EIP-22: DAO Rewards
This discussion is meant to be an extension and simplification of the ideas outlined in EIP-21, please read this first for full context.
We’d like to add an additional lever to aid with regulation during contraction periods. Using the model laid out in EIP-21, offering immediate, compounding, and deterministic rewards should allow us to rent even more contraction with a lower rate than coupons.
Complexity and Simplification
EIP-21 proposes creating another pool or “Reverse DAO” where these rewards would accrue. Though it would probably be the right long term goal, this adds considerable code and UX complexity to the system before we’ve been able to validate the powerfulness of this lever.
We instead propose adding these rewards directly to the DAO in an always-on fashion. This is much simpler, and should provide the same effect on circulating supply while we validate.
At the end of each advance call, rewards are minted to the DAO over the following formula:
EPOCH_REWARD = TOTAL_BONDED * (REWARD_MIN + DEBT_RATIO * REWARD_RATE)
We further propose the initial values:
REWARD_MIN = 0.3 bps REWARD_RATE = 5.0 bps
Which corresponds to a minimum reward of
~3.5% APY and a maximum reward at
20% debt ratio of
~15.5% APY compounded per epoch.
If we’re able to validate this mechanic we should next aim to clean up our existing tools, for example by rolling coupons and DAO rewards into a single external pool, as laid out in EIP-21.