Create dNDX, a dividends token for Indexed fee revenue

Proposals
#42

I’ve created a google sheet people can use to analyze different configuration parameters, and in doing so I’ve realized we need to make two modifications:

  1. Charge a base early withdrawal fee that is always added to the variable fee
  2. Multiply the early withdrawal fee by the dividends multiplier

The reason for both of these is to prevent perverse incentives, where you can get additional dividends by setting a very long lock duration without any intention to wait for the full lock period. Even with a very high maximum early withdrawal fee, we would only need an APY on the minimal lock period of like 5-10% before it would be worthwhile to just lock up for the maximum period and withdraw halfway through.

Here is a link to the spreadsheet

Feel free to copy it and play around with the configuration.

Here are some example configurations

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#43

I prefer NDX as well.

Will the max lockup be permanent? I’m thinking of some other projects that have longer periods than 1 year and I wonder if we would want that at some point. But I’m good with 1-2 years.

How does it work if you buy dNDX on the open market? Someone without NDX locked wouldn’t be able to use the dNDX to unlock anything right? They would just get the dividends and then be able to sell the dNDX to someone else later of they wanted?

Maybe max multiplier around 4x?
If min duration was 90 you could get 2x for 180 3x for 270 and 4x for 360.

I think most people would go with 4x in that scenario? But that might make shorter terms less attractive.

Most importantly I think you should never be incentivized to withdraw early (ignoring opportunity cost) - mostly because I’m lazy and don’t want to need to figure out the ideal time to withdraw early.

#44

hi guys
i just like what you do . i leave in koh samui thailand /i have all your coins include NDX
i hope you keep going.
i dont understand to majority of what you said. hope you wll have easy explanation from ordinary people

#45

We won’t be able to change it, if that’s what you mean.

Exactly - having dNDX allows you to receive dividends, but in order to withdraw staked you need to have locked them up.

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#46

Using NDX instead of Dai or any other non-protocol-native token would have the advantage that dividends of stakers that never withdraw them are de-facto re-distributed to all holders of NDX (through an effectively decreasing supply), while permanently locked Dai would simply be lost

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#47

That’s a good point. I’m sure that will be a non trivial amount.

#48

Can’t we revisit this proposal and explore additional options? Why wouldn’t we payout dividends as an indice made up of ndx, eth & dai. I’ve never been fond of how this proposal worked out and now that dNdx has been delayed why not iterate one more time.

The way this is structured now only drives volatility to NDX, but didn’t we want to drive value? Paying out with indices increases the generated exit fees which is being paid out as dividends so there you have it.

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