Proposal Summary

This proposal, designated as the first Falcon Improvement Proposal (FIP-1), introduces a new Prime FF staking mechanism with a minimum 180-day commitment period. The goal is to better align governance power and yield rewards with Falcon's long-term vision by incentivizing dedicated participation. Key changes include:

1. A new Prime FF Staking (sFF-prime) pool offering 5.22% native FF yield for a minimum 180-day locked stakes
2. 10x voting weight multiplier for Prime FF stakers in Snapshot governance
3. Reduction of the existing Flexible FF Staking (sFF) pool yield to 0.1% without lockup duration
4. Native sFF-prime and sFF yields are subjected to changes based on protocol development and market conditions
5. Removal of the 3-day unstaking cooldown period across both pools

Voting Options:

• For (Approve the proposal)
• Against (Reject the proposal)
• Abstain

Voting Starts: Dec 13 Voting Ends: Dec 15 Integration: After approval

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1. Introduction & Rationale

Falcon Finance was built on principles of stability, innovation, and community-driven decision-making. As DeFi evolves, recent market events such as volatility in stablecoin ecosystems, risks associated with leveraged looping strategies, and the influx of mercenary capital seeking quick yields have highlighted the need for stronger alignment between token holders and the protocol's long-term success.

In particular, short-term yield farming and governance participation by transient actors can distort decision-making, prioritizing immediate optimizations over sustainable development. This proposal addresses these challenges by incentivizing long-term holding and voting.

By rewarding participants with a genuine commitment to Falcon's growth, spanning months rather than days, we ensure that governance reflects a medium to long-term horizon. This not only reduces the influence of mercenary capital on FF token governance and yields but also builds resilience against market manipulations, ultimately benefiting the entire ecosystem.

2. Proposed Changes

We propose the implementation of a dual-staking model to cater to different participant commitments. The below yields are subjected to changes based on protocol development and market conditions.

A. Staking Pool Configuration:

• Flexible FF Staking (Flexible Commitment):
  • Lock-up Period: No lockup (Flexible staking/unstaking)
  • Token: sFF
  • Proposed Native FF Yield: 0.1% (new adjustment)
  • Purpose: Provides basic liquidity and allows for flexible participation
• Prime FF Staking (Long-Term, Aligned Commitment):
  • Lock-up Period: 180 days
  • Token: sFF-180
  • Proposed Native FF Yield: 5.22%
  • Purpose: Incentivizes and rewards long-term alignment with the Falcon ecosystem.

B. Enhanced Governance Power:

• To ensure that long-term stakeholders have a more significant voice in governance, Prime FF tokens (sFF-prime) will be granted 10x the voting weight of Flexible FF tokens (sFF) on Snapshot.
• Example: A holder with 100 sFF-prime will have the voting power equivalent to 1,000 sFF.

C. Removal of Unstaking Cooldown:

• The previous 3-day unstaking cooldown period will be removed entirely. Stakers can unstake at the end of their commitment period freely without delay, improving capital efficiency.

3. Justification & Expected Outcomes

• Stronger Governance: By weighting votes towards Prime FF stakers, we ensure that key decisions are influenced by community members with a vested, long-term interest in Falcon's success
• Reduced Mercenary Capital: The high yield for the 180-day lock-up discourages short-term farmers seeking quick exits, promoting a more stable and committed token holder base
• Clear Incentive Alignment: This dual-pool system clearly distinguishes between flexible participation and deep, long-term commitment, appropriately rewarding each

4. Next Steps & Voting Options

Falcon's strength lies in its community of aligned builders and holders. By approving FIP-1, we reinforce a governance model that rewards conviction over convenience, positioning Falcon Finance for enduring success.

• Vote For to approve the implementation of FIP-001, including the sFF dual-staking model, the new yield rates, the 10x voting power for Prime FF staking, and the removal of cooldown period
• Vote Against to reject these changes and maintain the current staking configuration.

Upon a successful vote, the Falcon team will deploy the necessary smart contract updates.

Let's build a stronger, more aligned future for Falcon Finance together 🦅