Just my 50 cents. I don’t know if I have a place to comment at all, but here goes:
A 4X reduction is pretty intense, why not do a apply gradual downsizing to 3/4 (0,75%) to begin with, then lower to 1/2 (0,50%) and if the LDO stock is drying out, then finally 1/4 (0,25). In my experience radical decisions tend to more permanent damage than incremental.
I could see a significant upside to expanding the referral program to MATIC as well. I think there’s quite some untapped volume.
Adding some perspective from the partner side as Argent is benefiting from Lido referral.
First, referral should be sustainable and be a raisonnable share of the protocol profit. 1% of Eth deposited is likely too high as represents several years of profit. But the referrer plays an important role in customer acquisition so getting 20% to 30% of the protocol profit wouldn’t feel unreasonable. We’ll need more time to understand Lido LTV per user as until withdrawals are enabled we can’t really measure retention.
Now back to the current proposal and assuming 0.25% is the right value for now. I think we need to manage the transition carefully as suggested by @etinvest
Changing from 1% to 0.25% overnight could send the message that Lido is not a predictable partner and can change terms at any time. Argent is well funded and doesn’t depend on that revenue to pay wages but you could have smaller referrers planning around that. Also if someone just integrated Lido on the basis of this referral program, it could feel as being rugged to see a change so abrupt.
This can also play a role for other chains, a Polkadot referrer might think twice about an integration as the referral could disappear overnight.
What you’d typically expect from a partner is predictability and a proper heads up of many months before significant changes.
So gradually changing to 0.75 then 0.5 and finally 0.25 over several months would make sense.
A separate discussion should happen around the longer term referral structure (eg. a revenue share collected monthly or yearly)
If Lido wants to be known as a reliable partner, it’s not a good idea to change the referral program at short notice.
What amount of notice is required is a function of the cost to integrate as a referal partner. If that cost is high, notice should be long (6mo+). If it’s low, then I would be more fine with making rapid changes.
I don’t know how costly it is to integrate Lido referal but think this info is key input to the decision, so hopefully someone can add more color on it.
I agree based on contention, the vote should not be passed until further discussion is completed. It seems like a more tiered approach might make more sense in the medium term.
True revenue share is a practical impossibility with the current set up. How would we track someone who stakes, triggers referral, unstakes, and then restakes at a much later date? With a different partner? Etc.
I think the points here about radical and short-term changes are very important. I recall – many, many years ago – when Amazon dramatically cut the affiliate payouts quite suddenly to their Associates (referral/affiliate) program. Entire (though perhaps small) businesses were built upon the program, business cases were dependant on the existing payout rates of the program. Many such operations were forced to close down and go out of business. Jobs were lost, etc. There are examples from the same era of Google doing the same with its Adsense program. Thats said, I have no idea to what extent – if any – there are businesses with a similar level of reliance on the Lido referral program, but I think its worth considering. For bigger integrations, pulling the rug out from under them may not have a material impact on their businesses, but it could definitely send the message that Lido is not a predictable partner, as mentioned by @itamarl and @Hasu above.
As such, practically speaking, if the pool is about to become empty, perhaps the short-term option is simply to extend (top up) and defer program reform to a subsequent proposal. (my 2 cents)
I think a tapering off like this makes a lot of sense. Agreed with Hasu that we should think through how long these types of integrations take for partners and what they payback period is for implementing them. Seems reasonable that a full reduction would apply over a few months at least so that teams have time to plan for it. I’d suggest getting a bit more input from the affected partners before voting, or, if there is a desire to reduce emissions ASAP, to do no more than a -25% reduction.
Just to add my humble opinion on top of the discussion:
If I was a decision maker of the general proposal making effort, I would lay out a total budget of LDO expenses across initiatives and then prioritize them by cost and score them by value. Afterwards I would propose a more overall restructuring as I believe that the consensus of LDO holders would potentially take often “emissions” into consideration instead of just decimating the ETH rewards program.
Thanks for all the feedback guys! I’m glad we are finding holes in the current plan and adding ideas that could solve those issues.
Some additional things we could add to the referral program’s Terms and conditions are guarantees on rate of change the rewards could be changed(i.e. referral rewards can only be reduced every X number of days) to create more certainty for referral partners that have built their business/livelihoods around the referral program.
From the DAO’s perspective, Lido wanted the ability to turn off and pivot the referral program quickly to mitigate potential black-swan events or activity that could drain the funds without much benefit to the DAO. I think the DAO community members are also unsure if the referral program will be a permanent feature of the Lido DAO.
I can talk to our analytics team and see if they have the bandwidth to manage and track a graduated bracket that pays out less rewards as more ETH is staked through a referral address, per period. For example:
Referral partner stakes 20k ETH in a 2 week period
1st 5,000 ETH earns 1%
Next 5,000 ETH earns 0.75%
Next 5,000 ETH earns 0.50%
Next 5,000 + ETH earns 0.25%
-Inspiration came from a comment V left in the discord
One thing we could do is, alternatively, switch goals of referral programs from “mostly TVL, integrations/stakers a nice bonus” to “mostly integrations/stakers, TVL a nice bonus”.
One potential way shape the program that way is:
incentivize first X ETH greatly (not per period, total per partner)
incentivize ETH > X less
incentivize amount of stakers where we it can credibly checked/analyzed to be not a sybil attack.
-Top up referral program back to 15 million LDO
-Reduce LDO referral rewards for Ethereum referral program to 0.75% payback (ETH/USD and LDO/USD 14 days TWAP) which cannot be changed for a set amount of time and written into the Terms and conditions(3 months?).
I think this addresses the main concerns for all parties involved which are:
-Lido DAO is spending too much and current payout is not sustainable
-Lido DAO community still believes that the referral program is important now, and for future integrations
-Referral program is running out of funds
-Gradual reduction in rewards will not drastically harm referral partners that rely on the program for revenue
Questions for the community:
-Do we like the change to 0.75% payout?
-How much time should the new 0.75% payout be fixed and guaranteed? 1 month? 3 months?
I will start a snapshot vote on Sunday if this proposal seems fair for everyone.
Background information : Stake DAO is a non-custodial platform built on top of decentralized protocols that enables anyone to easily grow their crypto portfolio, which launched options vault strategies last August for ETH (call/put) and BTC (call) (see more Strategies | Stake DAO )
How you intend to make use of the Lido referral program : StakeDAO will release a new wstETH covered call options vault strategy - allowing anyone to deposit every week their ETH for wstETH into Stake DAO’s covered call option strategy to benefit from smart risk management and best-in-class yields. We will kickstart this referral program by encouraging our 9 272 ETH users deposits to migrate towards the new wstETH covered call option strategy.