[Soft Proposal] Sunset BNBx (The BNB LST)

Non-grant related Proposals
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Intro

This is a soft proposal aiming to gather some community feedback around a potential sunset of the BNBx liquid staking token. While BNBx successfully provided a secure staking option, the current market environment favors consolidation making this the ideal time to wind down operations and focus resources on high-performing product lines.

Summary

Maintaining a secure, high-uptime LST requires significant technical oversight and continuous integration work which is hard to justify at the current scale; especially when viewed from the org perspective (BNBx represents ~2% of the Stader TVL). These are the broad factors that have been taken into consideration

  • Operational costs around maintaining the smart contracts, delivering upgrades, managing security audits, oracle maintenance, external monitoring etc

  • Risk Mitigation: Each supported chain introduces unique smart contract and infrastructural risks and by sun-setting the lower-volume LSTs, we reduce the surface area for potential technical vulnerabilities

  • There are also broader downstream ecosystem risks to consider when it comes to low trading volume LSTs. For starters, the token is susceptible to price manipulation, which could lead to bad debts in lending protocols like Venus when used as collateral.

  • Consolidation of the BNB DeFi Market: The BNB Chain ecosystem has reached a stage of maturity where liquidity is naturally gravitating toward a few primary protocols. While BNBx remains a stable product for now as further consolidation happens, smaller-cap protocols will find it harder to survive by the sheer nature of the industry’s unit economics

  • Prioritizing User Liquidity & Experience: Stader remains committed to being a Security-First protocol. Sunsetting the product now while market conditions are relatively stable is a proactive measure to ensure all holders can exit smoothly. We would be able to facilitate a controlled redemption process which ensures every user can reclaim their native BNB at the full accrued exchange rate hassle-free

Conclusion

When synthesized, these factors indicate that sunsetting is the most prudent and conservative path forward. Given the current trajectory of the DeFi ecosystem, which continues to lean heavily toward Ethereum-centric scaling; the operational risks and resource demands of maintaining BNBx far outweigh the potential rewards. Even under the most optimistic future scenarios, the opportunity cost remains too high and our focus is better served by reinforcing our offerings in the ecosystems where Stader’s impact and growth potential are already proven.

Would love to hear the community feedback for the same and in case of alignment, we will detail out the next steps

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It is sad to see that staking rate in BNB sucks so much, haha.

It also seems Binance only supports its own products. BNBx was a great product but it didnt take off.

at this point I agree that if the cost of the smart contrats and the maintenance is bigger than the revenue, it should be shut down.

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Thanks for update!

Any idea when this sunset thing might kick off

and what steps we’ll need to take as BNBx holders? :thinking:

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Honestly, this makes total sense. Looking at the numbers (2% of TVL), it doesn’t seem sustainable to keep burning resources on audits, maintenance, and risk management for BNBx.

It’s better to cut the distraction and double down on the chains where Stader is actually winning. Fully support the consolidation.

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Given initial community feedback after 11 days of opening the topic, we are now escalating the proposal for an onchain vote on Snapshot platform:

https://snapshot.org/#/s:staderdao.eth/proposal/0xffbe5dd0c8b82da008454e1070aaea0083957939dabd8d729cff20f8c45e0119

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Thanks for the feedback folks. And thanks @Gonemultichain for taking it to the next step. This is what we have in mind for the next steps should the vote pass

  • Disable Deposits: Disable the minting of new BNBx immediately (~ end of Jan)

  • Initial Redemption Window: The unstaking portal will initially remain open for a couple of weeks (till mid-Feb), allowing users to withdraw their BNB as usual; which means a 5-7 day queue

  • Post these 2 weeks, all the BNB will be withdrawn from the validators (at which point the exchange rate freezes and will be final) and all unstakes will be instantaneous

  • But in order to withdraw all the BNB at scale, we would need to enact a 20 day freeze (from mid-Feb to first week of Mar) on withdrawals post which the instant withdrawal would kick in

  • Redemption Grace Period: Post the 20 day freeze, the unstake UI will be active again for 6-8 weeks (from start of Mar to end of Apr) to allow users to withdraw BNB at the final exchange rate

  • Post that, the UI will be taken down but users can always withdraw via the contract

  • A detailed “withdrawal guide” will be provided to help users with this 3-step process which will be active for the foreseeable future

We will maintain active comms through every step of the process and as always any feedback is appreciated