Staking Rewards Season 2

Proposals
1

Hello Cryptex Community,

As you all know we need to begin the discussion around staking rewards for Season 2, the goal here is to co create a proposal that satisfies all members and that considers not just the current market conditions but also the state of the DAO and it’s finances.

For context Season 1 which had a duration of 3 months had a total approved budget of 31,562 CTX. 1/3 of that amount went to the Legacy Staking and the rest was destined for the Aragon based system.

That amount was selected using an even split from the amount approved for the Feb 2025-Feb 2026 period.

We know need to decide upon two key things:

  1. Length of Season 2

  2. Total amount allocated

The main idea is that rewards would still be claimed by campaigns within that season, each campaign will have a duration of one (1) month.

This will allow for the rule of measuring participation to enable reward collection to be used and in case no proposals are voted on during that month all stakers will be eligible to claim rewards based on the amount of CTX they stake and the how long they lock for.

Mae sure to leave your comments here so we can start drafting this proposal together as we target the first week of June for the voting process to be conducted.

2

Hi Leo,

Given the current environment, I recommend a 10,000 CTX budget per month with Season 2 ending August 2026, aligning with the operational expenditures budget.

At that point, we can also decide if we have September-December be one long season or split into two short ones.

3

Thanks for opening this discussion.

I agree that Season 2 should run through August so it lines up with the current operating budget period, but I think 10,000 CTX/month is too low if we want staking and governance participation to be taken seriously.

Season 1 was 31,562 CTX total for 3 months, with only 2/3 going to the Aragon system. That means the Aragon staking side was roughly 21,042 CTX for the whole season.

Using the current total voting power of roughly 2.29M veCTX as a rough denominator:

  • A 10,000 CTX lock at 1x voting power would have earned around 92 CTX for the full Aragon Season 1.
  • A 10,000 CTX lock around the current average multiplier would have earned around 230 CTX.
  • Even a 10,000 CTX max-lock at 4x would have earned only around 368 CTX for the full season.

That is not very meaningful. If we want people to lock capital, delegate, monitor proposals, and stay active, the rewards need to be large enough to matter.

I would support a materially higher Season 2 budget:

50,000 CTX/month through August, or 150,000 CTX total for the 3-month period.

That is still a bounded program, still far below the operating budget that was just approved, and it can be tied to actual governance participation. If no proposals happen during a month, then rewards can be distributed by stake/lock weight as suggested. If proposals do happen, eligibility should depend on the delegate participating.

The goal should be alignment. The DAO is funding contributors so the protocol can execute, but CTX holders and delegates are also securing governance. If we want the governance system to work, incentives should reflect that.

4

Hi all! Thanks @Lcedeno24 for the proposal.

Given that Season 1 hasn’t formally ended there is still some weeks and rewards left to understand how was the overall performance and what insights can be derived, although as @dnkta.eth mentions there currently is ~2.29M veCTX derived of ~900k CTX staked. This is certainly auspicious for the system considering the current governance parameters.

Naturally this is tied to rewards, and before jumping into exact amounts we should take into account some considerations:

  • Increasing the pool naturally incentivizes for more staked CTX, longer lockup time and naturally more rewards needed. Although that may sounds obvious, that trade-off should be leveraged against the program targets and not as isolated metrics.

  • Rewards have been impacted both due to CTX price-action during the season and the delay in the system rollout, having to merge two claims into one which presents a different scenario than having three monthly ones as expected. Accounting for both of this factors should contribute to more meaningful rewards.

  • Back in February when discussing the proposal APR was ~13%, which was underlyingly voted on as a reasonable return for the program back then. Something around those lines is still logical given the current market conditions.

  • Agree on having August as the cutoff date given the recently voted budget as well as tying Season 2 to participation if there are proposals to vote on, otherwise the stake/lock weight can determine rewards as already mentioned.

Again, some early thoughts in order to keep the conversation going!

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5

Hello everyone,

I agree with @SEEDGov and @dnkta.eth on this one. Though 10,000 CTX/month is underwhelming, structuring our budget around a target APR is mathematically sounder than picking flat numbers. I also agree on August as the cutoff date since it’s coherent with the recent budget approval.

As I mentioned in the Keepers thread, stakers carry the ultimate risk edge. Hitting a target ~10-13% APR could be a solid middle ground to properly recognize that risk without draining our pre-BAGZ runway.

Allez !

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6

Given our current treasury and revenue realities, I think 50k per month suggestion feels high. I do agree that governance participation is of critical importance but I feel like we’re tightening the belt across the board right now to preserve treasury and get to a position of sustained revenue. If possible to tighten the belt a bit on rewards as well, while still targeting a reasonable APR to retain stakers, I think that’s the wisest path forward. I don’t think I can offer a specific CTX number because I’m not sure how to reasonably estimate APR but I think we should be ok with a modest APR decrease for a short period of time.

Aside from that, I am definitely supportive of aligning the period to August to get in line with the operational budget timing.

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7

I understand the treasury discipline argument and I agree the DAO needs to be careful with remaining funds.

But I think we also need to apply that argument consistently.

The DAO just approved 725’000 CTX for May-August operating expenses. That is 7.25% of total CTX supply for a 4 month period. I supported that because I do not want to interrupt execution during an important period.

At the same time, stakers are not receiving emissions for free. They bought CTX, locked capital, accepted opportunity cost, accepted price risk, and cannot exit immediately. With the current Aragon system, exiting requires waiting through the lock period and cooldown process. These are the people securing governance.

Historically, the DAO has spent far more CTX on operations than on staking incentives. That may have been necessary at different stages but if we want incentives to be aligned between contributors, delegates, stakers, and the DAO as a whole staking rewards should not be treated as the first place to cut.

The game theory matters here. If rewards are too low, people have less reason to lock, less reason to delegate carefully and less reason to participate. That weakens governance exactly when the DAO is asking governance to approve large budgets and make important treasury decisions.

My original suggestion was 150,000 CTX total for Season 2. Given the treasury concerns raised here, I would be open to a compromise around 100,000 CTX total for June-August.

That would still be meaningfully higher than Season 1 and the 10,000 CTX/month suggestion, but lower than my original proposal. I think that is a reasonable middle ground between treasury discipline and making staking rewards meaningful.

8

So to make sure I’m understanding: Season 1 was around 20k CTX rewards for 3 months and you’d like to see Season 2 at 100k CTX for 3 months? Though I agree that allocation is MANY fold lower than the operational expenditures, it just feels like a significant increase at such a delicate time. I suspect we both wanted to see much more cut from the last several operational budgets, but ultimately supported so we didn’t cripple key activities that could prevent getting to market.

I hate to say it like this, but I don’t think allocating the suggested 30k CTX for Season 2 is likely to impact governance in a way that could jeopardize our ability to propose and pass any proposals necessary to go live. If we had enough stakers take action to move over in Season 1 for their share of 20k, a 50% increase in emissions for Season 2 probably won’t scare them all off.

Trust me, I want nothing more than for our holders and stakers to be rewarded – sustainably, based on revenue return. I just don’t know that I feel right about allocating more from the dwindling treasury to try to reward more right now.

To look at it another way: if we could have reasonably withheld 70k CTX from the operational budget without putting go live at risk, I think we absolutely would have. Why shouldn’t the same be true here?

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9

Where I see it differently is that Season 1 was not a normal baseline. It was the migration period, v1 staking was ending and the Aragon system was new. Many people were still figuring out how rewards and delegation would work. So I would be careful using Season 1 participation as proof that the same level of incentives will retain stakers going forward.

Season 2 is the first real test after people have seen the actual reward amounts.

I also think one thing that gets lost when we talk about APY’s is how concentrated the current voting power is. If rewards are distributed by voting power/lock weight, then a large part of any reward pool naturally goes to the largest lockers. That means a headline APR can look reasonable while the actual CTX amount received by smaller independent holders is still very small.

There is also a issue for new stakers. Because voting power grows over time, people who locked earlier naturally have more reward weight than someone entering now. That is fine and part of the design, but it means the APY can overstate what a new staker actually experiences at the beginning. So far there is roughly 950k CTX locked in the new Aragon governance system, while v1 governance had over 1.5M CTX at its peak. Some holders have still not migrated, likely because the new system requires a larger commitment: longer lockup, slower withdrawal, delegation, and more active participation. If the total pool is too low, new or smaller stakers may look at the initial reward amount and decide it is not worth locking.

That is part of why I think the Season 2 pool needs to be higher. It is not only about rewarding the biggest stakers. It is also about making sure smaller independent holders and new participants have a real reason to lock, delegate, and stay involved.

I absolutely agree that long term rewards should ideally come from revenue, the same way operating expenses should ideally be supported by revenue. But right now we do not have that revenue live yet. That is also why the DAO approved a large CTX operating budget so the team can continue executing. Until revenue changes the funding model, I think staking incentives should be treated as part of keeping the governance system healthy and decentralized, not as an optional extra.

That is why I still think 100k CTX for June-August is a reasonable middle ground. It comes out to roughly 33,333 CTX/month, about 3.3x the 10k/month suggestion, and is materially lower than my original proposal.

I would also support keeping the same structure discussed above: eligibility tied to delegate participation when proposals happen, stake/lock weight when no proposals happen, and a required review before any September-December continuation.

That keeps the program bounded while still making staking incentives meaningful during an important governance period.

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10

For the record, I appreciate the civil exchange of opinions. You and I are usually quite aligned and it’s good that we can have different positions and express them respectfully and without emotion.

I definitely don’t see this as an optional extra, I think governance is a necessity, but just like with every aspect of the budget, I tend to think of it in terms of where can we tighten the belt and still stay afloat. In hindsight, I think it’s easy to see we should have done more belt-tightening much sooner operationally, but we unfortunately can’t turn back that clock. I just don’t think we should use a “more than we can afford” operational budget (given treasury realities) as justification for a “more than we can afford” rewards program (given treasury realities). I’m not firmly planted at 30k but I do think it’s a reasonable level in comparison to Season 1 and even to prior rewards periods.

If we have concerns that the distribution won’t adequately incentivize smaller or newer stakers, can we look into adjusting those parameters?

I hope we soon get to a place where the rewards to stakers can be much more generous, I just don’t feel like this is the time to materially grow these rewards.

I’d even be willing to delay the CKR pilot for this same reason, though I do think there’s value in at least starting a pilot (even if levels are scaled way back) so that we can learn and adjust.

Higher allocations to both of these programs would directly benefit everyone in this conversation, and of course I like to benefit :slight_smile: BUT in the best interest of the organization, I just don’t feel right about voting for increased levels given current realities. If I could have voted against the operational budget without tanking progress near the finish line, I would have. With rewards, I feel like I can oppose increased levels without sinking the ship, so that’s basically where I stand for now.

Very interested to hear others’ opinions on this. Thanks again for the civil debate.

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11

Thanks, I appreciate the respectful discussion too.

I propose we do a token weighted signal vote with a few clear options, for example 30k, 60k, 75k, or 100k CTX total for June-August.

That would give the DAO a cleaner read on where tokenholders actually stand.

Then the final proposal can follow the result of that vote.

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