BeethovenX

Background

When Beethoven X DAO assumed control of sFTMx, it was on our roadmap to run our own validator. Running our own validator has the advantage that we can delegate a portion of the deposited FTM from sFTMx to this validator and earn additional revenue. It was the plan to wait for the Sonic upgrade to be available for Fantom Opera before we would take on this project.

Now that the upgrade to Sonic is imminent, we propose that the treasury funds such a validator. Note, even if we run our own validator, we still want to keep spreading the underlying FTM from sFTMx to multiple validators to keep the network decentralized.

To run a validator and participate in securing the network, the validator needs to stake a minimum amount of 50k FTM (so-called self-stake) and lock it for a year. It can then receive 15 times the self-stake amount as delegations and earn additional rewards on delegated FTM.

A validator earns ~6% APR (currently 6.33%) on the self-staked FTM and in addition receives 15% of the rewards of delegated FTM.

In total, a validator with 50k self-stake and maximum delegations (50000x15=750k) earns 3165 FTM (50000x0.0633) plus 7121.25 FTM (750000x0.0633x0.15) = 10286.25 FTM per year (7200 USD at 0.70c)

The reward scales linearly with more FTM staked and delegated. Because more staked and delegated FTM does not need more compute or storage resources, net profit increases with more FTM staked or delegated.

The system requirements are not yet released, but if you follow the announcements and news, requirements for compute and storage are drastically decreased with the Sonic upgrade. For the Opera version of Fantom, a validator costs around 6k USD per year on AWS. We believe that the operational cost for a Sonic node is far below that.

Given the FTM we have in our treasury as well as our current delegation distribution of sFTMx, we propose to self-stake 100k FTM to our validator which will in turn allow us to delegate a total of 1.5M FTM from sFTMx. Once the validator is fully delegated, estimated revenue is 20572.5 FTM per year.

We can decide at a later point to self-stake more FTM and delegate more FTM from sFTMx to our validator with another BIP.

The validator will also be able to use the delegated FTM as voting power in Fantom governance. We propose to replicate the Fantom governance votes in Snapshot for maBeets holders to determine voting power allocation, effectively allocating the staked FTM voting power to maBeets holders.

Impacts/Risk

Since we expect a new chain to be launched in fall, the validators for Fantom Opera will become obsolete over time. We do not know how a possible migration of staked and locked FTM will look like or whether it is even possible.

The self-staked FTM is locked for a year but could be withdrawn early by paying back a portion of the already earned rewards.

Specification/Execution Plan

Once the Sonic upgrade is live, we will spin up a validator node. We use 100k FTM from treasury to self-stake and gradually delegate FTM from sFTMx to the validator until maximum delegation is reached. Operational cost of the validator will be covered by the infra BIP.

Approval of this BIP will also allow us to decommission the validator on Opera and spin up and fund a new one on the new chain once it is live.

*Please see the below Discord link for discussion