CLOUD-1: Should Sanctum implement CLOUD staking and active staking rewards?

Changelog

Edit 2025-02-04 04:00 UTC

  • People gave feedback that the vesting duration was too long and the ASR amount was too large. Reduced ASR to 30M and linear vesting to 30 days. Explained linear vesting better.
  • Clarified that ASR would not apply for CLOUD-0 and CLOUD-1, since staking does not exist yet.
  • Clarified more details on ASR distribution.
  • Many people were confused about what will happen if this proposal passes – wrote a new section, What will happen if the proposal passes?

Proposal

This is the very first major step of Sanctum’s governance!
All proposals have a deliberation process before officially tabled up to governance. This proposal has the following timeline:

- 7 days deliberation
- 3 days voting

Should Sanctum implement CLOUD staking and active staking rewards?

This proposal would approve the implementation of CLOUD staking and 30M CLOUD (3% of total supply) to fund rewards for staked CLOUD, conditional upon active governance participation (“active staking rewards”).

Why staking?
The primary potential failure mode of futarchy is the “Keynesian beauty contest”. There is a danger that traders predict not whether the proposal is net positive, but whether or not other people think the proposal is net positive. This can create a self-reinforcing cycle disconnected from reality — leading to a dangerous outcome where policies are passed based on momentum and narrative, not actual value.

One very promising solution is to use staking; that is, to use staked CLOUD (sCLOUD) as the base asset to participate in the futarchic markets. This staked CLOUD will have a 30 day linearly vesting lockup (linearly vesting means that if you unstake 100 sCLOUD, you will be able to claim ~3.3 CLOUD every day), which will incentivise long-term holders to participate. We believe this will significantly mitigate the Keynesian beauty contest problem.

CLOUD staking could also be used as a separating mechanism to preferentially reward long-term holders in the future. But that’s outside the scope of this proposal.

Why active staking rewards?
Governance requires time and effort, especially something new like futarchy. By rewarding those who spend their time and effort to participate, we will encourage more participation, which means better decisions overall due to the wisdom of the crowds.

How would active staking rewards be implemented?
We propose to use 30M CLOUD to fund rewards for active governance participants over the next six months.

Voters would get a pro rata share of CLOUD equal to your overall staking score (staked CLOUD amount * time) multiplied by the number of votes you participated in after this proposal. To be counted as participating in a proposal, one must have a minimum trading volume of at least 10 USDC in each proposal, regardless of if it passes or fails.

We propose to split this 30M CLOUD into two tranches of 15M each and distribute CLOUD quarterly. We plan to distribute the first tranche ~3 months after the passing of this proposal.

What will happen if this proposal passes?

If this proposal passes, we will implement staking and start tracking staked CLOUD balances. Starting from CLOUD-2 (the next proposal after this), voting participation will also be tracked for the purposes of ASR.

We will eventually transition voting from CLOUD/USDC to sCLOUD/USDC, but whilst governance is still new and confusing for most, we will hold off on this transition for now. We will take a temperature check after a couple of votes and transition once people are comfortable.

We aim to run new proposals every two weeks, with a one week deliberation period + 3 day voting period.


66 Likes

I am looking forward for the upcoming votes after “Cloid 1”. I think ASR it is important part of governance to incentivize holders to stake and minimize price manipulation.

I believe that long term alignment can also be measure by staking one’s $CLOUD and the ASR concept may bring more members to participate. Therefore, I firmly believe ASR should be implemented and max voting participation should be encouraged.

LFG!!!

12 Likes

A couple of discussion points for the community:

  • How long should the staking lockup duration be?
  • Is the ASR amount too large, too small, or just right?
  • How should the team distribute ASR rewards – monthly, quarterly, after every vote?
  • Any other concerns?
12 Likes

Fp.

The lock up period and ASR amount, seems right. About ASR distribution, i think should be cumulative and every quarter.

5 Likes

Monthly distribution is better in my opinion. In case of JUP, the quarterly distribution created pockets of large supply when the ASR rewards got unlocked and brought the price back down of JUP. I like the linear vesting of stCLOUD and also like the concept of time staked to calculate the rewards. Overall I like the proposal. Primary challenge I see is making it easily understandable for everyone who wants to participate. Also the additional need for 10 USDC to make participation in a vote count can rule out some holders who want to start very small and then scale up .

9 Likes

50M ASR reward for 6 months is also quite attractive. If I assume say 100M CLOUD out of 180M circulating supply staked into the system, then it is a 100% apy which is a good start to get the thing rolling.

8 Likes

Great to see ASR being implemented.

Could you please provide a worked example of the 60d linear vest? Would it be day 1 can withdraw 1/60th of your stake, d2 2/60th etc?

6 Likes

Another question - is the sCloud a tradable asset?

6 Likes

I get why the 10 USDC cap has been set, imo it could help with bot’s and shizz…but it does not say if what the USDC trading volume is …so i can assume if i bought 10 USDC of INF would that meet the requirements ?

4 Likes

I like the Futarchy implementation, and I can see that this will engage informed, wise participants more than the broader population. One side effect of this will be that Sanctum will have a lower participation rate versus what we see in JUP governance. This will have more useful governance decision, no doubt but also loses out on broader mass participation. One suggestion I have here is to go with a hybrid model in long run, where there are some votes that do not require trading with a USDC stake and just vote ( similar to JUP) and some that require putting a stake ( profit or loss) based on Futarchy model.

5 Likes

Summary: Yes, Sanctum should implement CLOUD staking and ASR.

CLOUD staking and ASR will be important in order to reward those who are willing to try futarchy and governance as a whole.
I think rewards should be distributed quarterly, like Jupiter, in order to maintain the good vibes around the people participating
in governance and to show that futarchy is something worth to invest some time investigating and actively participating.
Also, quarterly distribution should be somewhat easier to prepare than monthly, up to the team to communicate if monthly or maybe for each vote
would be more difficult.

50m for 6 months is ok for now but after that do you believe that futarchy alone will be rewarding enough for people to want to participate in governance? Genuine question, I don’t know how that would look in 6 months~

Overall this would be positive for Sanctum but the details of how is it implemented are important, looking forward on what the team has to
share with us and to actively participate in Sanctum’s governance (:

4 Likes

I think the lockup duration of 30 days is better, on the ASR 50M for the start is attractive, for the distribute monthly make is look like salary payment, I think Quarterly makes more sense it will make look like and event.

I think 60days lockup will make some people not to staking enough

4 Likes

This is 10 USDC to stake in every vote ( CLOUD UP or DOWN based on outcome) and not buying INF or CLOUD in market. This is the Futarchy implementation of a vote. A minimum 10 USDC is required for it to count as ONE participation which will be the multiplication factor coupled with time your cloud is staked to calculate the ASR reward.

2 Likes
  • Staking lock up is too long, should be less than a month. What’s more, I think there should be variable staking periods, since the rewards will be calculated based on stake period anyways. Why not give us the option?

  • With 50m in supply being unlocked alongside investor and team unlocks this year, maybe we should also be determining what season 2 entails. In tandem with this discussion. Seems to be important in the context of supply distribution.

-If my lock up is 2 months, I will not accept anything less than monthly ASR. Restrictive rewards + participation barrier + lock up periods screams “insecurity”. I don’t see why we can’t have a similar rewards structure as Jup or Pyth.

  • Is the team concerned at all with implementing revenue share or buybacks? What are YOUR takes on this after Jupiters big move? How badly would it hurt the project and how can we the holders have equity in Sanctum, not just a (meaningful) gambling tool?
5 Likes

Stoked to hear about both staking and governance being implemented, and yet I’m a bit confused.

I watched the explainer, and understand that people are voting on decisions based on wallet actions. How does this work exactly with staked CLOUD? Are we essentially betting with our stake?

Would love it if someone could explain this more clearly to me!
Many thanks,
ChefG

2 Likes

Excellent proposal. However , we can if all agree and also suggested by few , like if 6 months staking can be made to 3 months like Jupiter with proportionate asr. 2 months unstaking pro is to keep people staked rather than unstake it and on the flip side 60 days for unstaking can be viewed as turn off. What if Scloud can be traded instead of unstaking will it impact the price. Season 2 rewards partly can also be linked with loyalty factor for staking and being invested in cloud plus governance etc.I am not sure abt the trade volume of 10 usdc , for activity in sanctum or shld it be linked to season 2, Instead of 10 usdc for trading, can we look at min cloud for staking, just a thought. thanks

3 Likes