Currently $MIN stakers are rewarded with fees from the transaction fees in each minswap liquidity pool, as proposed and voted here: https://app.minswap.org/gov/e4d7010585068a58a2e4694e87a51db0da23427ab7770774644bf4b445b9346f
The challenge: Increase staking rewards, making staking an easier choice
Allow $MIN stakers to deploy their accrued share of $ADA rewards. The proposed options are:
Buy-and-stake MIN: By reinvesting their rewards into MIN, they can increase their share of MIN staking rewards and increase $MIN buying pressure.
Zap into MIN-ADA and farm: By reinvesting their rewards into the LP and farming, they can accrue farming rewards (more $MIN) and as well increase $MIN buying pressure.
Capital efficiency: By allowing stakers to reinvest the rewards, they can compound, incentivizing long-term staking.
Buy pressure: Both options include some form of buying pressure. Option1 offers more buying pressure while Option2 offers half the pressure but also increase MIN-ADA pool liquidity.
Transaction income: By allowing those operation, more transactions can be made, generation more fees for the protocol.
Some protection from dilution and opportunity cost: If the capital can be used before locking period expires, stakers can be use their rewards to keep more shares of the pool in case $MIN price is falling, profiting from small prices to increase staking shares.
All rewards, including first-order rewards ($ADA from fee-switch) and second-order rewards ($MIN and/or LP farming tokens) are kept locked until the locking period expires, as it happens currently. If the locking is not respected, the user forfeit all accrued rewards.
TODO: need data to know how staking options distribution looks today
Impact Analysis (november 2023)
Daily Staking rewards are variable depending on transaction volume and quantity of min staked. Current snapshot shows ADA rewards in the 4k ADA level.
MIN Buy pressure analysis (best case):
If everyone decides do buy $MIN with their rewards, everyone would keep their share of staking rewards, and at current price, that would have a buy pressure of around 18,45% of current $MIN emissions, which is not negligible and could easily be much more if volume increases.
Increase APY analysis:
hard to do, too many variables
Define a threshold for reinvestments, to avoid compounding small sums and harm stakers because of fees.
Have a good UX explaining the concept and allowing managing those locked investments in a intuitive fashion.