[Proposal] Implementation of Staked FORTH (stkFORTH)

Ampleforth Governance
1

Intro

FORTH, Ampleforth’s governance token, has long been underutilized, limiting its potential as a cornerstone of the protocol. While it currently serves a governance function, its broader utility has been overlooked, diminishing its appeal and impact. To address this, I propose the introduction of staked FORTH (stkFORTH), a staking mechanism that evolves FORTH into an active, value-generating asset. By staking FORTH to receive stkFORTH, holders will attain enhanced governance power and access to rewards/incentives, revitalizing FORTH’s role within the ecosystem. This initiative aims to increase protocol TVL, foster committed governance participation, and positively influence FORTH’s market appeal/dynamics.

Objective

This proposal seeks to achieve the following:

  1. Revitalize FORTH’s Utility: Enable FORTH holders to stake their token for rewards and increased governance influence, making FORTH a more dynamic and valuable asset
  2. Boost Total Value Locked (TVL): Encourage & Incentivize users to lock FORTH, thereby increasing the protocol’s TVL and signaling confidence in Ampleforth’s future
  3. Ensure Committed Governance: Require governance participants to stake FORTH, aligning their interests with the long-ter success of the protocol
  4. Positively Impact Market Dynamics: Reduce the circulating supply of FORTH through staking, potentially increasing demand and possibly market price.

Proposed Mechanics

  1. Staking FORTH

  • Users can staking their FORTH in a dedicated staking contract to receive stkFORTH
  • stkFORTH will be minted at a 1:1 ratio for each FORTH staked and will be non-transferrable
  1. Governance with stkFORTH
  • stkFORTH will become the primary governance token, meaning only stkFORTH holders can vote on Ampleforth governance proposals
  • This shift ensures that governance decisions are made by participants with a vested, long-term interest in the protocol’s success
  • stkFORTH holders will also have the ability to delegate their voting power to other addresses, maintaining flexibility for those who prefer not to vote directly.
  1. Reward System
  • Stakers will earn rewards, with the specific reward asset determined by community vote/governance. The community can choose between two options:

  1. Option 1: AMPL: stakers receive immediately claimable AMPL tokens as a short-term incentive, proportional to their staked amount.

  2. Option 2: esFORTH: stakers receive escrowed FORTH (esFORTH), a 1:1 redeemable token for FORTH that unlocks linearly over time.

  • If esFORTH is selected, stakers will have two additional choices:

    1. Claim as FORTH: redeem esFORTH for regular FORTH once it unlocks

    2. Compound: Reinvest esFORTH back into their stkFORTH position, increasing their governance power and future reward accumulation

  1. Unstaking Process

  • To exit staking, users must convert their stkFORTH back to FORTH

  • This process triggers a 3-day cooldown period, after which users can claim their unstaked FORTH

  • The cooldown period ensure stability by preventing sudden, massive selloffs

  1. Market Impact
  • By locking FORTH in staking contracts, the circulating supply of FORTH will decrease, which may increase demand and positively influence its market price over time

Benefits

  • Enhaned Utility for FORTH: staking introduces tangible benefits - rewards and governance power - transforming FORTH into a more attractive and functional asset

  • Increased TVL: Staked FORTH will boost protocol TVL, reflecting greater user confidence and commitment to the ecosystem

  • Aligned Governance: Requiring staking for governance ensures that only committed participants influence key decisions, fostering responsible and forward-thinking governance

  • Potential Price Appreciation: Reduced circulating supply through staking could drive demand for FORTH, benefiting holders and the broader ecosystem.

Process Flow

Below is a simplified overview of the staking flow:

  1. Stake: Deposit FORTH → receive stkFORTH (voting power)

  2. Earn Rewards

  3. Receive AMPL (claim immediately, if selected by the community)

  4. Receive esFORTH (claim as FORTH over time or compound into stkFORTH, if selected by the community)

  5. Unstake: Convert stkFORTH → enter 3-day cooldown → claim FORTH

Conclusion

The introduction of stkFORTH represents a pivotal step in revitalizing both FORTH’s role within the Ampleforth ecosystem and the overall governance process. By enabling staking, we unlock FORTH’s potential as a governance and value-generating asset, while strengthening the protocol’s TVL and governance integrity.The community’s vote on whether AMPL or esFORTH will be the reward asset ensures that the system reflects community preferences, with the understanding that this choice will remain in place until a future governance vote decides otherwise. This proposal attempts to offer a clear path to align incentives, fost long-term commitment, and enhance the overall health of the ecosystem. I encourage the community to support this initiative and help shape the future of Ampleforth.

I also encourage the community to review the proposal, share your thoughts, and if this escalates to a snapshot/on-chain vote, to participate in the vote to select the reward asset; making FORTH a cornerstone of the Ampleforth ecosystem once again.

1 Like
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Thanks for the proposal @Guz_MassAdoption. I think there are some good starting ideas here.

Currently the FORTH token provides governance rights over the protocol, and it also provides control over the DAO treasury assets. So, as the protocol fees, LP positions, etc., earn more revenue, that goes to the DAO holders. In theory this all works fine, but there’s potential to make these linkages more direct.

First off, I think we should move away from the idea of inflationary incentives as a core feature of any protocol. I don’t believe it’s in the long term interest of existing holders to continually dilute them like this**. Instead, we can actually leverage the fact that we’re trying to build real products with value, and let some of that value flow more directly to participants. So the first idea of staking FORTH to receive a share of protocol fees, I think is a great idea. It makes this system more concrete than just pointing to a growing treasury.

Secondly, there’s the idea of timelocking to ensure longer term alignment. I’m generally in favor of this idea as well. Making it so only staked FORTH can vote isn’t necessary, though. There is a way to make it so FORTH is still the basic voting token, even when it’s staked. There is open design space, here, but I think simpler is better.

Edit:
** Not to say there should be no inflationary incentives ever, but these are better layered on top and subject to the governance process.

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Thanks for taking the time to offer a thoughtful response!

re: move away from the idea of inflationary incentives as a core feature of any protocol

I completely agree with this and to your later point of utilizing the LVAs as the reward tokens in the form of protocol fees.

re: there’s the idea of timelocking to ensure longer term alignment

I’m partially against the timelocking mehcanism because now it serves as an interference of incentives + needs - or in other words, a misalignment of wants. in fact, the only way i see a timelock mechanism being worth its salt is if there is an early unstaking penalty mechanism which is routed pro-rata to active stakers (retaining that % of liquidity within the protocol). Otherwise, I think the current Geyser setup should suffice - especially for an MVP. User stakes FORTH → receives stkFORTH → longer the user stays staked the higher the multiplier goes (capped at 3x) & receives protocol fees in the form of LVAs as the reward token(s). the only modification i’d propose is the ability to claim the reward asset, instead of forcing the user to first unstake, claim and restake similar to the current process in the geyser (not the best user-experience although i understand the reason why it’s implemented this way).

re: making it so only staked FORTH can vote isn’t necessary…

I agree and thank you for the pushback on this. If its possible to maintain voting capabilities even when FORTH is staked, then that would be great. Simpler is definitely better.

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