FIP-1 : Staking & Fancy Economy Update

Summary After a careful review of the Fancy Birds economy, FNC token price, and tokenomics model, we propose the following recommendations:

1. Distribute RevDis only to stakers who are locked for at least 4 weeks

2. Allow claimed FNC staking rewards to receive yield and revenue distributions at staking weight

3. Allow in-game FNC rewards to be staked or claimed as sFNC

4. Replace FNC with USDC and ETH as in-game currencies for all spending activities (while keeping sFNC)

The goal of these changes would be to provide long-term, sustainable price support for the FNC token, which will help maximize value for both players, investors, and NFT owners.

Overview After observing the FNC token movements in relation to the economy within Fancy Birds, we believe there is a significant amount of long-term sell pressure on the FNC token. This presents a large issue for the entire ecosystem as players earn in FNC, investors hold FNC tokens, and our NFT collections derive value from the underlying value of the FNC token price. Thus, the entire ecosystem is highly correlated and aligned to make sure the Fancy economy is optimally designed to maximize FNC token price. If the price of FNC increases, we all win. If the price of FNC decreases, we all lose.

This proposal is designed to offer both immediate and long-term avenues to increase FNC buy pressure and reduce FNC sell pressure and hopefully provide a more sustainable economic model that creates incentives that encourages behaviors that are favorable to the Fancy platform. In theory, this should result in a higher FNC token price, which benefits everyone in our ecosystem.

Rationale We recognize that there are quite a few areas that can be improved and we can add features that help the entire ecosystem. As we are very early in the project, we appreciate the immense amount of community support and brainstorming of creative and innovative ways to improve our project. Many of the below ideas were partially or fully suggested by members of our community with thorough debate given to both the pros and cons of possible changes.

We hope that by providing our full rationale below, that we can offer greater transparency to the community in our recommendations and demonstrate how much thought has gone into this proposal.

1. Distribute RevDis only to stakers who are locked for at least 4 weeks We want to prevent people from front-running Revenue Distributions. People currently could front-run RevDis by flexibly staking their FNC tokens, waiting for the RevDis to occur, then removing their staked position, and then repeat the cycle. Thus, RevDis should only be distributed to stakers who are locked for at least 4 weeks.

Flexible staking does not provide much benefit for our ecosystem, however we can leave it as an option for those who want it (although long-term, it is probably best to remove it altogether).

2. Allow claimed FNC staking rewards to receive yield and revenue distributions at staking weight At present, when someone claims FNC as a reward for staking, that reward is locked for 1 year and does not receive any Yield Rewards (APY) or Revenue Distribution (RevDis). We recommend offering yield farming and revenue distribution rewards to those locked reward positions at a weight of 2x like a normal 1 year locked staked position would receive. This will allow stakers to effectively compound their rewards, similar to staking programs such as Illuvium. Note that all yield farming rewards will remain locked for 1 year. Revenue Distribution rewards will be unlocked upon claiming.

We believe that by allowing claimed FNC staking rewards to participate in yield farming rewards and revenue distributions, we can attract more people to our staking platform and also have longer average durations of total value locked.

3. Allow in-game FNC rewards to be staked or claimed as sFNC We believe everyone should have the opportunity to participate in our staking platform. At present, it is very difficult for many players, especially scholars, to stake in a meaningful and frictionless way. In the current structure, players must choose to either claim an airdrop or not claim it, but there is no easy way to stake those earnings and achieve passive income which many players desire.

We are proposing that players will have three options they can pick for their in-game FNC earnings:

Players can choose to claim all or a portion of their in-game FNC as sFNC. Players can choose to stake all or a portion of their in-game FNC as a locked staking position (minimum 4 weeks, up to 52 weeks). Players can choose to opt their in-game FNC rewards out of the airdrop and determine later which of the 2 above options they want. These options will allow players to choose how much of their in-game FNC rewards to claim as sFNC and how much of their in-game FNC rewards to stake before the cutoff period for the airdrop.

We propose that in-game FNC earnings can be staked with the same staking mechanics as our current staking site, with a minimum lock-up period of 4 weeks. The minimum lock period would have a 1.07x weight in the staking pool, and the player can increase (in 1 week intervals) the lock-up period up to 52 weeks which has a 2x weight in the staking pool. Please note that staking yield rewards claimed as FNC are locked for 1 year and RevDis can be claimed as they are received. We also propose that staking be hosted on the Polygon network, so there are minimal gas fees (which can serve as a real barrier to entry for many players).

Players would also be able to claim staking rewards as sFNC instead of FNC which would be available immediately to be spent in-game with no lock-up period. Players that claim FNC as rewards will now receive Yield Farming and RevDis while waiting to be unlocked and will be treated like any normal locked staked position in the FNC only staking pool.

Example 1: Player A has 200 FNC reward tokens available to be claimed for the airdrop period. Player A decides to claim their rewards. Upon claiming, Player A decides to lock their tokens for 4 weeks at 1.07x weight. After 4 weeks, Player A can remove their unlocked tokens or leave them staked to continue receiving yield farming and RevDis rewards.

Example 2: Player B has 200 FNC reward tokens available to be claimed. Player B decides to claim their rewards. Upon claiming, Player B decides to lock their tokens for the maximum 1 year at 2x weight. After 1 year, Player B can remove their unlocked tokens or leave them staked to continue receiving yield farming and RevDis rewards.

Example 3: Player C has 200 FNC reward tokens available to be claimed. Player C decides to claim their rewards. Upon claiming, Player C decides to claim 100 sFNC and lock the other 100 FNC for 4 weeks at 1.07x weight. The claimed sFNC will be unlocked and available immediately to be spent in-game. After 4 weeks, Player C can remove their unlocked tokens or leave them staked to continue receiving yield farming and RevDis rewards.

Example 4: Player D has 200 FNC reward tokens available to be claimed. Player D decides to claim their rewards. Upon claiming, Player D decides to claim sFNC instead of FNC. The claimed sFNC will be unlocked and available immediately to be spent in-game.

We believe that these options will provide players a choice of how much of their in-game FNC rewards they want to stake. Offering everyone, including often overlooked players and scholars, the ability to stake is an important step in making sure we’re all aligned and support the project’s long-term success. Additionally, offering players/scholars the ability to stake their earnings offers them the ability to earn more than what is currently possible in our current earnings model.

4. Replace FNC with USDC and ETH as in-game currencies for all spending activities (while keeping sFNC)

FNC was not intended to be the primary in-game currency token and the recent volatility makes it difficult to maintain our pricing structure. By replacing FNC with USDC and ETH as the primary in-game spending currency (for activities like breeding and future revenue sinks), FNC can achieve more pricing stability. (The team can also consider adding other tokens too, such as MATIC.)

Keep in mind that 100% of all USDC and ETH that will be spent in-game will go to the RevDis Vault which will buy FNC tokens on the open market and distribute those tokens to stakers. Please note that sFNC will still continue to be utilized solely as in-game currency.

For those who would have otherwise used their in-game FNC rewards to spend in-game, they still can. Those players can simply claim their rewards as sFNC and/or stake their rewards and claim the staking rewards as sFNC. For those who would have bought FNC to spend in-game, they can simply use ETH or USDC to spend in-game (which ultimately will be sent to the vault which will buy FNC on the open market).

This change will make FNC act more like a governance token, which has long-term benefits to our project and community. Additionally, adding other tokens that can be spent in-game, such as USDC and ETH can help stabilize the FNC price, which can stabilize earnings to players in a sustainable way.

Posted directly from the Gov forum, written by CleverName: https://gov.fancybirds.io/t/fancy-improvement-proposal-fip-1-staking-fancy-economy-update/84