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Questions for Discussion with Gauntlet (HoS stakin 21e2938fe504802f8313ef565858aea8

5 min read

Questions for Discussion with Gauntlet (HoS staking mechanism)

Call Log / Gemini Notes

https://docs.google.com/document/d/1A24WLy0aJI0LC4uxUS_Lk7wdKFRFN9uwRC49O0wTpMY/edit?tab=t.eeuffo1147gx

Relevant Docs

Key Facts

  • 1B NEAR was minted at Genesis in 2020
  • NEAR’s annual inflation rate is 5% (50M NEAR)
    • 4.5% total goes to validators/stakers
    • 0.5% total goes to the treasury
    • Said differently, 90% of the annual inflation rate goes to validators/stakers (45M NEAR) & 10% of the annual inflation rate goes to the treasury (5M NEAR)
  • Most recent epoch’s staking APY was 9.63%
  • Gauntlet is proposing a staking APY of 8.64%
  • Survey result showed community staking APY of 6.89% Forum Post: NEAR Token Issuance Survey Results
  • The goal is for HoS to offer a rewards structure that is superior to PoS.
  • HoS market share will be a key metric used to evaluate performance.
    • 3% target market share will be used because analysis shows that a validator handling 3% of the stake is typically among the top 5 validators in the NEAR network.
  • 18M NEAR TVL (3% of total staking supply) within HoS will be a critical milestone.
  • The yield premium & APY will be dynamically iterated every week based on the difference between the target and actual market share (the lower the market share, the higher the APY will be to attract stakers).

Questions

  1. In Gauntlet’s point of view, how do you see this WG working with Gauntlet?

    • still work in progress
    • Gauntlet had chats with Lane a lot
    • trying to give a more structure
    • Communicate between HoS and gov WG will happen.
    • There will be more sensible questions to work within the WG.
    • What information should be what kind of information made public?
    • Gauntlet’s priority
      • optimization of incentives to move towards veNear
      • transition to HoS 2.0

        • This includes the optimization of inflation

          [⇨v1.0 doesn’t have the function to execute onchain governance, v2.0 should (needs confirmation from NF?)](Questions%20for%20Discussion%20with%20Gauntlet%20(HoS%20stakin%2021e2938fe504802f8313ef565858aea8.md)

  2. Before the staking reward mechanism v2 implementation, will there be any yield for HoS staking / veNEAR, or will it be staking with fixed yield?

    • Answer (Maxwell): no additional incentives will go live at launch. Would like to change this quickly after launch

  3. What will be the governance process going forward for the DAO setting parameters?

    • Is Gauntlet going to propose numbers every single month, or will an algorithm be implemented?

      ⇨v1.0 doesn’t have the function to execute onchain governance, v2.0 should (needs confirmation from NF?)

    • Gauntlet will publish a 2.0 proposal

      1. Is it possible to get a detailed breakdown of Gauntlet’s final deliverables to HoS? Reference:
        1. Staking Reward mechanism v2
        2. HoS governance proposal

  4. What is the plan for implementing incentives to delegates? How does it fit in with the proposed delegate compensation?

    ![image.png](Questions%20for%20Discussion%20with%20Gauntlet%20(HoS%20stakin/image.png)

  5. Does Gauntlet plan to write a proposal to the forum with the proposed parameters for v2?

    • What would be a good x target?
    • What would be good weighting between each numbers?

    ⇨Gauntlet doesn’t have specific parameter numbers to share at the moment (still working on aligning on how to release those numbers)

  6. Is it possible to get a demo of the staking and validator rewards flow? I.e, the staking flywheel (e.g, token holder stakes NEAR, gets veNEAR, then chooses a validator, then chooses an endorsed delegate. endorsed delegates vote on staking parameters)

    • What does staking flywheel look like?

    https://docs.google.com/presentation/d/1OpNrKqJHp4SQd-kPwzlE41t5pXo8XnFJqOIY8LNi0qg/edit?pli=1&slide=id.g36c245207ff_0_64#slide=id.g36c245207ff_0_64

    ⇨

    pretty much like Unistaker or gov token delegation.

    Maybe worth trying Agora UI on testnet.

  7. Is an inflation reduction inherent in the proposed staking APY reduction? Our understanding is that inflation & staking are directly correlated. i.e, when inflation is reduced then staking APY is also reduced. Is this correct?

    • Thoughts on supporting smaller-scale validators?

      ⇨

      Maybe we should ask NF.

      Gauntlet is interested in a validator incentive program after inflation cut proposals, but does not have specific design at this point.

      We first need to have an inflation proposal before discussing the program.

      Designing Small validators’ growth would be a good place for WG to work on.

  8. What is Gauntlet’s point of view on the extent to which inflation impacts LST growth? (Ilia mentioned that inflation negatively impacts LST growth

  9. Is Gauntlet working on economics to ensure small validators are sustainable or is focus on overarching network security?

    ⇨ They are considering different cohorts of validators to make sure each cohort of validators is incentivized to keep running

    Currently, 297 validator slots are filled, and NF is trying to broaden it to 300 - 400.

  10. In Gauntlet’s point of view, what should be the next step for this working group?

    1. Incentive budget to support small validators
    2. Form an opinion on what should be focus be for this WG?
    3. Increase utility for people holding LSTS

Schedule Follow up call with Lane & foundation

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