Tokenomic Rework Vibe Check: Surplus Revenue Redistribution

Hi All,

Some of us research/governance nerds wanted to get a pulse on the perceptions of a broader group.

The current draft proposal starts with the the total amount of revenue from rETH commission and then splits it up. First, it ensures that NOs are getting paid enough to want to be with RP (the node_operator_commission_share). Next it pays vote-eligible staked RPL enough to ensure governance is very expensive to attack (the voter_share). Finally - the remaining revenue is “surplus”. Here is a summary table with 3 columns of how we could direct that surplus – I’d love to hear which you think would be most beneficial to RP and RPL.

Increase voter_share Buy & burn LP deposits
Benefit mechanism 100% of ETH is distributed based on vote-eligible staked RPL 100% of ETH is used to buy RPL and burn it, creating ongoing demand 100% of ETH is used for single-asset deposits in a weighted pool; this means ~90% of ETH creates ongoing demand and ~10% of ETH provides liquidity depth to ensure easy entrance/exit
Market addressed People that want to (a) stake RPL, (b) run a node, (c) stake a “matching” amount of ETH People that want to hold RPL (staked or not); note that a larger market means more total demand, which may bolster value/price Same as buy & burn
Building on top A second layer could address folks that want to stake RPL amounts that don’t match the amount of ETH they want to stake; since this increases earnings, the second layer could take a portion as a revenue stream RPL stakers/holders freely earn the “surplus” revenue stream without using a second layer. A second layer could access the voter_share as needed for governance. Same as buy & burn
Utility in defi Choosing to use RPL in defi, eg, as collateral, would result in that RPL being much less productive than if it’s staked Choosing to use RPL in defi, would result in that RPL being somewhat less productive (would lose the voter_share, but not the surplus revenue) Same as buy & burn

Which of these do you think would be most beneficial to RP and RPL?

(select more than one if you think it’s close)

  • Increase voter_share
  • Buy & burn
  • LP deposits
0 voters

If you have question, comments, feedback, or simply want to discuss – this thread’s a perfect place for it :slight_smile:

Keep in mind, if you vote for voter_share there is no such thing as „fee switch“. Value of RPL wont be supported.

Didn’t want to see this comment go unchallenged as sole comment. Voter share directly gives rewards to staked-RPL NOs and indirectly supports the price of RPL. Buy/burn directly supports the price of RPL and indirectly gives rewards to staked-RPL NOs. The “no fee switch” is not accurate because both are essentially fee switches.

In my humble opinion.


Wanted to make a short (heh) comment on buy+burn from my experience at Maker. For those that don’t know, for many years, Maker operated with a surplus auction + burn system.

From what I experienced, views on burn seemed to fall into one of two camps, either very pro for its simplicity and elegance, or very ‘con’ given its actual effect. Burn was one of the elements that attracted me to Maker in the first place, it’s a powerful meme. I started off very much in the ‘pro’ camp, and it was always exciting when burn was happening.

However, over time I moved more into the ‘con’ camp for the following reasons.

  1. In practice, its effect is very dependent on the amount of funds going into the burn. To get effects that overwhelm the market noise, you need significant funding.
  2. It is wasteful. There were many things better things Maker could be spending money on, ie dev work, expanding products, etc.
  3. It rewards passive investors in the token equally to active members of governance, which always felt bad. Governance is a non-trivial cost in attention over time.

If you must have a burn-like mechanism, I strongly believe buy+LP is strictly better. You get much of the benefit from the buy pressure in addition to reliable liquidity that stabilizes price over time as it grows. Further, you can use this liquidity to help absorb token mints in the future if required.

Personally, I would lean towards the surplus commission going to buy+LP. Both this and a non-zero voter_share provide tangible and quantifiable benefits. Having some amount going to voters allows operations like NodeSet to operate, as well as recognizing the preference for governance activity over passivity. The buy+LP returns value to the token in a way that still benefits the DAO as a collective.

Maker switched to buy+LP as part of Rune’s endgame plan. It’s one of the few parts I view as unequivocally positive. If you’re interested, you can look at some stats here.


FYI, it benefits NodeSet depositors (and preserves at least some raison d’etre for xRPL) to increase the voter share.

Remember that if you prioritize non-participants (i.e. burning RPL) over people who invest their time/energy to make the protocol work, those people may go elsewhere.


Why do you conisder an xRPL holder (benefiting from rewards intended for illiquid staked RPL, liquid, not contributing any ETH to validators, not operating a node) a “participant”, while calling an RPL holder benefiting from burn a “non-participant”?

Not speaking for Wander, but I can tell you why I think an xRPL holder is a participant. An xRPL holder has put up their RPL, which either has gone to creating a minipool, or at least is available to do so, hence scaling rocket pool. Basically it’d work the same way as the deposit pool for rETH.

Just the same way I consider the RPL side of a whale marriage to be a participant. This seems obvious to me actually, it’s not only eth providers that help scale rocket pool. At least in its current form.

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This argument feels flimsy to me. We can allow RPL to earn freely and not be required for minipools. Ie, xRPL is counting as a participant in your description only because you’re purposely leaving in a requirement that makes it so. And then xRPL is working around the requirement by providing rewards to a liquid RPL-like. This sounds like when my kid helps me cook – eg, I purposely don’t do a stirring step so that they can be a participant.

Here’s a thought experiment:

  • RP will introduce a new token called yRPL
  • In order to get yRPL, you must stake RPL 1:1; there’s no unstake method
  • We require staked RPL to start minipools
  • Any NO without enough RPL can borrow this staked RPL without any cost
  • yRPL holders get monthly airdrops based on the amount of yRPL they hold
  • The IMC will work on yRPL liquidity instead of RPL liquidity

What do you expect will happen? I expect all RPL will quickly stake. Now everyone has a liquid earning token. This sounds silly – if it’s what we want, we could cut out all the intermediate steps and just let RPL earn directly.

So a couple things. Under PROPOSED tokenomics the governance utility of RPL takes center stage; it would no longer be a ‘ticket to entry’. Governance works by deciding little things like who is on the GMC, but under on-chain voting also decides on big things. Our governance structure (square root, etc) is not meant to be ‘fair’ but to be more secure. The security is a function of the total number and distribution of honest voters.
xRPL increases the number and distribution of voters. There is rudimentary sybil protection which makes it more likely to provide security than our average node. There were thoughts about giving xRPL holders a vote in RPIPs by distributing their share throughout NodeSet validators; even if that’s true the validators would get the final vote to prevent governance capture by a large xRPL staker. So I consider NS staked RPL to be productive/participating in its most important utility, just as I think that people who delegate their voting power are still ‘participants’ in governance.

I think this is a good if NS is a small component of RS. If it were large (say half of RP), then I would say that distributing this vote power to a group with a specific subincentive other than “pro RP” is quite a problem. I’m agreeing that distribution is good, and saying I’m not sure this guarantees more distribution in praxis.

Parsing the survey a bit…


We see significant cross-support between LP and burn, but it’s actually quite a lot lower than I thought it would be (around half of supporters of each support the other). Voter_share and burn have the least cross-support at about 1/4, and voter_share and LP are at around 1/3.

Honestly – I’m pretty impressed at how overall tight this is in a variety of ways. We see quite similar total support for each category, and while the cross-supports do have some significant variation, it’s not night and day – we see all the combos significantly represented.

In all, I think it’s clear that a “forum level” vibe check won’t get us clarity here. I think these options should get cleaned up a bit, and we should do a Snapshot level sentiment poll (would be our first).


I think there’s also two sides to it:

  1. What idea sounds best at first glance
  2. What idea sounds best after doing a deep dive

This vibe check probably helped the most with #1, but we probably don’t have all the information we need for #2. Not sure how to go about it but doing some modeling and further defining the ideas might be necessary before being fully informed for a more formal vote/ranking

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