[Proposal] Break-even-calculator for $ECO lockup

The Ecommunity has taken another milestone with the implementation of the first cycle of Eco Monetary Governance. The first Monetary Governance decision was to implement a 30 day $ECO lockup at 5% APR.

Short-term staking for 30 days is, unfortunately, not economically feasible for small/medium stacks because of gas fees right now. Team members of Eco Inc. have confirmed that Eco is working on a solution to these challenges:

@Shahrukh | Eco Inc and the rest of the team are looking into solutions for the medium term, and we are also looking at long term solutions that will dramatically reduce the cost
Christian, Eco Inc.

Under the assumption that the gas fees for locking $ECO amount to $6.50 and that the price of $ECO remains unchanged, a user would have to stake at least 78.000 $ECO for 30 days to break even.

[(6.50 / 0.02) x 100/5] x 12

To increase transparency, I’d like to propose adding a basic break-even-calculator to governance.eco.org or to link to a community-maintained calculator. The person interested in staking would have to add the following metrics manually:

  • Amount of $ECO to be staked
  • APR in %
  • Lockup period in days
  • Gas fee estimate

All the data could be fetched from the protocol / and from the ETH gas station but this would naturally increase the complexity of the project.

I’m curious to learn what the community thinks of this. Do you think this is important or do you think this is only relevant in the short-term as Eco is already working on a solution to reduce gas fees, for example by moving to L2?

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Great suggestion! Support it!

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Hi Stefan, this is a very important issue, thanks for bringing it up.

That was exactly the argument I made on day 1, and we have no perfect solution at the moment.

First of all, I created this spreadsheet as a temporary tool, you can copy it to your Google account and calculate break-even values at any time: ECO Break-even Calculator - Google Sheets

Next about the calculator, there are 2 values you have to keep in mind when making break-even assumptions:

  1. Gas price. It can fluctuate in a matter of minutes (for example if NFT mint is happening right when you are sending a transaction) and completely break all the math. For example, the calculator will show you that it is fine to lock right now, but tx costs after the transaction is submitted might put you in the red.
  2. ECO price. We are trying to make ECO a very reliable asset, so possible price fluctuations are a secondary metric, but it can change math as well. Some lockups that do not look profitable at the moment, might end up in green later.

Another global issue is the lockup period. The higher the lockup, the longer your balance is unusable. It might not be a problem right now, but if we want to avoid slowing $ECO velocity it is the best to avoid really long lockup periods (365 days for example)

Let’s assume that we change the lockup period to 120 days - it would require the balance of minimum 20000 $ECO to break-even (assuming low gas and same price).

Only the top 90 wallets have balances over 20000 $ECO, smaller wallets will not be able to lock. Let’s assume 240 days, with 10k minimum balance, only 150 top wallets will be able to lock. Not a perfect solution either.

As you can see this is a very serious issue, ECO is trying to solve governance/locking gas costs as a top priority. We will definitely have this discussion among the trustees and evaluate possible solutions.

Thank you again for bringing this issue up.

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MikeWeb makes some great points in that gas prices are always fluctuating and ECO price is also fluctuating, but I do agree that we need a cheaper solution for lock up so that all holders can benefit from lock ups.

Maybe using a roll-up could solve this?

1 Like