Illuvium Staking V2 - What do you need to do?

By Deraji | ILVFi | 5 Dec 2021


Today, I’ll review the highlights and details around Illuvium staking version 2.  This proposal has not yet been accepted, so there may be some changes.  As the details and experiences emerge, I will update this article.  As of December 5, 2021, here’s how Staking V2 is expected to work.  Reach out to me (Deraji#0798) or to the moderators and community on Discord for more support.

Upgrade vs Migration

The most confusing thing about Staking V2 is the use of very purposeful, but potentially vague language.  There are two critical terms in Staking V2 - Upgrade versus MigrationUpgrading refers to a transaction that enables the Staking V2 contract to read your V1 stake, while Migration refers to moving your staked tokens to the new contract.  I’ll give more examples and details to make this clear.  In short - Upgrading enables READING V1 stakes, while MIGRATING completely gets you out of V1.  

You MUST UPGRADE TO CONTINUE RECEIVING YIELD FARMING REWARDS!

One of the most critical aspects of V2 - as of two weeks after V2 is implemented, you must upgrade to continue receiving rewards.  During this two week window, you must complete an upgrade transaction for each core pool in which they are currently staked.  If you have staked tokens in both the SLP and ILV core pools, you must complete a transaction for each pool, regardless of how many times you have staked.  If you are only in the ILV pool, you will have one upgrade.  If you are only staked in the SLP, you will have one upgrade transaction.  If you are staked in both pools, you will have two transactions.

Wait - I’m only staked in the SLP pool, but I have claimed rewards in the ILV pool.  How many upgrades will I need to do?

Here’s where things get confusing.  My current understanding is that “upgrade” only refers to STAKED DEPOSITS, not unvested, claimed rewards.  As yield farming reward claims began in July 2021 and require a 1-year vesting period, all yield farming rewards are currently vesting.  As such, they will be migrated automatically to V2, and will not require a migration or upgrade transaction.  Therefore, if you are only staked in the Liquidity Pool, you will only have one upgrade transaction!  

UPGRADE Key Takeaway - If you want to continue receiving Illuvium yield farming rewards and have staked deposits locked in V1, you must upgrade within two weeks of the V2 implementation to continue receiving rewards.

What is Migrating?

Migrating is the action of removing your tokens from Staking V1 and moving to Staking V2, while retaining credit for your lock-up period.  There are several reasons you would want to do this:

  1. Lower transaction fees for claiming
  2. When claiming, all tokens will be claimed in a single transaction, rather than having two separate transactions if you have pending rewards in both the ILV and Liquidity core pools.
  3. You have the ability to move your stake to a new wallet address
  4. You will retain your pool weight and credit for past lock-up periods

Migrating enables you to receive the benefits above without losing your valuable pool weighting.  Remember, pool weighting is determined by your length of lock-up, from flexible to 1-year under staking V1.  This determines your yield return rate (APY), with 12 month locked tokens earning double those staked flexible.  Pool weight also determines your revenue distribution multiplier, which I covered in my video here.

Key Idea - You can only Migrate unlocked tokens!

If your tokens are still locked, then the confusion around migration does not matter to you right now.  In order to receive the benefits of Staking V2, you must migrate your tokens, and only unlocked tokens can be migrated.  While you MUST UPGRADE, you cannot migrate!  You will still pay higher gas prices to claim, and you cannot transfer your stake to a new wallet.  You can see if you can migrate by going to the Vesting tab in the Illuvium staking dashboard.  If you see “withdraw,” that means you can migrate.  If you see “locked,” you cannot migrate. 

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This only applies to you Deposits, and not your Rewards, as Rewards will be migrated automatically.  You can sort to see your Deposits using the drop downs at the top of the vesting page, selecting Deposit.  You can also select “Unlocked” to see your tokens that are unlocked.  

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Per the recent AMA hosted by Vetemor and Illuvium Moderator, Arash, you must conduct a migrate transaction for EACH STAKING TRANSACTION (video here, and shown at the end).  If you have staked once, you may migrate your stake in one transaction once unlocked.  If you staked twenty times, you will need to conduct twenty migration transactions should you choose to receive the benefits of Staking V2.  Remember, you don’t need to migrate, but you must upgrade!

FLEXIBLE STAKING IS GONE IN V2

Another significant change in staking V2 is that flexible staking is being removed.  One rationale for this change is to solve the potential issue of people staking for a very short period of time around key revenue events, such as the land sale in order to receive revenue distribution.  As of Staking V2, the minimum lock-up time for staking is one month.  For those currently staking flexible in either the ILV or Liquidity core pools, you must remove your tokens and restake in V2 for a minimum of one month to be able to receive rewards.  As there are currently ~280,000 ILV (58%) of the ILV pool and 31,000 SLP (25%) of the liquidity pool staked flexible, we will see shortly what these stakers decide to do.

Scenarios:

Scenario 1: You have 1ILV staked once in the ILV core pool, and you are locked until September 2022.  You never claimed rewards.

  • UPGRADE: Yes, one transaction.  Complete within 2 week Staking V2 window.
  • CLAIM: Not required upon upgrading
  • MIGRATE: You cannot migrate until September 2022.

This is one of the most common situations for Illuvium stakers - a single token locked for a year.  In this case, you MUST UPGRADE in a single transaction to continue earning rewards.  You DO NOT have to claim your rewards as part of upgrading.  You CANNOT migrate until your tokens unlock, so don’t worry about that until next September.  

Should you migrate when you can?  A lot can change by next September, so it’s difficult to say yet.  Factors to consider - what is the cost of the migration transaction relative to your claiming costs?  After V2 rolls out, we will have a better estimate of how much transaction costs have been reduced and if it justifies an extra migration transaction.  

A Big Reason to Migrate - Security

One of the biggest reasons to migrate regardless of cost is security.  If your staking wallet is compromised, it may be worth trying to migrate and move to a new wallet as soon as possible to avoid the potential of your hacker doing the same.  Always remember to be safe and consider using a hardware wallet to stake.  If you did not originally stake with a hardware wallet, it may be worth considering migrating and moving your stake to a hardware wallet regardless upon unlocking in September for added security.  You will be racing against whomever has your private keys to do the same.  Good luck and never share your seed phrase with anyone!

Scenario 2: You have 1.6 SLP staked flexible in the liquidity pool.  You have claimed 3 rewards ILV that are vesting until October 2022.

  • UPGRADE: No - You will need to withdraw and restake in order to continue earning rewards
  • CLAIM: You will need to claim as part of withdrawing
  • MIGRATE: No - just withdraw and start over with Staking V2 at a lower staking fee

Another common situation, you are staked flexible and have vesting reward ILV.  Since staking V2 increasing the minimum staking period to one month, you will need to restake and select a new lock-up period.  Wait until Staking V2 is active, withdraw and stake should you wish to continue yield farming with Illuvium.  Staking fees will be lower in V2, so it is recommended to wait until V2 is implemented to make this move.  Once V2 is out, you will stop earning rewards on your flexible stake.  This scenario is also applicable to those staked in the ILV pool or both pools.

You do not need to do anything with your claimed rewards, as these will automatically transition over to V2 with no action required on your part.  

Scenario 3: You have a single deposit of 5 SLP that were staked for 3 months locked starting in August, which are now unlocked.  You have some vesting rewards.

Now we get more complicated.  You staked once in the SLP for 3 months, but your deposited tokens are now unlocked.  You have a choice.  Staking V2 allows you to maintain your current pool weight, getting credit for your time locked.  There are three options based on what you want to do moving forward.

Option 1: Only Upgrade

Your first choice is to only upgrade.  In this case, you will continue earning rewards at the same 1.25 weight, but you will not be able to move your stake to a new wallet, and your claiming transaction will remain at the higher V1 gas fees.  Why do this? You want to continue earning rewards at 1.25x but also want to maintain the ability to withdraw at any point.

Option 2: Upgrade and Migrate

Your second choice is to both upgrade and migrate.  In this case, you will maintain your 1.25 pool weight, but you will now be able to move your stake to a new wallet, and future claiming transactions will be lower cost.  You will need to claim any pending rewards as part of your migration transaction.  Why do this? You want to continue earning rewards at 1.25x, but you also want the added V2 benefits of lower transaction fees with the ability to move to a new wallet.

Option 3: Withdraw and restake

Your last option is to withdraw your deposit and start over in V2.  The reason to do this would be to receive a higher pool weight.  Let’s suppose you are more bullish on the project now and would like to enjoy a higher yield farming APY and revenue distribution.  In this case, your best option is to withdraw your deposit and restake in V2 with a longer lock up period.  Do not do this with any lock up period lower than 3 months, and likely you would want to lock up for 6+ months to make this worth it.  Your claimed vesting rewards will be moved automatically, so nothing needs to be done with these.  You will need to claim pending rewards with the withdrawal transaction, though future claims will be less expensive in V2. Why do this? You want to continue staking with Illuvium, but you want a higher pool weight than 1.25.  You will essentially be starting over, but earning at a higher rate with lower staking and claiming fees.

Scenario 4: You have three different deposits of varied lock-up periods in the ILV pool, and two unique deposits of varied lock-up time in the SLP.  All deposits are locked until July 2022 at the earliest.  You have claimed and pending yield farming rewards.

  • UPGRADE: YES!  Upgrade in the 2 week window.  You will have two upgrade transactions.
  • MIGRATE: No.  You cannot migrate until July 2022.  See below for more details for next July.
  • CLAIM: You do not need to claim at this time, and you can continue to claim with your current V1 strategy.

You bought in multiple times into each pool.  Your life is complicated.  First and foremost, you will need to conduct an upgrade transaction for each core pool, once for all of your ILV pool stakes, and once for your SLP stakes.  Without upgrading, you will stop earning rewards.

Because all of your deposits are still locked, you cannot migrate at this time.  Once your deposits unlock, you will have the option to migrate them.  You will have a unique migration transaction for each of your deposits.  It is unclear yet if you wait for multiple deposits to unlock if you can move them as a single transaction.  For now, presume if you wish to receive the V2 benefits, you will have five unique transactions to migrate each of your deposits.  It will be up to you whether the benefits of V2 warrant the cost of these five transactions, though you have several months to assess the value of V2 relative to gas fees.

Again, vesting rewards will be moved automatically to V2, so they require no action on your part.  You do not need to claim immediately and can continue with your current claiming strategy and will remain under V1 claiming costs.

Scenario 5: You just bought ILV and are looking to stake, or you’re looking to add a new stake.

So, you just got into Illuvium!  Welcome.  If you’re looking to stake, given how close we likely are to the upgrades outlined above, it seems that the best option is to wait for Staking V2.  Another key aspect of Staking V2 is lower transaction fees to stake.  Given the current congestion of the Ethereum network has made any staking transaction $100+ at most times, waiting is likely the best option for most people.  This also avoids the hassle of the above, not having to upgrade or migrate, and receiving the other benefits of V2 (lower claim fees, ability to move wallets) immediately. 

 

What scenarios did I miss?  Feel free to share your situation below and I’ll do my best to address your questions, or reach out on Discord.  Above all, remember that if you want to keep receiving rewards, you need to upgrade!

Thanks for reading and thanks for your support.

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Deraji
Deraji

Crypto curious thinker, amateur economist, geriatric millennial gamer passionate about Illuvium. Happy to share my economic and financial assessment of this unique blockchain NFT Play-to-Earn project. patreon.com/ilvfi


ILVFi
ILVFi

ILVFI focuses on the upcoming P2E game, Illuvium, the first proposed AAA-quality video game based on blockchain technology and NFT ownership. We'll focus on both the game play, as well as the in-game and ILV governance token economics.

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