Unlocking higher utility for Stader's governance token | For SD holders
Summary
We’re excited to announce Phase 2 of ETHx tokenomics. Led by the launch of the SD Utility Pool, this is designed to be a positive sum experience for two sets of users: SD holders and ETHx node operators. In this blog, we’ll explore the benefits for SD holders and how they stand to get additional rewards by delegating their SD.
Introduction
At Stader, our aim has been to constantly unlock more utility across our offerings. Our native protocol token, SD, is no different. So far, we’ve explored use cases across governance and DeFi. Liquidity pools for SD are live across our liquid staking solutions, namely Ethereum, BNB, Polygon, etc., with some of these opportunities providing up to 55%+ additional rewards. Over time, we have built a strong community of 15.7K+ SD holders with 33.8M+ SD in circulation.
With ETHx, we continued to uphold the spirit of innovation with the bond requirement of 4 ETH for permissionless node operators. For each validator to run, 0.4 ETH in SD had to be put up as collateral. This has led to more than $2.6M+ in $SD being bonded so far, setting into motion a growth flywheel for SD in Phase 1.
In less than 6 months of launch, ETHx has gone on to become Stader’s largest liquid staking solution by TVL. With 75K+ ETH staked , ETHx currently accounts for 50% of Stader’s overall TVL. Given this steady growth, we’re set to enter phase 2 of ETHx + SD tokenomics.
This phase will be spearheaded by the launch of the SD Utility Pool, a marquee initiative by Stader that unlocks a two-fold opportunity for SD holders; rewards and utility. This Utility Pool enables SD holders to delegate their SD to node operators looking to run ETHx validators. In this process, node operators can continue to have ETH-only exposure, while SD holders (current and prospective) earn rewards on their delegation.
SD Utility Pool
Detailed conversations with two of our key stakeholder groups revealed the following insights.
- SD holders: SD holders want to participate beyond governance and seek enhanced utility and rewards from SD
- Node operators: ETHx node operators want to scale participation but struggle to hold a big governance token position given their treasury management guardrails. They’d like to receive delegation support from current SD holders
The SD Utility Pool unifies two of our key stakeholders in a model that lends itself to both. SD holders can deploy their SD to the Utility Pool while earning double digit rewards. Node operators can then source the SD required for setting up an ETHx validator for a nominal net fee. Our thesis is that as ETHx scales, more node operators will join the permissionless set, fuelling the demand for SD even further and contributing to its growth.
Here’s a simple flywheel visualizing this.
In summary, here is how this plays out for SD delegators.
When the demand for ETHx goes up, more permissionless validators get added to the set to support this demand. As the number of validators go up, the SD Utility Pool sees even more adoption. This leads to validator fees steadily coming in, which translates into more rewards for SD delegators. This further strengthens demand and value of SD, resulting in higher rewards for ETHx stakers across DeFi. Enhanced staking and DeFi rewards further fuel TVL growth resulting in the SD Tokenomics Flywheel.
With the Utility Pool, SD holders can:
- Delegate any amount of SD (with a minimum amount of 1 SD)
- Earn additional double digit rewards
This assigns a key role to SD holders within the ETHx ecosystem, thereby solving for a long standing community request. In the long run, this acts as a lever for increased demand for SD.
Call for delegation
ETHx has continued to grow at a rapid pace in the ~6 months that it has been live on mainnet. A quick overview of stats tells you that it has a TVL of $170M+, 200+node operators and 2.2 M+ $SD bonded. This brings the QoQ growth to 378%.
By the end of H1 2024, the target is to add 3000+ permissionless validators, for which the Utility Pool will serve as a major catalyst. It is also positioned to be a key force in enabling a more engaged community of SD holders by involving members in ETHx operations.
As always, our aim is to continue innovating for you, unlocking more utility and rewards. We invite you to join the SD Utility Pool and make the most of its growth. We’re in the final stage of development and will soon roll the final product out.
If you haven’t gotten SD yet or are looking to top your position up, here’s a list of options for procuring SD.
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