I don’t have strong opinion about curve arbitrage bot, but I think we should exclude people who imbalance incentivized pools for stETH, including ones using Tornado Cash. Given that the proposed referral program explicitly can be adjusted by the DAO, we can react to funny business even if we didn’t see it coming ahead, and that in turn will discourage funny business.
It might also be a good idea to ask protocols that distribute rewards every week to users how they filter abusive behavior. I know that Rarible has gone through considerable effort to reward $RARI to unique users on their NFT platform.
As I wrote above, we have the means to deal with abuse.
For example, to add them to the disqualified list.
should there be a cap reward per referree? perhaps. otherwise, for example, a whale could self-refer, stake and then unstake and instantly grab all of the epoch rewards.
should there be a minimum staking time period requirement to trigger the rewards? I think so. See above.
should the referral link build in an ‘i am not a robot test’ on both sides (referrer and referree). I think so for various reasons. E.g., see above.
could be achieved by requiring minimum staking period for reward payout.
This sounds great in theory, but most likely it will have to come with practical restrictions on the further utilisation of stETH converted for, as sending the stETH to any other wallets / contracts other than the initiating wallet would violate the minimum staking period.
An incentive mechanism where Lido stakers receive LDO rewards + staking rewards would be even better and fairer imo.
This proposal is cool. Am sure there are many people who have Eth but haven’t heard of Lido services in terms of putting their idle eth to work. This will provide incentive for people to talk to more people about lido. heck, youtube and other social media influencers/creators might even jump on. this is a step forward in the right direction.
In a short discussion yesterday there’s been a thought that it might be a good idea to cap first couple weeks of the program reasonably low, to prevent large-scale subversion of the program. I think it’s good idea.
Thinking about this on the weekend. One other side effect of the program would be to inceltivize existing users of Lido to stake ETH that they have in other wallet or perhaps have locked in vaults.
For example I keep a bit of ETH for GAS in a couple other wallets. This promo would incentive me to send some of that ETH and stake it for the LDO rewards.
Secondly it would incentive me to get any ETH i have in say vaults, by repaying the loan, getting my ETH out and staking it.
A lot of this user behaviour will come down to the tracking, the more scrutiny, the less likelihood of existing Lido users moving funds around to get the LDO reward. With that in mind what do you have in mind? With over 14 000 wallet address trying to do this manually on excel is out of the question. Most likely you would need to leverage some analysis’s software that specialising in defi and erc-20s like:
The other option is writing your own scripts. What do you guys have in mind to monitor the the campaign and reduce unintended behaviour?
Thanks @Alex_LIDO for kicking off the conversation. Customer acquisition is an interesting use of DAO treasuries, and this is a welcome starting point for discussion.
Net: The idea of an incentivized referral program is compelling. However, use of DAO resources should be approached with caution, particularly if there’s potential it can be gamed.
IMO, there are several key questions for the community to build consensus around:
Efficacy. How many deposits do we anticipate a referral program like this could drive? Would it be consequential to Lido? Is this a better use of the DAO’s treasury than alternatives like protocol development, staking insurance, etc?
Evaluating success. One potential risk to the proposal as described is the lack of a clear framework for how to measure, optimize, and ultimately assess success. What’s the right way to measure the success or failure of the referral program (or any other allocation of the DAO treasury)?
Program size. How much LDO should be allocated to the program? Should it be scaled up as a smaller experiment at the start as @vsh suggests above? At current prices, 15M LDO is ~$30m, and roughly 6% of LDO in the DAO’s vaults.
Reward size. What is the optimal ratio of LDO rewards to ETH deposits? Is it better parameterized dynamically, i.e. sensitive to the size of the project, stETH liquidity, etc. rather than statically? SAt current LDO and ETH prices, the reward is a ~1.3% rebate on ETH deposits (if farmed).
Implementation. Should tokens be non-transferable or vested? Should rewards be allocated up-front, or subject to governance? Should they be capped on a per-user basis? Sybil resistance is critical, can we avoid the gamification and spam that can be triggered by growth initiatives?
Thank you all for your questions.
I am currently preparing a proposal update that will answer them.
Efficiency and evaluation of success
I believe that we will be able to attract at least 130,000 ETH (1,950,000 LDO) in the first six months of the program through the referral program.
However, in the first month I would consider it a success to attract 20,000 ETH on the background of growing interest in the referral program.
I would consider as a failure the fact that in the first month we will attract no more than 10 000 ETH through the referral program against the background of decreasing activity of users in the referral program.
We are concerned that the referral program may attract exploiters, so we impose additional restrictions to protect against peg fluctuations.
You can read more about this in the updated proposal.
I would like to follow the referral program every step of the way to promptly help those who want to join.
The size of the program
Let me remind you that we don’t take all 15m LDO at once.
We are limiting ourselves and allocating 200,000 LDO for a period of 2 weeks, which will be distributed according to the FCFS rule.
Larger limits will no longer make sense, and smaller ones will do more harm to the program users themselves and the DAO.
In the future, the amount can be changed by voting.
Amount of rewards
It seems to me that at the moment the amount of rewards is sufficient to keep the referral program from being attacked while still being interesting for honest members.
We want to reward users who help us to increase security and to decentralize DAO by attracting as many new participants as possible and increasing the stETH from old ones.
This is the groundwork before launching new liquidity pools and expanding the LIDO ecosystem with new integrations
My belief is that limiting received tokens would make the deal less attractive; if we want a program less attractive (e.g. it’s apparent we’re paying out too much) we should probably decrease the rewards and not limit their usability.
Sybil protection is not particularly important here, as the rewards are proportional to capital attracted, not to the number of referrals. If the current program is not sufficiently protected from spam (I think it is) and exploits, DAO can always stop it; combined with limits on referral program, I don’t think there is an opportunity of significant damage to the DAO here.
Thank you very much for your comments and questions.
Updated text of Proposal given below.
I would like to discuss it with you.
Word-of-mouth marketing and various reward programs (e.g., airdrop rewards, referral rewards) are highly effective growth marketing techniques designed to boost brand awareness and adoption of decentralised distributed ledger protocols. Moreover, the Program will encourage software developers of wallets and other DeFi protocols to promote our staking protocol among their users, and will positively impact the number of active stakers, and subsequently, the amount staked with Lido.
The following conditions are proposed:
- Users are given the ability to generate a unique referral URL that is specific to their Ethereum address.
- A Referrer will receive LDO as a reward after her/his/its Referee (new user) staked at least 1 ETH using the unique referral link.
- The Lido Referral Program does not have any timeframe. The Program ends when there are no more tokens in the Reward Pool (i.e., the total amount of LDO tokens that can be distributed to participants of the Program) or when the DAO makes an active decision to cancel it.
- The DAO can cancel or pause the Program at any time.
- The DAO determines the LDO Token Reward.
- The DAO determines the size of the Reward Pool.
- The DAO can at any time change the LDO Token Reward and the size of the Reward Pool.
- The DAO can at any time change the way the Lido Referral Program is implemented.
Proposed LDO Token Reward and Reward Pool
The proposed size of the Reward Pool is 15m LDO. The proposed LDO Token Reward is 15 LDO for 1 ETH staked. It means that if a Referee stakes 10 ETH, her/his/its Referrer is rewarded with 150 LDO Tokens.
After careful consideration, it was concluded that any limits are bad options for optimal to achieve our goal of attracting more users and capital to Lido. Currently, there is no point in having limits per wallet/participants as such a limit will be quite hard to impose. It may disincentivise active users to participate in the Referral Program.
Expected Results and Evaluation of the Results
Based on the analysis of various rewards programs conducted by DeFi protocols, it is expected that the Referral Program will help to attract at least 130,000 ETH in the first six months of the program in exchange for 1,950,000 LDO. However, these estimations are not 100% reliable and regular analysis of the success of the program will be conducted.
We consider that the first month is a crucial point in evaluating the Program’s effectiveness, and if we fail to attract more than 20,000 ETH, we will have to rethink the LDO Token Reward. Moreover, an additional metric for the success of the programme is our effectiveness in identifying and addressing abusive behaviour (see Point 4 of Section Implementation below).
Reports will be prepared, and we will together evaluate the success of the Lido Referral Program and decide whether to continue, amend or stop it.
There are many ways in which the Lido Referral Program can be implemented. An example of one of the most cost-efficient options is provided in this proposal. Nevertheless, the DAO community is welcome to share their opinions regarding alternatives supported by valid arguments.
The following implementation of the Lido Referral Program is proposed:
A participant gets a unique referral link. It will also be possible to indicate the address during an interaction with the smart contract. Developers of protocols and wallets, please, read the following two guides.
15 million LDO tokens held in the DAO Treasury will be reserved for the purpose of the Lido Referral Program.
Every two weeks from the start date of the Program after the voting necessary to move some part (200 000 LDO, for example) of LDO tokens, Rewards will be transferred to a dedicated blockchain address* and, then, subsequently, within 7 days to Referrers using the L2 Ethereum scaling solution Arbitrum.** It means that there are about 26 Reward Calculation Periods and 26 Pay-out Periods within one calendar year*** as the table below illustrates.****
Reward Calculation Period
- In order to ensure that the Referral Program can successfully achieve the purpose of developing the ecosystem and attracting new members to our community, it is suggested to have rules that will help to limit abuse and misbehaviour. Namely, participants/addresses involved in abusive, incorrect, suspicious behaviour that is against LIDO DAO values and goals will be excluded from the Program and will not be entitled to LDO Rewards, including but not limited to the following situations:
- Participant/Address is involved in automatic arbitrage trading also known as “bots”;
- Participant/Address directly or indirectly worsen the ETH:stETH peg in incentivized liquidity pools such as, for example, Curve ETH:stETH liquidity pool;
- Where is there is a suspicion that staked ETH are proceeds of crime (e.g., hack).*****
Reports showing the distribution of LDO will be regularly published to ensure transparency of the Lido Referral Program.
- If for whatever reason there are any errors in the calculation or transfer of allocations of the Rewards to any Referrer, the error can be rectified in any suitable way (e.g., if the Referrer received more Rewards than it is supposed to, he would not receive Rewards for further referrals until the mistake was corrected).
- We want to underline one more time that DAO can at any time stop the Lido Reward Program, amend the way it is implemented, including Proposed LDO Token Reward, Reward Pool.
*Tokens for further distribution will be moved to this address only after on-chain voting. Currently, there are no technical possibilities to allow the DAO to control this wallet directly. Hence, I suggest nominating me as a controller of the distribution wallet on behalf of the DAO. If somebody has a suggestion of a reputable member(s) of the Lido DAO community who could take control over the address, please, list your candidates in the comments below.
**In the future, the Lido Referral Program may be implemented utilising another cost-efficient solution (e.g., Optimism) in addition to Arbitrum or instead of it. Our community will be updated on any relevant changes to the implementation of the Program. If you have other ideas on how the Program could be implemented, please indicate this in the comments below.
***There is no guarantee that the Lido Referral Program will last for one year as the DAO may decide to cancel the Program at any time or the Reward Pool may be exhausted within less than twelve months.
**** The table is provided for illustrative purposes and it doesn’t include all possible Reward Calculation Periods Pay-out Periods.
***** You are welcome to suggest more examples of behaviour that can be considered abusive and not contributing to the development of our ecosystem.
If the proposal is approved, there will be a detailed FAQ explaining all aspects of the Lido Referral Program.
If this proposal is successfully approved, the Lido Referral Program will start on 1 July 2021.
Is the referral program ready to be voted on?
I think so, if no one has any objections or comments about the updated proposal.
Let’s fucking send it
Good afternoon, can you tell me where I can vote for this idea?)
The snapshot has already ended.
We are pleased to say that the Lido referral program was launched successfully yesterday - July 19th. We look forward to updating you all on its progress!