PCT Token Functionality

Hi everyone,

I want to start a discussion here surrounding what to do as far making the PCT token more attractive and useful. This bridges over from our Discord conversation on the same topic.

Ideas I have liked from other people include:

  1. Offering staking functionality for PCT such that stakers could be given access to reduced fees for borrowing on a progressive scale i.e. a certain amount of PCT staked unlocks 30% off, 50% off or 100% off borrowing rates.

1a) Stakers could then also use this staked PCT as collateral.

1b) Stakers could also be entitled to a portion of the revenue from the money market, say half just to keep half for dev funds. This could be awarded only to the PCT stakers (and not just holders) via a protocol buyback of PCT.

  1. Gas-subsidized bundling of transactions could be interesting as well per @Vaspou

Anyway, onward and upward. Let us know what you think.

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I think that’s a good suggestion.

all of the above sounds great and gives some super unique and valuable utility

Both 1a - 1b & 2 sounds pretty useful.

I like all suggestions, they’re all valid, and good incenive

Just to add that we have to look for way to reward stakers based on time. ie. have a time sensitive reward system, the longer you stake, the better rewards and revenue you get.

The rewards could be paid out periodically to the wallet, or compounded back into the stake immediately as it is due.

This could work if we take time snapshots to calculate the period of staking, and avoid malicious intents to just start/add staking prior pay out times.

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I totally agree with Bluecrypt about Time Sensitive Rewards. This will bring lots of new long term investors and prevent big dumps. We need to vote that asap before Phase III.

I liked the idea of 1b which can be considered as Time Sensitive Rewards.

I would like to add for consideration, we can offer staking ETH-PCT liquidity tokens as well, perhaps with higher rewards than plain PCT, to encourage long term liquidity for the project.

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Guys, a couple another idea for a future product - PCT-based “membership” in the credit union. Under- or non-collateralised loans can be given out between union members. In order to become a member you need to stake PCT and have previous union members vouch for you. Their PCT stakes covers your risk of default. You basically can take loans from the union members in any asset up to the equal amount in PCT that people who vouched for you stake in the protocol.

Now combine it with % off of protocol borrowing reserve rates proposed in the @CliveSpader’s post . Given that using a union you are only required to pay the reserve rates, if you vouch and stake for others you can eliminate the cost of capital completely (disregarding the risks of the defaults) - subject to the size of your stake and it’s encumbrance (the more you vouch for others, the cheaper it gets for you).

The concept is borrowed from https://union.finance/ , but they issue tokens to staking union members instead of offering zero-cost capital (as in our case).

Ok, some people have pointed out that we need funds for development and that protocol fees offer our best path to acquiring said funds. That said, I see there is a lot of interest in having the protocol pay out something to PCT stakers as per feedback from @jahruhle @cany and @jojopeha.

What I think we should do is just for the first 3 months weight this in favour of development, so 1/3 of protocol fees could go to stakers (market buy PCT and make it available to those with stake), while 2/3 of the fees can go to our treasury governed via multi-sig. This can be revisited once the money market has some momentum.

I agree with @Bluecrypt and @Karpos that we should dole out rewards in a way that is time-weighted, and I agree with @vfat that liquidity providers for the PCT/WETH pool should be able to stake their BPTs and earn fees from that pool as well.

What are people’s thoughts here? I think this could be a good first step to differentiate PCT. The rest of the ideas like @Vaspou’s undercollateralized loans, or having staked PCT be available to use as collateral, or staking PCT unlocking lower borrowing rates can be considered down the line.

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Hi- I think using fee to buyback governance token is a proven failure for all project across the board- just creating temporary miniscule buy pressure resulting in eventual bigger sell pressure. Would it be possible to airdrop the staking portion of the protocol fee to the staker’s in the native tokens they were earned. From lending and borrowing I am guessing fees will be generated in wbtc, eth, yfi, snx, dai and link. Imagine staking a token which will accumulate the tokens mentioned above. The rewards lets say harvested every month, now obviously I am not sure if this is even technologically possible, but I want to know what everyone thinks of such a reward system.

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Hey ak, this is a good thought, thanks for adding it! It is definitely something we can consider. As far as the tech goes I will have to defer to @PercentFinance here.

I’ll add my thoughts here from the discord channel.

Firstly the buy back mechanism has failed mostly in cases where the token is also concurrently being farmed, leading to massive sell pressure which the buy-back mechanism isn’t enough to counteract. In my opinion this will not be an issue for Percent as farming will end.

Secondly I do like ak47’s idea of rewarding users in blue chip tokens, however my counterpoint was that for the vast majority of users they will not earn enough of each token for it to make sense. They would only have dust amounts of each token which they won’t be able to do anything with. My proposal instead is to create a blue chip index token comprising of all the tokens available on the Percent platform, and depositing the fees into this token. Percent stakers can then be rewarded in this new index token.

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I’d also like to add that I think we have seen the buy back and redistribute work in projects like farm, where they distribute 30% of profits to stakers.

Farm has taken a massive hit but is only down 65% ish from ATH unlike many other DEFI projects without this profit sharing feature… not to mention, I’d say the sell pressure in farm is significantly more from all their other farms than the profit sharing one.

I really like the idea above about the time based rewards. Perhaps they could choose to lock for 1 week to get 10% of profits, 1 month for 20%, and so on, or a scale that goes up the longer you stake and caps at 30%, either way, good ideas.

About the token utility: owning more PCT gives you better rates, i think this should also require locking PCT to lock in the better rates, when the loan is returned, they can unlock their PCT. Maybe that’s obvious but figured I’d chime in with that.

Considering the proppsals to use the protocol’s reserves to:

a) directly channel them to holders; or

b) indirectly do so by buying PCT back off of the market.

I would like to point out that MM/Lending protocols provide more economic value than they capture - both Maker and Compound are great examples of that. Where the value capture becomes significant is massive scale. We’re nowhere near reaching it this or even a year from now.

We can and should be more creative in ensuring token’s utility + value capture. Some nice ideas circling around here, expect us to double-triple the current effort after we figure out the more pressing needs like multi-sig transfer and protocol growth funding.

To illustate my earlier idea, here’s Compound’s current reserve h/t @Bluecrypt:

And here’s my back-of-the-napkin calc of our potential reserves at ~30m TVL

Not much, in my view, to even support a large enough dev team to grow Percent to more TVL and more revenue at a highly competitive, liquidity-sensitive DeFi market via product betterment, integrations and other things…

So, again i’m more for mechanisms that allow to equate the economic value derived from using the protocol to the value capture.

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