Unlocking Higher Utility for SD Token Holders: Quick Snapshot of the Amplified Rewards

Summary

Stader is marching steadily towards its goal of providing a strong protocol token supported by multiple use-cases and stellar performance. It recently announced Phase 2 of ETHx tokenomics led by the launch of Utility Pool — a one-of-its-kind product designed to enhance $SD utility while enabling a more decentralized and secure ETH liquid staking network. In this blog, we shall cover the intent behind the product, rewards profile and special incentives aligned for early delegators.

Introduction

Stader has constantly endeavoured to strengthen its protocol token $SD by adding available use cases & enhancing its utility. We started with governance and built upon it with DeFi integrations. The launch of ETHx further boosted the growth of $SD by requiring every permissionless node operator to lock in a minimum of 0.4 ETH worth of SD per validator. Under this initiative, 2.4Mm+ $SD has been locked in by 225+ node operators.

Stader recently crossed the significant milestone of $500 Mn in TVL. ETHx accounts for 70% of that TVL and shall be at the forefront as Stader embarks on its journey to be a protocol with $1 Bn TVL.

A major lever in this growth shall be the launch of Utility Pool, an initiative rewarding $SD holders for contributing to ETH decentralisation by supporting permissionless node operators. Through Utility Pool, SD holders can assign their SD tokens to node operators who wish to utilise the same to cover the bond requirement for their ETHx validators. This arrangement enables node operators to maintain exposure solely to ETH, while both existing and new SD holders gain double digit rewards for their contribution to ETH decentralisation.

Pool economics & early bird boost:

SD Utility Pool shall generate high double digit rewards for the delegator. These rewards shall be generated from two sources:

• Utilisation fee: The node operators shall be paying a utilisation fee of 10% for the SD they use. The net rewards accrued shall depend on Pool utilisation. At 90% utilisation, that would be: 90% pool utilisation * 10% rewards = 9% net APR.
• $SD Emissions: Stader shall release early extra 11,500 $SD in the launch month to incentivise the early delegators. That means an annualised rewards rate of 30% at 500k $SD in the Pool and 10% at 1.5 Mn $SD.

The two sources combine to give rewards of ~40% and more for early joiners.

Let us understand this with an example.

Why delegate to the SD Utility Pool?

The SD Utility Pool is a unique, first-of-its-kind opportunity in the Ethereum LST space that is rewarding protocol token holders for contributing to the decentralisation of Ethereum. The node operators shall be required to pay a utilisation fee for the SD that they bond from the Pool. This fee and the additional SD emissions for early adopters shall be added back to the pool, resulting in a strong double digit reward for SD delegators to the utility pool.

Depositing to the SD Utility Pool unlocks the following benefits for the delegators:

1. Contribution to ETH decentralization: SD deposited by delegators will be utilised by ETHx node operators to spin validators, reducing the capital required and eliminating the governance token exposure. This will enable more validators to enter the ETH ecosystem, thereby reinforcing decentralization.
2. High double digit rewards — Delegators shall receive consistent double digit rewards with no lock-up. The rewards are generated via the utilisation fees of 10% from node operators and guaranteed 10% additional rewards for early adopters via $SD emissions.
3. Greater value accrual to SD — As more SD gets locked in by permissionless ETHx node operators, SD will accrue greater value. This will enable higher incentivization via SD for ETHx users, increasing demand for ETHx. The increased demand would grow the ETHx TVL, creating greater demand for the SD in the utility pool. This virtuous flywheel will in turn benefit SD holders.

Additional resources:

The SD Utility Pool is intended to be as intuitive and easy to use as possible. A seamless and intuitive UI has been developed to assist SD delegators with the delegation, withdrawal and claims process.

The delegators can start with as less as 1 $SD. There is no lock-in period, meaning a withdrawal can be requested at any given time. The request shall be fulfilled by the unused SD in the Pool. In the unlikely event that a request is unfulfilled for 10 days, the treasury shall step in to inject liquidity into the Pool.

The delegators shall, however, need to wait for a unbonding period of 7 days before which the tokens can be claimed.

Detailed guides have been prepared for the deposit, claiming and withdrawal processes and can be accessed here.

Call for delegation:

By mid-2024, we aim to integrate new 3000+ permissionless validators, with the Utility Pool playing a crucial role in this expansion. This initiative intends to foster a deeper involvement of SD holders in the ETHx operations and building a more active community.

Stader remains committed to enhancing the value and rewards for our holders through continuous innovation. We encourage you to become a part of the SD utility Pool to leverage its upcoming growth.

For those looking to acquire SD or wishing to increase their holdings, we have compiled this list of avenues for obtaining SD.

You can also stay informed about the progress by sharing your email us here. For any enquiries or feedback, we welcome you to join us via Twitter, Discord or Telegram.