# Proof-of-Deposit – initial proposal and request for feedback **URL:** \ **Category:** Governance\ **Created:** [March 10, 2022, 4:45pm UTC](https://forum.celo.org/t/proof-of-deposit-initial-proposal-and-request-for-feedback/3041 "2022-03-10T16:45:12Z")\ **Posts on this page:** 1\ **Showing post:** 40
**Author:** ![markbarendt](https://sea2.discourse-cdn.com/flex020/user_avatar/forum.celo.org/markbarendt/32/6778_2.png) [@markbarendt](https://forum.celo.org/u/markbarendt)\ **Post date:** [March 31, 2022, 1:11pm UTC](https://forum.celo.org/t/proof-of-deposit-initial-proposal-and-request-for-feedback/3041/40 "2022-03-31T13:11:30Z")
> [@Pinotio.com](#): > > - Today, locked Celo rewards flow through validators (and are reduced by slashing or downtime penalties), This penalty remains, yes? > [@Pinotio.com](#): > > In the proof of deposit system, cStable holders can deposit (think of it like assigning) their cStables to validators in order to earn interest from validators. There will likely be no required locking period for these deposits (because they don’t contribute to security) so the cStables remain a currency and not a security. From a user perspective, researching and ‘voting’ for a validator seems very, very, problematic to me on a currency that I’m hopefully going to be using to buy groceries and pay rent with, that I’m holding as dry powder ready to invest with. It puts the user of cUSD in the position of having to regularly and constantly keep up with the reward rates available, the go through the process of choosing that validator in Valora and doing the Valora approval or maybe even having to switch wallets… Seriously, would anyone here really do that work once a week or even once a month for your interest bearing checking account at the bank where you keep your fiat money? If I, as a retail user, was expected to do that much work I’d probably be looking for a new bank. Do you really think that work-a-day person in Columbia or the Phillipeans or Eastern Utah has the time or will or understanding to vote on this stuff. Complexity is a bane and this looks like it’s going to be complex to use for non-nerds. I really do see this as a fatal flaw. > [@Pinotio.com](#): > > **Why this could significantly increase cUSD and other cStables outstanding** > Consider cUSD, of which there is about $100M outstanding today. > > … I fully agree that if Celo’s stable coins paid interest there would be much greater demand. This is a truly worthwhile goal. I do think though that the use case must be truly simple to be marketable and gain acceptance. It should not take investment research and maintenance to run an electronic interest bearing checking account. > [@Pinotio.com](#): > > **A thought on the efficiency of staking rewards** > Lots of protocols pay staking rewards (Ethereum PoS, Cardano etc.). Rates are around 5-7% - like Celo. To a large degree, the rate doesn’t matter much though. You own Celo or Ethereum because you think it will 10X or 100X, not because of the 5% yield. So, one can argue that Celo spending lots of epoch rewards to incentivise locking is not very efficient. In other words, locking is - particularly for a smaller protocol - quite inelastic. People lock if the rate is positive but they don’t change behaviour much if the rate is 3% versus 8% on Celo. So, where’s the supporting data for this? To me it seems like a fair number of assumptions and suppositions are being made without much testing/piloting of the idea. I asked above for the results of any modeling and that hasn’t been put forward. I’m going to quote from the other thread where I’ve been conversing with John and Ying. > [@Enhancing Celo's Mission of Prosperity for All](https://forum.celo.org/t/enhancing-celos-mission-of-prosperity-for-all/3181/14): > > I’m going to use a very blunt question to highlight the difference in the philosophy of what we each seem to be expressing. This is by no means meant as an affront to you, it is purely a tool to refine the conversation a bit. > > Are we trying to be Moon boys here in the Celo ecosystem and then move on, or are we trying to create a viable business that we’re going to spend the next 14 years in? I’d like to see this go 14 or 40 years. There are other ways to provide interest to the stable coin holders. --- _[View the full topic](https://forum.celo.org/t/proof-of-deposit-initial-proposal-and-request-for-feedback/3041)._