The Power of Buybacks: Transforming SD Tokenomics

Utility, sustainability, supply, and security, the cornerstones of robust tokenomics, and Stader’s SD token is a prime example of how these principles come to life.

With over $700Mn+ in TVL and a community of more than 150k+ stakers across 4 PoS blockchains: Ethereum, Polygon, BNB and Hedera, SD has been integral to Stader’s success.

However, SD is no longer just a governance token. It’s evolving to power the next phase of growth for Stader and its ecosystem.

From governance to growth: The journey of SD

SD’s journey has been marked by strategic initiatives that extend beyond governance. Whether it is making SD accessible to all investors demographics by listing on top centralized and decentralized exchanges like Coinbase, Bybit etc. Or creating unique utilities for SD like SD being used as slashing insurance for ETHx permissionless node operators.

That is not just it. SD is coded to grow with Stader’s goals. Onboarding users of all demographics requires partnerships with protocols across the DeFi space. Partnerships with industry leaders such as Ledger, Metamask, Aave, Compound, Pendle, Curve, and Balancer have strengthened Stader’s ecosystem, making its LSTs accessible, rewarding, and utilitarian. These collaborations have driven the adoption of Stader’s LST and SD in the space.

With adoption comes revenue and SD tokenomics aligns very well with Stader’s success across its expanding ecosystem ensuring long-term sustainability and value creation.

At the heart of this evolution also lies a game-changing mechanism: buybacks.

The Buyback Mechanism

A transparent and systematic approach

Buybacks are a cornerstone of SD’s revamped tokenomics. Approved by the StaderDAO, 20% of Stader’s revenue is allocated for quarterly buybacks, creating a regular sink that removes SD from circulation. The result? A reduction in circulation supply creates an SD sink and optimizing the tokenomics.

Completed Buybacks:

1. Buyback 1: On September 2, 2024, Stader conducted its first buyback, with $150,000 worth of SD bought back from the open market.
2. Buyback 2: The second buyback occurred on December 13, 2024, involving $63,500 worth of SD bought back from CEXes and DEXes.

Both buybacks can be transparently tracked via the dedicated SD Buyback Wallet: Wallet Address: 0xEfE40Ff167A89cE3bAbdAd161d41D798Ca7116b2

The Impact of these Buybacks

• Supply Reduction: Buybacks directly decrease the circulating supply of SD, optimizing SD supply in the open market.
• Market Confidence: Regular buybacks signal Stader’s commitment to value creation, fostering trust among token holders.
• Alignment with Growth: By linking buybacks to revenue, Stader ensures that the tokenomics are inherently tied to the platform’s success.

Lessons from Industry Leaders

Buybacks have been a proven strategy among leading Web3 protocols:

• Binance (BNB): Binance’s quarterly token burns, funded by 20% of its profits, have significantly reduced BNB’s circulating supply, boosting investor confidence. BNB Chain recently performed its 29th Buyback and Burn event in November 2024.
• MakerDAO (MKR): MakerDAO uses buybacks as part of its tokenomics. A past buyback resulted in a positive impact on market confidence.
• Aave (AAVE): Aave uses a buyback-and-distribute model, purchasing tokens and redistributing them to stakers, aligning incentives, and reducing circulating supply.
• OKX Token (OKB): OKX employs a similar buyback and burn mechanism, periodically repurchasing OKB tokens from the market and burning them to decrease supply.

These examples underscore how buybacks can positively influence tokenomics by reducing supply, regulating demand, and instilling market confidence.

Potenial Use Cases for the bought-back SD

While buybacks primarily focus on reducing circulating supply, purchased SD tokens open avenues for further value creation, subject to approval by the StaderDAO. Potential uses include:

• Increasing rewards for SD Utility Pool: Enhancing incentives for SD holders who participate in securing the Ethereum network.
• Airdrops for active community members: Rewarding loyal users and fostering engagement within the Stader ecosystem.
• Other initiatives proposed by the community and in line with Stader’s objective to foster growth and innovation and increase value for the users

These initiatives ensure that the benefits of buybacks extend beyond scarcity, driving community participation and network security.

Scaling Buybacks with Revenue Growth

Stader’s upcoming venture, Cabbage, holds the potential to supercharge buybacks. As an AI-powered memecoin trading platform, Cabbage aims to capture a significant share of the $70 billion monthly DEX trading volume in memecoins. As Cabbage grows, its revenue could significantly contribute to SD buybacks, amplifying their scale and impact. This symbiotic relationship between Cabbage’s revenue and SD tokenomics shall ensure that every milestone in Stader & Cabbage’s journey strengthens SD’s tokenomics.

A holistic approach to tokenomics

The SD Tokenomics Reboot isn’t just about buybacks; it’s a comprehensive strategy to future-proof the token. Key elements include:

• The SD Mega Burn: On June 25, 2024, Stader burned 30Mn SD tokens (20% of the total supply), reducing the circulating supply from 150Mn tokens to 120Mn tokens.
• Enhanced Utility: SD now supports Ethereum network security by covering slashing penalties for permissioned and permissionless node operators via the SD Utility Pool.
• Sustainable Emission Caps: Proposed capping of reward emissions ensures SD’s value grows alongside its utility.

Looking ahead: Scaling Buybacks and Beyond

The future of SD buybacks is bright, with Cabbage paving the way with its growth. As Cabbage captures market share and scales its revenue streams, the SD tokenomics is set to optimize even further. This symbiotic relationship ensures that every new milestone in Stader’s journey strengthens SD’s tokenomics.

Additionally, Stader is always exploring new opportunities to bring more value to SD with integrations, partnerships, and new products, bringing more value to the ecosystem and SD holders. Whether through staking solutions, partnerships, innovative utilities, or new products, SD will remain at the core, powering growth and securing networks.

Conclusion: The path forward

Stader’s commitment to SD is a testament to its dedication to creating sustainable, value-driven tokenomics. With two successful buybacks already completed and a robust pipeline of future initiatives tied to Cabbage, the buyback mechanism is set to play an even larger role in shaping SD’s future.

This is more than just a tokenomics upgrade; it’s a transformation. Together with its community, Stader is building a resilient ecosystem where SD holders are rewarded for their trust and participation. As the journey continues, SD will remain at the heart of Stader’s growth — a token that’s not just functional but foundational.

Let’s grow together. The future of SD is now.