Protocols are successful in achieving long term adoption by fostering a strong and lasting community. Achieving this requires:
•A positive narrative surrounding the product to attract initial users
•An excellent product that encourages those users to stay while also recommending it to others
•Incentive mechanisms to further attract and retain users
•Effective governance to ensure the product can effectively adapt to changing market conditions.
While DDX is of course a decentralized governance token, I believe that the inclusion of additional incentive mechanisms (i.e. in addition to being able to participate in governance) would help improve the narrative of the project, draw in and retain additional community members to use the product, and contribute to broader distribution of the DDX token and thus decentralization.
I would like to propose consideration by the community and developers to consider options for DDX incentivization such as:
• Staking DDX in exchange for a portion of network rewards to encourage a broad governance base +/- higher incentives for those actively involved in governance.
Short - Medium Term
•The ability to deposit DDX in order to contribute to liquidity mining for the insurance fund
I’m hoping this helps spark some community discussion and look forward to the success of DerivaDEX.
Hey @Aron thanks for the post. I agree with the framework you’ve laid out, personally.
One thing I do want to flag is the possibility for staking benefits that are aligned with trader requirements-- for example, staking to reduce trading fees, or for other access privileges on the exchange.
In the long-term, to be sure I follow-- you’re suggesting that operators allow users to stake with them for a proportion of network rewards?
And for the short/medium term, this is already the case (and funded through the end of the year-long program). It could be interesting to think about benefits for staking to the insurance fund post-insurance mining as well.
Hey @Ainsley thanks for the response.
Yes, I believe that allowing any DDX holder to participate in staking with an operator in exchange for a portion of network rewards makes sense for growing and maintaining a thriving ecosystem. I certainly see benefit in staking incentives for traders as you point out, though I would suggest that allowing non-traders that hold DDX and/or participate in governance to also have staking incentives is most inclusive and encourages broader community development.
Perhaps a model whereby:
Any DDX holder can stake with operators to earn a portion of network rewards
Additional or alternative benefits for DDX holders that are active traders
Additional or alternative benefits for DDX holders that participate in governance
This model fosters inclusion, while further incentivizing active participation.
With regards to the insurance fund, my question was whether there was a mechanism whereby DDX itself could be included as an option to stake for participation in insurance mining, as opposed to exclusively stablecoins as is currently the case.
The option for staking to the insurance fund post-insurance mining sounds appealing.
How would you handle drawdowns with other types of collateral then USD?
Ya to be honest that notion was somewhat inherent in my original question. I assumed that potential price fluctuations in other assets was the primary reason only stablecoins have been utilized for the insurance fund, though I was curious if there was any potential mechanism to include non-stablecoin assets that I wasn’t aware of.
As a further follow-up I would be curious to hear opinions from the DerivaDEX team or other community members on the feasibility of DDX as part of the insurance fund, as it does appear that other platforms use potentially volatile assets for their insurance funds. Bitmex appears to use BTC and Okex appears to utilize a number of assets such BTC, ETH, LINK, etc to form components of their insurance fund.