Stake to Build — Deflationary Staking Mechanism
A lot of you will know that Realm is taking a collaborative approach to the development of and ownership in our metaverse. We believe it is important to involve our talented community members in product decisions as they often have excellent ideas. To invite this community input we are ensuring a weekly AMA with founders to discuss product design choices, answer questions and make improvements.
Our drag and drop Realm Builder Tools are progressing at a fast rate and really bring down the barrier to entry for Building Realms. Realm’s Import Pipeline from Blender, C4D and Maya directly imports into Godot Game Engine speeding up building further. Collectively our Builder Tools and Pipeline enable us to deliver a deflationary staking system.
This Stake to Build initiative will be discussed on our AMA Wed 23rd February on twitter spaces. There will be a recording on Twitter for community members and a question submission form can be found here.
Our team is continuously learning from community feedback and adjusting the staking mechanism to optimise results. We have used round figures to make it convenient.
Problem: Single Sided Staking (SSS) increases the supply of $REALM creating Inflation.
Solution: Pair Inflation with Deflation by removing $REALM from the Circulating Supply by incubating projects that consume $REALM.
Stake to Build
Realm’s Stake to Build initiative accelerates the growth of Realm’s metaverse by enabling stakers to support teams who are building Realms. By building a large number of Realms the economy in the metaverse grows as does the use of and demand for the $REALM token. Staking rewards are paid to stakers in 2 forms:
- Days 1- 90: Guaranteed Rewards are earned during the Build Phase. Rewards earned is based on the percentage of the Project Pool that the Staker owns and how long the stake is staked for. Guaranteed Rewards are locked for 3 months starting from the launch of the Realm being built.
- Days 91–365: Performance Rewards are earned during the Launched phase by paying a Staker Royalty from the volume of $REALM being transacted in the Project’s Realm. The Project Pool Owner can set the Staker Royalty between 1- 20% of their entire volume. At day 366 Performance Rewards stop.
Realm provides Projects that are building Realms with a Project Grant up to $30k paid in $REALM tokens. For every $REALM token given as a Project Grant, 1 $REALM is added to the Guaranteed Rewards for Stakers in that Project Pool.
When a Team applies to get incubated and create a Project Pool they have the opportunity to be selected for a $30k Project Grant that is paid in $REALM upon delivery of the agreed milestones.
The Project Grant $REALM tokens are locked until the pre defined Milestones are achieved by the incubated Project. Stakers use their LP token to vote on whether they think the milestones have been delivered. There is a Review mechanism that aims to limit issues around milestone delivery. Realm supports incubated projects throughout the entire process.
If we use a $REALM price of $0.2 for this example, the Project will receive 150k $REALM. For every 1 $REALM invested in the Builders through a Project Grant, 1 $REALM is sent to the Project Pool as Guaranteed Rewards for Stakers. Each pool has a maximum Pool Capacity that is currently set at 10m $REALM but may change depending on community feedback and performance.
Once the Pool Capacity is met nobody else can stake into the pool. There is a Pool Minimum threshold equal to 10% of the Pool Capacity. Failure to meet the Pool Minimum means the pool will not become Active and Stakers should remove their $REALM.
Staking and Unstaking.
- A Staker can unstake their tokens from a Realm Project Pool at any time, should they want to stake them in another pool or sell them.
- When they unstake, the rewards stop accumulating and the Staker can claim their rewards on the Unlock Date.
- The total Rewards and Unlock Date will be displayed in Realm’s DAPP.
- Project Pools are open for Staking for one week. As soon as it hit’s the Pool Minimum the Project Pool becomes Active, the pool remains open until it is filled or 7 days expire. After 7 days nobody can stake in the pool.
- Once Active the Project team starts working on delivering milestone 1.
- If a user unstakes from a pool they cannot stake back into it.
Let’s take a look at a couple of hypothetical examples. In this example a Project is building the CyberShark Realm
- Pool Capacity = 10m $REALM
- Pool Minimum = 1m $REALM
- Staker Royalty = 10%
- Project Grant = 150k $REALM.
- Guaranteed Rewards = 150k $REALM.
1m $REALM is staked, the 10% Pool Minimum has been met and the Project Pool goes Active. The 1m $REALM remains staked for 90 days until the Realm Launch, then it’s all removed meaning no Performance Rewards, just Guaranteed Rewards are paid.
The 150,000 $REALM are locked for 90 days after the Realm Launch, so 90 days Building Phase+ 90 days Launched Phase, unlocking 100% of the rewards 180 days after staking began.
150,000/1,000,000 *100 * 4 (quarters)= 60% APY for the Stakers, a decent reward for a potentially high risk Project based on the number of Stakers.
Now let’s imagine a Project is very popular and smashes it’s Pool Maximum of 10m $REALM. The 10m $REALM remains staked for 90 days until launch, then it’s all removed meaning no Performance Rewards are paid. In this case the Guaranteed Rewards are split between 10x more tokens so the APY is 6%, not such a great return for what is a popular Project.
The way we balance this out is Performance Rewards. Performance Rewards take a percentage of the economic activity occurring inside a Realm from the day the Realm Launches to 365 days after the Project Pool Activates.
For this example let’s set the Staker Royalty at 10% of the Volume of $REALM transacted within the Project’s Realm. These Performance Rewards are unlocked and accessible on demand. The amount of Performance Rewards accumulated is based on the percentage of the pool a Staker owns.
Let’s dig into performance rewards with an example of an actual game that could have quickly launched on Realm’s platform. Chicken Derby is a mad fun and really popular NFT game that launched it’s private Beta November 24.11.2021. About 3 months after it’s launch it’s had 3800 ETH = $11.4m Volume. Imagine continuing at this pace for 9 months, that would be $34.2m Volume. WOW!
$34.2m Volume would yield $3.42m dollars of rewards if the 10m $REALM tokens remain staked until day 365. That’s $3.42m worth of $REALM being paid to Stakers who Staked $2m worth of $REALM, assuming the price of $REALM is still $0.2.
That’s an APR of 171% Performance Rewards + 3% Guaranteed Rewards. 174% rewards is a great yield and best of all this mechanism is deflationary as only the initial 150,000 $REALM Project Grant + 150,000 $REALM Guaranteed Rewards to the stakers were added into circulation.
How is it Deflationary?
Everytime a transaction occurs in a Realm there is a Realm Platform Fee of 20% that is paid in $REALM to Realm. We take a portion of these tokens and lock them up in contracts for several years to remove them from the Circulating Supply. The remaining tokens are used to cover the operational costs of running Realm, offering free to build Realms, paying the team, covering server costs etc. Any left over balance is split 3 ways between the Stakers, Social Impact causes and Realm.
Continuing our example of Chicken Derby, if we take 10% of the 20% Realm Platform Fee and lock those $3.42m of $REALM up we reduce the supply by 17.1m $REALM tokens. We initially put 300K $REALM into circulation while we locked up 17.1m $REALM, in other words we took 57X more tokens out of supply than we put into the supply, we made staking deflationary.
Looking forward we will discuss this Stake to Build Proposal on our weekly Founder AMA - 23.02.22 at 7PM UTC on Twitter Spaces. Please add any questions you have in this Form or ask them at the AMA, where we can also discuss next steps.
We look forward to your questions.
Realm is a mobile-first, play-to-earn, social impact driven Metaverse that allows gamers, players and artists to create their own personalized NFT microverse. Creators can bring unique music, art, and games into their realms. Whole living worlds can be minted as an ERC-1155 NFT and traded on the OpenSea Marketplace. Alternatively, players can discover, trade, collect and view NFTs in the environments and experiences their creators imagined.