# Staking Is Committing

## Let's Transform The YOU Staking

In the youves vision [(see Medium post)](https://medium.com/@youves/shoot-for-the-stars-with-youves-our-strategic-vision-%EF%B8%8F-552635fd4603), the rationale for a transformation of the current YOU staking mechanism has been discussed.

A few months ago, a draft proposal had been published on the youves forum ([see youves forum](https://forum.youves.com/t/retracted-migrating-to-a-new-you-staking-pool-contract-and-a-new-dao-contract/79/1)) in order to get first feedback from the community. Not everyone was agreeing with the proposed draft. There were discussions taking place on Telegram and Discord too. Furthermore, Youves core contributors did discover potential challenges and discussed improvements on a technical, but also on a conceptual level.

This resulted in an improved proposal for the transition and future setup, which will be kicked off with YIP-04, a youves improvement proposal which injected a few hours ago and is now up for voting.

This post should inform you about the ideas and these upcoming governance proposals. Let's dive into the thought process behind the upcoming changes:

#### Separate Commitment Pool and Bailout Reserve

In the earlier proposal for a new YOU staking contract, it was the idea to have the bailout mechanism in the same smart contract as the staking and reward mechanism. During contract development, the complexity to handle both did increase. In the final version, even though the security audit was sucessfully passed, hands on testing revealed an effect that could lock up some YOU tokens without anyone being able to access them. While this effect could only be detected if the pool was exposed to unlikely bailouts and rewards, it was decieded that we shouldn't set on such a design.

In parallel, other voices came up, with the opinion, not to use YOU tokens for potential bailouts, due to the current size of the YOU market, which would set a de facto cap to any potential bailout. Instead of holding YOU tokens for potental bailouts, it would be more suitable to use a basket of liquidity tokens representing stable tokens (eg. uUSD and USDT) and volatile tokens (eg XTZ, YOU, tzBTC).

Considering all the lessons learned and the thoughtful arguments, Youves core contributors from Ubinetic came up with the idea to seperate the Staking Pool with it's rewards and the Bailout reserve into separate contracts:

1. A **Commitment Pool** contract, where users can stake YOU tokens and earn rewards. The longer these stakers commit their tokens, the bigger their rewards and the bigger the governance vote weight of their stakes.

2. An improved version of the current **Reward Collector** contract. This contract collects the rewards of all engines and swap contracts and is capable of triggering swaps and forwarding tokens via a lambda. This contract is already being used, but can be improved.

3. A separate pool of funds reserved for a potential bailout, the **Bailout Reserve** contract. This contract can receive tokens from the rewards collector and it can execute lambdas. With this functionality, YOU stakers, via governance vote, can decide on how the Bailout reserve will be composited, what amount should be reserved and how it should be used.

#### Only use rewards as Bailout Reserve, don't tap user's stakes

In contrast to the previous design where also user's funds could be tapped to fund bailouts, the new setup plans to only use rewards to pay for bailouts. Some of the rewards can be moved to the Bailout Reserve, where they can be held in any composition and volume as the community decides. While this means that rewards to stakers will be reduced until the Bailout Reserve reaches the desired size, it also means that YOU stakes from users will not be touched for Bailouts.

#### Hand over the composition of the Bailout reserve to the community

The Bailout Reserve pool can hold any FA1.2, FA2 tokens or XTZ. It has an execution entrypoint that allows the admin of the Bailout Reserve pool to move or swap tokens in a very flexible way. The admin of the reserve pool will be set to the new DAO.

The youves community can decide what tokens will be held. Core contributors will do an initial proposal, that aims for a final pool composition of a certain size, held in stable and volatile assets. Preferably, the Bailout Reserve will hold liquidity tokens like yTEZ (uXTZ/XTZ), Sirius (tzBTC/XTZ) or uUSD/USDT LP tokens. This would also help to increase the overall liquidity on the platform.

Once a bailout is decided, the youves community can, via execution lambda, unwrap these tokens, swap them on a decentralized marketplace

## Changes ahead

The ideas outline above will be implemented with a series of changes, dependent on the approval of the youves community. These will be the necessary steps:

### 1. Deploy a new commitment pool and a new DAO contract (done)

Because the DAO contract has a set voting contract, which is the YOU staking contract, a change of the YOU staking contract also enforces a replacement of the DAO contract. Youves contributors have already deployed a replacement DAO contract and the new Commitment Pool.

New DAO: [KT1ENJfVK98HTRfxjFKPqu1R7tFwXVjmLAo2](https://tzkt.io/KT1ENJfVK98HTRfxjFKPqu1R7tFwXVjmLAo2/storage)

This DAO contract is identical to the previous DAO contract `KT1C3T98TqCm38cHPauZ4SopkQ4torCsxgab`. As `voting_contract` the new Commitment Pool is set `KT1T3BFEu9WSQyRuV9Fyd7SqTU4rW3ptJ3NN`. This means that stakes from the new Commitmenet Pool will be allowed to vote on proposals on this new DAO contract.

New Commitment Pool: [KT1T3BFEu9WSQyRuV9Fyd7SqTU4rW3ptJ3NN](https://tzkt.io/KT1T3BFEu9WSQyRuV9Fyd7SqTU4rW3ptJ3NN/operations/)

The Commitment Pool is a stripped down version of the bailout pool, which was developed, tested, audited in the last months. It's functionality is descibed in the [youves forum](https://forum.youves.com/t/yip-4-commitment-pool-and-new-dao/120). Documentation in the youves docs will follow and the code is published here: https://github.com/youves-com/youves-smart-contract/blob/main/contracts/tracker/commitment_pool_v2.py.

### 2. Conclude YIP-4 to propose admin to the new DAO (ongoing)

The new DAO `KT1ENJfVK98HTRfxjFKPqu1R7tFwXVjmLAo2` must be set as admin, first on all flat curve contracts and all other contracts which only accept one admin (engine contracts in contrast can have more than 1 admin). The DAO contract will need to accept this administrator proposal in another, future YIP proposal in order to be functional as admin.

In the same YIP, the `max_release_period` of the current YOU staking pool will be set to `1`, which allows stakers to immediately withdraw their YOU tokens and receive the full rewards. This unlocks all current stakes and stakers can withdraw their YOU and their rewards in order to deposit them in the new staking pool.

### 3. Remove old DAO and set new DAO as admin via youves keyholders

Once the community accepted YIP-4 and signalled their acceptance of the changes, the Youves keyholders will remove the old DAO as an admin from all remaining contracts, which include all engines, farms, savings pools, legacy pools etc. Also, the youves keyholders will set the new DAO as admin the same contracts.

### 4. Conclude another YIP to accept administrator

In parallel, another YIP will be concluded which accepts the DAO as administrator for those contracts which only allow one admin (flat curves, checker CHF).

### 5. Deploy new Reward Collector and Bailout Reserve pool

A new reward collector will be deployed, replacing the current reward collector [KT1KXvsh7vnPUkBj1oG1E3LUoFnKHsf7Wixo](https://better-call.dev/mainnet/KT1KXvsh7vnPUkBj1oG1E3LUoFnKHsf7Wixo/storage). The new reward collector has the ability to delegate XTZ and earn baking rewards and it has the ability to not only swap tokens to YOU and forward them to the YOU staking contract, but it can also split off rewards and set it to the newly deployed Bailout Reserve pool. With these two contracts and the DAO set as admin, the youves community will be able to govern and adjust the reward distribution and the bailouts reserve to the platform needs.

### 6. Move all remaining rewards to the new Reward Collector and split off 50% for the new Bailout Reserve Pool

Once the new Reward Collector and the Bailout Reserve pool is ready, the remaining funds on the reward collector and some minor amounts on previous contracts will be moved to the new Reward Collector, from where 50% will be sent to the new Bailout Reserve pool and the rest will be used for YOU buybacks to the new Commitment Pool. This will give initial liquidity to the Bailout Reserve pool.

If you inspect the current reward collector, you will find that there is an amount of tzBTC, which was not yet swapped for buybacks. The reason here is that tzBTC in the past was not able to keep peg with Bitcoin and the rules defined for buybacks were not met to swap these assets. As there will be a new tzBTC - XTZ bridge soon (see [tzbtc.io](https://tzbtc.io/tzbtc-2-0/)), it is expected that the price of tzBTC will be close enough to the price of BTC, so these remaining rewards can also be swapped and used for buybacks.

### 7. Frontend

The youves core contributors will ensure that users can easily withdraw their YOU stakes from the old contract and deposit them into the new contract using the youves frontend. It will also be ensured that the old YOU staking contract will be accessible from the frontend just like any other legacy contract.

All youves community members are invited to join us in the community chats on Telegram and Discord, where you will find answers to possible questions and where you can discuss this transition.

Remember, this is a necessary transition in the path that was outlined in the vision, published last year [on Medium](https://medium.com/@youves/shoot-for-the-stars-with-youves-our-strategic-vision-%EF%B8%8F-552635fd4603).

Thank you for your ongoing support!