Dynamic Whale Staking (DWS) vs DAI Savings Rate (DSR)

Rob wants to push a feature called Dynamic Whale Staking. I call it Proof of Giving version 3.0 (PoG v3). I’m opposed to the feature because it sends your funds to an address you do not own (e.g. “burn”). The code specifies you get the funds back after a certain period plus a reward. It acts like a bank certificate of deposit (CoD) with interest where you are guaranteed a return after a certain time has passed.

He added some disclaimer after I brought up questions about this feature not passing the Howey Test. Whether it does or not, I can not really say. That is up to the SEC and crypto lawyers to figure out.

The danger as an investor is that you do not own the coins at the time you “burn” it. If the point is to keep the supply off the exchanges, you could alternatively time lock the spent funds via a smart contract like MakerDAO’s DAI Savings Rate (DSR) feature. After the spent funds are available again, you give a reward/interest. That provides the same function to time lock the wallet funds, but the funds remain in your wallet rather than being “burned”.

Rob said:

The drastic difference however is in POG, you have control over your coins and each day, you can crash our market or spend the coins.

With burning otoh, you lose control of your coins and burn them, and therefore make our coins rarer for the period that our money supply shrinks.

So this type of ecosystem what we would hope for is new buyers buy into biblepay, our price rises, they burn the coins, they get a refund later plus a reward, and by then we have even more users.  So its sort of an ecosystem with an impetus for popularity, if it works out.

I replied:

Do you feel investors will feel comfortable losing control over their coins by burning to an address they do not own? It is quite nerve racking to “burn” your coins, wait x of days, and hope the code will send you back the original plus reward. Don’t you want investors to feel safer by keeping funds in the wallet and time locking it via a smart contract? This is what Dai Savings Rate (DSR) does (https://web.archive.org/web/20190730215041/https://medium.com/makerdao/dai-reward-rate-earn-a-reward-from-holding-dai-10a07f52f3cf).  In the end, both methods keep supply locked up and DAI Savings Rate feels much safer to investors than Dynamic Whale Staking.