusivity with the protocol’s broader goals:

  • For TINY Pairs:
    • Threshold: 500 TINY Power (as originally announced).
    • Rationale: Pools paired with TINY directly strengthen the protocol’s native token by increasing liquidity and utility. Keeping the threshold at 500 for these pairs supports TINY’s role in the ecosystem.
  • For Non-TINY Pairs:
    • Threshold: 2000 TINY Power.
    • Rationale: While non-TINY pairs are valuable, they don’t provide the same direct benefits to TINY. A higher threshold ensures meaningful contributions from participants in these pools while still allowing flexibility.

Why This Compromise Works

  • Builds on the Existing Threshold: Acknowledges the original 500 TINY Power threshold while refining it to incentivize TINY adoption.
  • Encourages TINY Pairs Without Forcing Them: Projects and LPs can still choose their preferred pairings, but TINY pairs offer clear advantages.
  • Strengthens Protocol and Token: Boosts TINY liquidity and demand, supports TVL growth, and creates a more balanced governance structure.

Implementation and Flexibility

To ensure this system works effectively:

  1. Monitor Impact: Evaluate how the 500/2000 split impacts TINY liquidity, governance participation, and protocol adoption after the first cycle.
  2. Remain Open to Adjustments: Revisit thresholds if needed based on community feedback and real-world data.

I believe this proposal aligns with the community’s goals while ensuring TINY’s long-term success.

1 Like
11

Hi Wolf,

Thank you for sharing your feedback with us — we truly appreciate it!

Our decision was based on two key factors:

  1. Long-term Commitment from Governors
    We want to encourage governors to demonstrate long-term commitment to the platform. To reach a TINY power of 2,000, users will need to lock approximately 2,000 TINY tokens for a period of 4 years. As of now, this would amount to roughly $75 USD. We believe this is a reasonable commitment for most users, though we understand that for some, this could serve as a potential barrier to entry.

  2. Current Governance Rewards
    The governance rewards are another important factor. By locking TINY tokens for 4 years, users can currently earn 150% APR. This means that even if someone can initially lock only 1,000 TINY, the rewards they generate could help them significantly increase their locked amount — and thus their TINY power — over time. In fact, by re-locking governance rewards, users could reach a TINY power of 2,000 in less than a year.

The 2,000 TINY power threshold is designed to balance accessibility for the majority of our users while also strengthening the governance system as a whole.

That said, we’ll be closely monitoring the metrics after launch and remain open to making adjustments if needed.

Thanks again for your input, and please don’t hesitate to reach out with any further thoughts or questions.

3 Likes