regarding this:
Hey Sonny, thanks for the feedback, and for being with us for so long. It’s a fair point, so let me explain how we got here.
This isn’t really a new mechanism. When the discount tiers were introduced in LIP-5, quarterly reviews were built in from the start so the thresholds could keep up with the token. We raised them once with LIP-14, but never adjusted them as the price dropped. In hindsight we should have done that gradually, instead of one bigger step now.
The reason it’s needed is that the discounts are paid out of protocol fees. When the current tiers were set, LIQ was around $0.155. At today’s price the top tier costs under $100, and the discount it unlocks can be worth more than that every month. In Q3 roughly a quarter of all repayment fees went back out as discounts, which isn’t sustainable and would eventually hurt everyone, stakers included.
We thought about basing it on what people paid, but there’s no way to see that on-chain. Tokens move between wallets and exchanges, so any cost-basis rule would be impossible to verify and easy to game. What you hold today is the only thing we can measure fairly.
We did try to tilt it towards long-term holders, though. sLIQ counts in full while unstaked LIQ only counts 50%, so someone who bought last month and doesn’t stake needs twice as much as you for the same tier. Loans accepted before Nov 1 keep the current thresholds. And since the tiers are pegged to a USD value and reviewed every quarter, the token requirement comes down again if LIQ goes up.
We’re also looking at ways to reward staking duration on top of this, so if you have ideas there I’d love to hear them.