SD Utility Pool: Utilisation Rate Change

Intro

Stader Utility Pool has seen tremendous growth since its inception in early ‘24 with ~90% of the delegated SD from the Utility Pool being utilized by Node Operators, serving as a testament to its efficacy. It has more than delivered on its promise to allow Node Operators to maintain delta neutrality to SD which has been a major blocker for the ones looking to run nodes exclusively with ETH exposure. It is a crucial step in reducing the entry barriers into the Stader ecosystem and the broader Ethereum staking realm in general

Continuing that trend and with the express intent of bringing in more Node Operators into the fold, we are proposing a change to the Utilisation Rate to make it more affordable and competitive vis-a-vis the broader DeFi landscape

Executive Summary

The idea is to effectively bring the rate down to 6% from the current 10% in a staggered fashion to ensure a smooth transition. And here’s how it plays out for different stakeholders

Node Operators: Currently not all Node Operators can access the utility pool at the existing utilisation rate without some SD exposure. This change will significantly increase the coverage thereby making it way more accessible to anyone looking for a delta neutral solution and generating higher demand for the pool

SD Delegators: Delegators will see an increased demand for the pool which would scale up the pool and the overall rewards by extension. In terms of the reward rate, the dip in the organic rate will be offset by the boosted rewards from Permissioned Node Operators which has been live since the start of October and will be activated alongside this change ensuring a stable reward rate

Conclusion

Stader’s tokenomics were always designed to maximise returns for all stakeholders; be it the node operators who can run validators with the lowest bonding requirement or the delegators pooling in their assets to secure the networks. 4.5K+ validators across 250+ Node Operators coupled with our 300+ utility pool delegators are a testament to the success of our approach.

And we are on the path to further decentralization by growing the Stader pie. We would love to continue hearing feedback from the community on our tokenomics. Please share your thoughts here in the forum or in any of our communities across socials!

3 Likes

I do agree to progressively taper SD emissions.

Furthermore, in my opinion, in the medium to long term it should be fully maintained by buybacks.

SD Utility pool is a wonderful sink. I have been keeping it there for 9 months. Obviously sad to see the rate decrease a bit but let’s be it!

Would like to see:

  • SD emissions to keep going down / SD inflation to decrease
  • SD eventually becoming deflationary
  • Buybacks to be higher than 20%
  • Announcement about what Buybacks will be dedicated to.
1 Like

I support this proposal. It’s essential to maintain our competitive edge as the most accessible and cost-effective option, especially with Lido deploying its CSM.

Being a Node Operator in this market is tough, with plenty of highly lucrative and non time consuming opportunities in DeFi requiring far less technical effort. That’s why I believe making NOs experience within the protocol as seamless as possible is always a positive step.

Totally agree medium/long term of the protocol

Thank you for your opinions and your votes. The proposal has passed and it will be executed by the tech team.