Staking Proposal

Hello! I’d like to propose a staking mechanism. Currently, I’m into another project that has implented what they called ‘Fluid Staking’.

I’m sure there’s another term for that, but what Fluid Staking basically does if implemented by the DAO:

  1. DMG holders can lock-up their DMG tokens in a smart contract for a set amount of time. The longer they lock up their token the higher the APR should be.
    One year period as the maximum lock-up is good. I’m not sure what the lowest period should be.

  2. To make staking more robust, add a slashing mechanism. Make it so that we can withraw the rewarded tokens regularly to our non-custodial wallet, but if one were to withraw their principal too early before their chosen lock-up period ends, then their principal would be slashed.
    However make it so that it’s not possible for someone to end up with less DMG than they started with regardless if they were slashed.

  3. Another mechanism to add would be an unbonding period. Basically, if someone were to withraw their principal too early, then it would be locked up in the smart contract for a certain period of time. It coud be 1 day, 7 days, or 21 days.

This proposal should reward long term DMG holder and show their commitment to the project, while punishing those who are speculating on the price because their share of the network is shrinking should they choose not to stake.

Now where would the reward pool come from? As a sign of good will to the community, perhaps the foundation could donate a portion of their DMG token to the pool. This is also a good way to boost decentralization.

Thank you for reading.


To add to this: One con that I could think of if Fluid Staking were implemented would be that DMG tokens are meant to be used in participation to voting. Locking them up is going against that basic utility.

Now I’m not a developer but perhaps there’s a way for the DMG tokens to be locked up in a smart contract and still be able to participate with the same DMG tokens when it comes to voting in proposals.

Also staking mechanism doesn’t have to be a permanent addition. A year-long period of staking should suffice and after a year of staking, depending on how the platform is doing, the DAO can re-evaluate whether to extend staking mechanism.

Another con would be the risk of the DMG tokens being classified as security. Being classified as a security would be the biggest con I could think of especially since I’m sure the foundation is trying to be regulation compliant. However, I’m not an expert on this matter.

If someone with an area of expertise in this matter could chime in would be appreciated.

Would love to hear some feedback on this.



Not sure if you’ve frequented the telegram, but staking has been on their minds for a little while now. The core team hasn’t released any details/timeline on it, but they’ve moved it up as the next development on the list
About 14 days ago they added a staking skeleton repo
They probably only push certain commits to the public repo; not enough there yet to determine the mechanics of staking.

To talk about your points
For #1: This is just my opinion on the matter, but I don’t think there necessarily needs to be a lockup time period for staking so long as APR goes up steadily; the benefit of continuing to stake for longer would be obvious. Having lockup periods and penalties seems to only be necessary if the staked tokens are used to do something like establish the trustworthiness of a validation node and punish bad-acting ones. That example doesn’t apply to DMM of course.
For #2: Since you’re saying “make it so that it’s not possible to end up with less DMG”, I think you mean you want to slash the interest gained, not the principal. If we don’t have a forced lockup period and instead depend upon higher incentive for longer term staking then we wouldn’t really need to worry about this part.
For #3: Could be useful, but I would caution against it being too long. Should be 1-2 days probably, if it’s even necessary. I think there could be metrics shown about it, where people would know exactly how many staked tokens are currently being unbonded