[ODAO] Proposal for Rewards Tree Spec v3

[knoshua]

@Uisce

This would make sense if it was the node operators staked RPL required with the stated purpose of insurance, however before it is rewarded to a NO this RPL is an expenditure of the protocol as a whole.

So would you be ok with odao monitoring underperforming nodes and then slashing staked RPL to cover the resulting offline penalties?
There is a difference in which RPL is used and this solution is less efficient because it has one transactions per node vs. one transaction per reward period. But otherwise it is very similar in that all parties end up with the same amount of tokens.

@Uisce

I believe responding to ‘why RPL’ with ‘it is minted then systematically sold to boost rETH APR’ would not be a reassuring answer to that question.

I dont think that using something like 3% of inflation that way warrants redefining the purpose of RPL. It would still be used to reward staked RPL, the oDAO and fund the pDAO more than anything else.

[Pieter]

@jcrtp I think this is a fair approach. Minipool-based rewards are more accurate and having exited minipools no longer earn RPL rewards (after withdrawals are available) is pretty clear in my view.

@Uisce Yes, there’s a conceptual difference between penalizing staked RPL and redistributing RPL rewards, even when the end result would be the same token-balance wise. Knoshu raises an interesting point re: efficiency, though.

Maybe this even calls for a double whammy. After all, looking at beacon chain ETH rewards, a missed attestation boths causes you to lose potential rewards and assigns you a penalty vs. your stake instead. Translating this to the RPL world:

• Redistribute ‘ineligible’ RPL rewards, towards other NOs
• Assign a linear penalty to the RPL stake, aimed at repairing missed ETH rewards for rETH

[NonFungibleYokem]

@jcrtp

• Prorating RPL rewards based on node performance
• Who ends up getting the RPL taken from poorly performing node operators
• In the case of being given to rETH holders, the mechanism for getting it there
• Whether or not there should be a “grace window” where anything above 90% effectiveness gets full rewards, and what the value of that window should be

A slightly alternate proposal then ‘linear proration from 100-0 participation’:
Non-Linear proration on a curve from 100% to whatever percent an operator would be doing better as an reth staker. I think in discord I’ve seen that estimated around 85% effectiveness? And then start penalizing the operator’s RPL stake when falling below that ‘would be better off as an reth staker’ threshold.

[Valdorff]

@jcrtp

With that in mind, what makes sense to me is to fork this discussion into two things: a “short term” iteration which does the first two things and targets the original date of Interval 6 (February 22), and then a much larger, longer discussion around the latter points involving an RPIP and number crunching and analysis and stuff.

How do you guys feel about that plan?

Love the plan, and agree on the non-controversial bullets you called out as non-controversial.

[dietz]

Yes I also think splitting into “short term” and leave the still to be sorted part for later is the right approach.

[Danylostefan]

I agree with forking the discussion into short term and long term. I agree a vote is needed and hope it is put forth sooner rather than later.

That being said - a few words
I am one of the people watching effectiveness very closely. As others have said 100% is not realistic. In my opinion, working with a mix of home stakers, penalizing anyone for even being below the network average (currently 97%) or the Rocket Pool average (currently 95.4%) I think will be counter productive and disincentivizing to new NOs -which we need. Now I do believe 90% is an attainable goal for everyone and if you are coming in below 90% you need to fix something.

I also am in favor of taking the RPL from underperfomers to boost or “make whole” the rETH holders. Question on this - could there ever be a scenario where rETH is not just made whole but actually “overpaid” - I imagine this would/could happen if the price of RPL skyrockets. Would this be an outcome we would want? I’m not sure, don’t really have an opinion.

To rephrase it - if RPL price surges would be happy if RPL minipool reparations not only made rETH holders whole, but boosted the APR to above normal levels?