Currently, the deepest SD<>ETH Liquidity Pool (and second deepest SD LP overall) is sitting in this 80/20 Balancer pool: Balancer
This 80/20 Balancer pool represents smaller IL risk and bigger exposure to SD than a 50/50. (Read more about Balancer Weighted Pools here Weighted Pools | Balancer).
Pool metrics at the moment of writing this proposal:
TVL: $617k
SD TVL: $493k
ETH TVL: $124k
LP rewards ranging 10% - 26%.
Proposal
This proposal aims to migrate the rewards given to incentivize a deep liquidity from the abovementioned SD<>ETH pool to a new one paired with ETHx. The main goal behind this:
Increase the native rewards of the pool, getting exposure to ETH native rewards for the 20% of the ETH side in the pool.
Also, the current incentives dedicated to the SD<>ETH 80/20 pool would be redirected to the new SD<>ETHx 80/20 pool when deployed, if this proposal were to pass the Stader DAO vote.
Until then, the current SD<>ETH pool will continue being incentivized as per usual.
Liquidity on ETHx/ETH is sufficient, but I am wondering if this will stop people from buying SD as it’s an extra swap they have to perform. Will the SD buyer have more slippage overall if we pull liquidity away from ETH?
I do see we have 1,2M in liquidity on SD/USDC, which is nice.
In general i am for but I would like to hear other peoples thoughts.
Any thoughts on a multi- token pool? I like the idea of adding Ethx, Eth, and SD to the mix. Maybe 10/10/80 or 15/15/70. I wouldn’t add USDC due to increased IL risks.
Another option would be to incentivize both pools.
Good point, but the swap fees ETHx<>ETH are so low, and the pool so deep (especially as we grow) that team does think that it will not significantly deter anybody from buying.
Although ETH makes up a “residual” part of the LP due to the weighting (btw love the Balancer design to reduce IL for these kind of tokens), migrating to ETHx means optimizing capital efficiency with some organical yield from ETH staking rewards, while also deepening the inherent bond between SD and ETHx.
Regarding @randomtard comment about if it could dissuade people from buying SD, my opinion is this is highly unlikely.
If we look at the 2 biggest SD LPs from TVL perspective, we can clearly see that UniSwap SD/USDC LP has a much higher volume than SD/ETH 80/20 pool. On top of that, as you have already mentioned, nowadays majority of big buys are done through aggregators, so even if someone wanted to swap directly ETH for SD, the impact would be minimal.
Worth mentioning that this pool is the closest “SD staking” we have so far. I actually rather not launching SD staking to be conservative about any future regulatory risks, and keep the incentives flooding into this pool.
Therefore, optimizing the yield and getting involved Stader’s flagship product, ETHx, is a no brainer.
We fully support this proposal. Linking $SD with $ETHx, unquestionably enhances the growth of the protocol. As mentioned by other community members, the profound liquidity of ETHx/ETH on-chain — with 20k on Uniswap, 4M on Curve, and 15M on Balancer — effectively minimizes slippage for anyone with ETH looking to gain exposure to ETHx. Notably, for the Balancer pool, 0x4a8feb0e61a39b331d143cd597982a6819e0bcf9 recently deposited over 8M LP, resulting in a significant surge in its TVL.