Octant GLM Locking Mechanism

TL;DR

INVENTED BY THE GOLEM FOUNDATION
Octant functions as a governance mechanism by allowing token holders to lock tokens, gain governance rights, and influence funding decisions in decentralized systems.

Launched on the Ethereum mainnet on August 8, 2023, it is best known as a platform for participatory public goods funding, developed by the Golem Foundation and created to experiment with decentralized governance and sustainable PGF models. Leveraging 100,000 ETH staked during Ethereum’s transition to Proof-of-Stake, Octant funds recurring rounds where GLM holders lock tokens to earn rewards and governance rights while donations are boosted by matched funding.

WHO SHOULD USE IT?

This type of mechanism is best suited for those who aim to attract long-term participation from those committed to the growth of their ecosystem. It engages public goods supporters who favor direct project funding, with subtle gamification offering the chance for substantial rewards without any risk to their original contributions.

STRATEGY

Octant’s operates through 90-day Epochs. The Golem Foundation stakes 100,000 ETH and allocates part of the staking returns to fund Octant, distributing the funds between User Rewards and Matched Rewards. Users lock GLM to partake in these rewards, which are calculated based on a time-weighted average.

HOW DOES IT WORK?

Users are required to lock a minimum of 100 GLM tokens into a smart contract for a 90-day epoch. The more GLM that is locked, and the longer it remains locked, the greater the rewards and voting power assigned to the participant. This design incentivizes sustained engagement while allowing users to maintain full control of their assets.

The mechanism is non-custodial, meaning users retain complete control over their GLM tokens and can unlock them at any time. However, optimal participation and maximum rewards are achieved by maintaining the lock for the full duration of the epoch. The reward structure operates on a time-weighted average, ensuring that extended and substantial locks yield proportionally higher returns.

Voting power in governance decisions is directly proportional to the amount of GLM locked. From Epoch Two onward, Octant has implemented a “minimal value strategy,” whereby voting power is determined by the smallest amount of GLM held in the lock during the epoch. This approach promotes consistency in locking behavior, as any reduction in the locked amount diminishes the participant’s influence and rewards.

When an epoch ends, participants enter an allocation window during which they can choose to either claim their rewards or donate them to public goods projects. Donations are enhanced through a matched rewards pool, increasing their impact. This model not only rewards individual engagement but also reinforces community-driven funding, aligning participant incentives with broader public goods support.

WHAT SETS IT APART?

Non-Custodial Design

Unlike many staking models that pool assets or require custodianship, Octant’s mechanism ensures that users maintain full control of their GLM tokens at all times and allows flexibility in unlocking funds without penalties.

Time-Weighted Rewards

While many mechanisms reward solely based on the total amount staked, Octant uses time-weighted averages to calculate rewards, which encourages longer-term engagement.While many mechanisms reward solely based on the total amount staked, Octant uses time-weighted averages to calculate rewards, which encourages longer-term engagement.

Minimal Value Strategy

Many web3 platforms incentivize short-term, large stakes. In contrast, Octant calculates voting power based on the minimum GLM locked (starting from epoch 2), encouraging consistent participation and deterring short-term locking and unlocking strategies.

Interactive Allocation Process

By incorporating an allocation window, Octant introduces gamification, enabling users to adjust their funding strategies according to real-time community behavior. Few web3 mechanisms integrate this level of interactivity and flexibility in governance, making Octant’s process both participatory and responsive.