Proposal #16 - Retroactive airdrop 0.5% LDO to early stETH users

while i think that something should be done about zero eth deposits since these are obviously just trying to game the system for airdrops i dont think a high threshold or any for that matter would be good in the long run since the point of the airdrop is to help bootstrap governance.

I also dont think we should make a comparison with one inch since their platform was nearly one year old while ours has been active for less then 2 weeks and the nature of staking is inherently more risky than trading especially as there could still be plenty of issues that could come up with ETH 2.0.

In this regard a time weight based on how long people have held their stake seems to be the best option rather than a minimum stake threshold since this allows for a fair distribution while at the same time not favoring whales.
As for liquidity providers i think a separate proposal would probably be ideal

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The idea of taking in account IN and HOLD time for the airdrop to kick the governance is great. However I would suggest to have a max cap for the airdrop to have a more distributed airdrop and so initial governance.

I understand that big depositor are vital for lido.fi and someone may say that having a max cap disincentive big deposit. Well this isn’t the case since this information is given after not before, same as minimum deposit required.

If the goal of this airdrop isn’t only about rewarding but kickstarting the governance this is something to think about.

To make it short:

IN - regard when one took the risk and deposited,
HOLD - regard how long one maintained the position,
AMOUNT - regard how much ETH one deposited,
LP - regard if and how much liquidity one provided for stETH-ETH,

and

DISTRIBUITED - based on the criteria above see the distribution output and find a balance by “equalising” so we do not end with less than 5 address having +95% of the 0.5% initial governance airdrop. Having a Max CAP could help on this.

Sure is fair for those who deposited more to have more but is the voice of someone that deposited 1k ETH worth 1000% more than one with a 100 ETH deposit?

I think this is vital for initial governance distribution, reward in a balanced way to have a wide distribuite governance. Let me know what you all think.

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Agree that a purely retroactive airdrop with a past block cutoff 10 days from start is not ideal for the entire 0.5%. This mostly rewards high risk aping into new contracts and does not necessarily benefit the protocol. The high quality team behind this project will easily attract capital over the long term. Rewards should be given for long term commitment and incentivizing the pools that will make the token liquid. Liquidity will be the most important factor in growing the protocol.

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Is this realistic? I haven’t done a distribution analysis but from a cursory look at least, it looks like the highest deposits were in the 500eth range for the first week or so.

But I agree that a max cap makes sense from a governance perspective.

I agree. Having a low min threshold and max cap would probably allow for a more equitable distribution. And then rewarding time and length staked after genesis proportionally.

I tend to agree because the parameters are so different, and LPs should be rewarded accordingly.

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just some thoughts:
i think the goals are rather clear

  • no airdrop farming
  • still maximum of reach
  • dont empower “whales” too much

i think its a good idea to not have a past block for the airdrop, but if the reqs are clear, a future block is exploitable by farmers.
some ideas:

  • take 50% (0,25%) now, 50% for a second airdrop with a future block
  • extend block to either vote #16 creation or vote #16 passed to include more users (of course again eliminating 0ETH / 0,0001 ETH etc.)
  • assuming that the deposits will follow normal distribution use something like 2 standard deviations as a cut for participants. obviously the closer we will get to the final block, the easier it will be to farm, but that should allow a definition upfront (= fair for everyone) without being to exploitable.

at the same time i think that e.g. UNI, badger etc. were so successful because the reqs were unclear. so if there was a second airdrop in the future i wouldnt define it publicly upfront, but rather surprise people.

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A few thoughts of mine on that whole thing.

I think that airdrop is needed for early stakers:

  • they took significant smart contract risk and price risk, compared to later stakers
  • are getting less staking rewards annualized than later stakers, due to how rewards are socialized between all stETH holders
  • provide a significant service to Lido by locking ETH with us and providing liquidity for staked eth.

I think that 0.5% airdrop is on a high side of what’s fair for these risks, and the cutoff point is arbitrary (I’d prefer it to be till the day Lido starts incentivizing stETH LP), but the Dao has voted on these numbers, so let’s roll with it.

Now, if I were to weight the rewardable things people did for Lido, I’d weight them like that:

  • Staking with Lido: 1 point for every ETH staked - increasing Eth amount under stake is good for Lido and risky for stakers
  • Providing liquidity: 2 points for every stETH on LP (1 for stETH side and 1 for ETH side) per month (so 1/15 of point per day) - people are taking IL risk along with staking risks for this one, so it’s significant, and more stETH liquidity is good for Lido
  • Holding stETH without providing liquidity: 0.5 points per month per ETH
  • Selling stETH on uniswap: -0.5 points per ETH - exiting your stETH position almost immediately doesn’t really color people as early supporters of Lido, does it?

The other thing about this airdrop is that a pretty good strategy for airdrop recipients will be to receive the airdrop, wait until stETH/ETH liquidity is incentivized, and exit all Lido-related positions immediately. I don’t think they will do that - it took significant trust to lock Eth with Lido this early and I believe they will maintain their positions. But it’s better if that is reinforced by the expectations of additional reward for those who will continue to support Lido in the future.

Thus, I propose for 0.4% to be distributed using the point system introduced earlier in the post, and 0,1% left to be distributed in 6 months from now to the same set of recipients on similar merits - so only the ones who hold and/or LP will be able to collect it.

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Some of your suggestions is so complex. ait will take weeks to implement.

Anyone who deposited anyhow should have a floor amount of Token, rest could be a mix of days and Value.

Airdrop Hunting, nobody can exclude people just because they did the system on low scale before investing more.

I’m pretty sure I can make the airdrop dataset using points system in a day.

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I would like to agree on the suggestion. To keep the rule simple is better IMHO. And in order to avoid empowerment on whales as OMG mentioned, fair distribution to the qualified addresses should be fine.
My idea on the threshold is 0.1 eth or 0.5 eth in order to avoid free-lunch-airdroppers.

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I have a little concern because the majority of Airdrop goes to whales.
It would be nice if there was an upper limit (cap).

For my personal situation, I have deposited a relatively large percentage of my assets into stETH, although I don’t have the same financial resources as a whale.

However, I would like to respect the developer’s conclusion. :wink:

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i think 0.1 eth would probably be to high of a threshold, remember the goal here is to ensure a fair and wide distribution. dont think we will get much promotional value if distribution is just to a 100-150 wallets. I mean there was significantly less risk in making a trade or 2 on most dexes yet thresholds there are about 10-20$ or so.
i think in our case a threshold of 5-10$ should be sufficient and ensure distibution to atleast 400-500 addresses.

Again this is why i mentioned earlier that a time weight based on time staked is probably a fairer idea.
this way you exclude people who may have minted larger amounts or smaller amounts but have immediately swapped it back to ether via the uniswap pool.
I mean even if you have minted 1 eth but immediately swapped it out a point could be made that this is also just airdrop hunting.

IMO distribution should never be based on amount staked since this just favors whales.

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Would people who have staked say 0.1 eth receive 0.1 points according to your numbers? That way smaller stakers would not be left out but would not be rewarded disproportionately either.

Is the date for holding and receiving the extra 0.5 points per eth the cutoff block or one month after genesis? I believe one month would be more appropriate because if we take the cutoff block then someone who deposited say 300eth just before the cutoff but sold shortly after would receive their full airdrop amount while someone who deposited 100 eth just after genesis and is still holding would receive three times less, even though they have taken on a much higher risk. So having a period of one month evens this out a little.

I concur with others in that I think for marketing and adoption purposes, the proposal should consider setting up a new vote for a second airdrop with a future cutoff block. The number of people eligible for this airdrop is fairly small. A future airdrop with parameters tbc by the DAO after the cutoff date would be good for getting more people interested in staking with Lido.

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I don’t think airdropping to the whales proportionally is a bad thing. The risk takers bear and value of their contribution to Lido, in absolute value, is directly proportional to Eth amount. And we can’t judge subjective risk from pseudonymous onchain data especially because someone obviously already tried to game the system.

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I have doubts about how to distribute whales in an advantageous way, so I think this simple method is fine. Obviously it’s not good for a small group to own a lot

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@vsh I’m missing the fact that you are not taking TIME into account here. There is a big difference between person A who staked 10 ETH at launch VS person B who staked 10 ETH the day or week after launch.

There should be some way to calculate your % share of circulating supply historically and taking this into account. Or just the fact how long you have staked and some way of rewarding the people who got in earlier than others. The FACT is the later you staked the more secure you felt doing it, the less risk were taken in my opinion.

To be honest, first come first served method is just as relevant here and should be a factor taken into account.

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Have to strongly disagree here. While proportional distribution based on amount staked is fair, this wouldn’t really be helpful for the purpose of bootstrapping governance. Large concentrations of tokens in a few wallets will almost certainly lead to dumping nor will it have any promotional for LIDO.
I would much rather have wide distribution even if it mean giving airdrops to those zero eth addresses.

Again this why time weight is the best option since it rewards people based on how long they have supported the protocol.

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@vsh has implemented the proposal

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In this draft idea of token allocations, only top 5 addresses would receive 64% of tokens…
Don’t all of you think this allocation would prevent sound growth of Lido DAO?

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Hope they have considered the whale cap proposed to have a more decentralized initial governance.

It’s ok for those who contributed most to get a proportional reward but as I feared less than 10 address pretty much control the entire pie initially.

However I looked at the addresses that staked and is difficult to not have this disparity when one deposit 1k eth and most not even 3.

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