Discussion and draft design: The $T token

I have a question I am/was a staker but started the undelegation process before the new Keep Nucypher idea was public mostly due to lack of good amount of eth in my opinion to make it worthwhile and I was considering single side staking or LPing. What would happen to my situation since there seems to be merkle root rewards as well as staking ones.

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Thanks for the Proposal @statelayer!

Questions/Comments:

  • KEEP tokens have a fixed Supply (1 billion); NU tokens are inflationary (currently at 1.149 Billion NuCypher price today, NU live marketcap, chart, and info | CoinMarketCap). Would the new T token be inflationary like NU or fixed supply like KEEP?
  • Why would the new DAO raise money with the sale of 20 Million new tokens? What is the purpose of it?
  • What would be the new tokenomics of the T token? I expected TBTC V2 to provide enough revenue to fund Node Operators and Stakers with a good return (15%+?)? Would the return in TBTC V2 based on revenue plus inflation?
  • Are there other applications that in the near future could drive revenue for Node Operators? As far as I am aware, only TBTC V2 will drive revenue soon enough.

Hey M,

  1. That is the amount I propose, I think it’s good to have a decoupling so people don’t make too much comparisons. But BTW 100M is smaller than KEEP and NU supply so it should be probably worth more in $.

  2. Inflationnary, 100M was just for the first year after the token launches.

  3. It is specified in the post.

  4. I am not sure. I have no idea how people will value KEEP after this.

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As you can see there I propose we give the merkleroot to KEEP in all situations, including those being unstaked.

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The reason I want to have a raise is to have a good amount of T tokens available on the market to avoid the issue where the inflation is super high compared to the amount available on the market. Also, I would suggest the DAO could gradually sell its wBTC for tBTC, helping tBTC grow at the same time and then possibly distribute tBTC as rewards, which is a + for boostrapping tBTC v2.

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Thanks for putting this together. A few questions after reading through it.

  • There is another proposal that would utilize the existing KEEP and NU tokens in the new staking contract while this proposes to create a new token - do you see these as complementary proposals, or is it an either or?
  • When would tbtc v2 launch in relation to the staking contract? Would people that stake in the staking contract be effectively staking for tbtc v2, and have to also run a node, or would tbtc v2 come after the staking contract completes (1 year after launch) and everyone has withdrawn?

In general, assuming I understand this proposal correctly, it looks like this essentially would generate a new token that would replace NU and KEEP and would act as a governance / work token for the new network and any new applications that launch on it. I’m personally in favor of this approach (new token) as it seems much simpler to explain to outside parties interested in participating in the network.

That said, one concern I have is around tax handling for this proposal. I’m no tax person, and this is not tax advice, but it would seem that (in the US) distributed $T (both from the merkle drop and the staking contract) would be taxed as income. Assuming this were true, I would expect some amount of selling of $T by participants to cover this obligation. Personally, I would prefer an approach that would retain the cost basis of my existing tokens and would not necessitate the paying of additional taxes.

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Definitely complimentary, maybe it wasn’t clear enough but this proposal would use the staking contract not to distribute T tokens, it would give NU and KEEP stakers staking weight in the staking contract, which can optionally be burned for T tokens at a later point as discretion to the users if they want. This is why I use the term allocated instead of distributed. It is merely an option for the stakers to turn their staking weight into T tokens if they want to. So the staking contract isn’t distributing T, it would simply be giving users staking weight in the protocol.

This basically is the same approach as earlier discussed with a staking contract but with the introduction of a $T token where staking weight in the staking contract can be optionally redeemed for T.

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Would users also be able to stake $T for staking weight as well?

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Yes, although this would be part of the ‘‘rewards’’ part of the allocation

Amazing work @statelayer! I like this proposal and for me it looks fair for both communities and token holders.

@statelayer thanks for putting these details together!

Do I understand it correctly that all $T tokens would become transferrable at Phase 2? Including the ones that were allocated (merkle root) through KEEP / NU that was still locked.

And regarding the KEEP / NU tokens staked / held and the potential for being burned for T tokens at a later stage. With this do you mean that existing holders of KEEP and NU basically have a reserved amount of T tokens that they could acquire by burning their respective amount of KEEP / NU? So basically you know upfront your min % share of the total allocation of T?

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Thanks for the hard work here @statelayer! This proposal works well with the shared staking contract we’ve been working on, and the staking weight idea is to LPs and other stakeholders is interesting.

This is a concern of mine as well. But…

I’ll ruin your day and say that I doubt this is possible with a new token. “All emissions” to staked KEEP and NU holders without a drop doesn’t solve this. It’s also going to be different for every staker’s jurisdiction.

This reminds me of a thread by @Rewkang… actually on reading he cited @statelayer ha. Interested in other people’s thoughts of a high-float approach

Any thoughts on how you’d want to do this snapshot, and when?

Do we really need a new token? Maybe. But I think that fairly distributing a token is fundamentally hard and we should try to minimize the choices that we can make in the process.

(Ignoring NU’s inflation) Why not just have a 1:1 conversion? You can trade your KEEP or NU for the same amount of token T. That’s it.

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We can’t ignore inflation. Both tokens have existing emission schedules :thinking: how are you suggesting that’s dealt with?

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to the last point:
One option could be to have the snapshot be taken 7 days before the T token launch. I don’t think we want too long of a period where KEEP has possibly less value and T is not live yet.

One way to do it would be for an external party submit the content of a snapshot to the DAO, and have it be approved by a governance vote (I imagine the voting would take staking weight into account, as T wouldn’t be live yet )

Whats the rationale behind the WBTC raise? Would that be a private sale to strategic investors?

Given the existing market caps for NU and KEEP that would seem to imply quite a significant raise.

Would the 30M in rewards be for liquidity / partnerships / stakedrop / coverage pool?

Ideally I think it would be good to see T tokens find their way to people who are going to stake and be active capital in the network, rather than farm and dump the token.

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But what about the “-40M allocated to users that stake in the staking contract” that seems like alot to lose out on would solo staking count towards that portion?

Refer to this post for the staking contract, I am suggesting almost every KEEP holder could stake in it and partake, including current KEEP stakers. I understand the working is a bit confusing since both are staking actions haha

WBTC raise:
One of the goals is to make sure there is significant float on the market. The idea to raise wBTC is that we could later convert the wBTC to tBTC and start paying tBTC users with rewards directly in tBTC.
And no, it would be a raise open to everyone, with T being offered by the DAO and wBTC going into the DAO treasury.

Rewards:
Rewards would be generally reserved growing tBTC to the discretion of the new DAO, including all the things you listed above

Hi @state
I applaud the hard work you have done to come up with the proposal.

KEEP planned supply at 1B and NU planned supply at 3.8+B planned and both teams (though not all planned supply is circulating) getting only 50M initially and eventually to 100M sounds bit low. Me personally - would not worry at the 100M number. I would consider it as reverse stock split (50 to 1 or something like that) and I’m completely ok. I know purely from $ price point of view it doesn’t matter but there will be folks who would be concerned by the drastic cut in their token ownership. Just wanted to make that comment.

My 2 questions -

  1. What do you propose for the inflation rate to be for $T ?
  2. Selling 20M for WBTC and slowly converting wbtc to tbtc v2 is very interesting and compelling to me. But what I’m not sure is the purpose of this raise and why would the treasury not own any $T tokens and only hold WBTC/TBTC ?

Kudos again for coming up with the proposal !