Stader's Real Yield Incentive

Stader is almost ready to launch $SD Staking and is working out the kinks before the official launch. While we move to the Phase 3 of decentralisation, we want our community to help suggest what % of the protocol revenue should be shared with stakers? A percentage that would be a sweet spot between:

  • The incentives for the community and,
  • The revenue for further expansion

Looking forward to your suggestions!

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Hi Aditya,
this is very interesting. Sharing here some thoughts.

IMO There are two ways to calculate the revenue sharing SD should have:

  1. Top-down
  2. Bottom-up

TOP DOWN

Top-down would be to choose it based on % number vs a benchmark of what other protocols do. Let’s see:

Balancer

75% of protocol revenues collected by the protocol will be distributed to veBAL holders.

The other 25% of the fees will be kept by the DAO treasury as a reserve.

CRV

Every time a trade takes place on Curve Finance, 50% of the trading fee is collected by the users who have vote locked their CRV.

GMX

GMX is a decentralized perpetual exchange.

When staking GMX, 30% of the revenue is paid to GMX stakers.

Synthetix

Synthetix is a decentralized finance protocol that provides on-chain exposure to a wide variety of crypto and non-crypto assets.

yield. The company shares up to 100% of the revenue with the stakers.

Dopex (DPX)

Dopex is a decentralized options exchange on Arbitrum

70% of the fees go back to the liquidity providers, 5% to delegates, 5% to purchasing and burning the protocol’s rebate token rDPX, and 15% to DPX single-sided governance stakers.

Gains Network (GNS)

Gains Network is the decentralized protocol behind the perpetual and leveraged trading platform gTrade.

In total, 40% of the fees from market orders and 15% from limit orders are allocated to GNS single-sided stakers.

UMAMI

Another Arbitrum protocol, Umami is a market maker and liquidity provider that helps partner protocols rapidly scale their liquidity.

By depositing one’s Umami for mUmami, holders can earn 6% APR, denominated in WETH, from Umami’s treasury and protocol revenue.

“Each $UMAMI token represents a fixed claim on Umami’s governance and protocol revenues,” states its tokenomics page. “It can never be diluted away by inflationary emissions or capital raises.”

Top Down Conclusion

30% GMX, 50% CRV, 75% BAL, 100% SNX and others…

BOTTOM-UP

Bottom up would be to work our way to a revenue sharing % by understanding"

  1. how much is Stader’s ARR at current TVL
  2. what % of SD token is likely to be staked
  3. SD token price
  4. circulating supply

These factors impacts the final APR % that the end user will see.

(we could, again, benchmark that APR % with what other Real-Yield protocols are having).

Example, dummy numbers:

  • 2 million ARR.
  • SD token price 0.40 and circulating supply is 10 million, putting mcap at 4 million.
  • 50% of the SD tokens will get staked.

In that case, the APR will be (2 million * % revenue sharing given) / (50%* 10 million * $0.40) .
APR = 2,000,000*RSR / 2,000,000 → APR = RSR.

With those paameters, APR would be equal to the Revenue Share offered. I consider that, if paid in stablecoins, anything 10% or above is an incredible yield, especially given the fct that staking is a very stable business model. Nowhere you would find a “dividend aristocrat” stock giving you 10% dividend.

Ofc, on what I just did is important to do a sensitivity analysis and see how the APR evolves as the 4 parameters outlined above evove (e.g price fluctuation, more tokens get unlocked, etc etc)

6 Likes

What a great news!

Tuning on revenue sharing is great because we can ride the wave of “real yield” protocols.

Most protocols demand more than “just stake” to get access to the protocol fees. They demand time-locks / ve model.

Some protocols do have “normal staking” and “time-locked’, and give more revenue share for those that do time-locking. I do believe this is something worth exploring.

I agree with @gonemultichain that anything double digit, if paid in stablecoin, is a godsend.

What about doing a revenue sharing that increases with time?

E.g first 6 motnhs will be 10%, next 6 months 10% … and will incrase at this pace until reaching 50% revenue share in ~3 years.

3 Likes

Thank you for sharing this amazing info and your thoughts.

I know one more protocol with real yield:
MintDAO is B2B NFT launchpad sharing 75% of the collection revenue in USDC with MINT stakers.
There Are going to be only 5’000’000 MINT tokens, but still, no TGE after the terra crash so we can’t know the price of the token, have no actual numbers of how much money is in the Treasury and don’t know the real staking APR still.

Can you please explain in simple words what is your proposal for % of revenue sharing?

And I have a question for the Stader team, do you @Aditya have any suggestions on what % of the revenue you are ready to share with your most beloved supporters that had follow you since Terra until now and forever :smiley:

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thanks a lot for your comment.

We are now listening to community on what % they think APY and/or revenue sharing should be.

Expect news soon!

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I think we lack for the information to make such decisions.
What Is Stader`s revenue until today on each of the chains?
Quarterly or yearly? Give us a taste to understand what we are dealing with.

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will the yield be paid in stablecoins? because if it is paid in 6 different coins (BNB, MATIC, HBAR, LUNA, NEAR, FTM) it will be very cumbersome.

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It will be paid in SD tokens.
Stader will buy SD tokens in the open market to pay that yield.

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Why not distribute the staking rewards in USDC?

Real yield means distributing yield in asset not issued by protocol (e.g. USDC/ETH/…).

The issue with distributing yields in SD is that the buy-backs may be outweighed by the SD dilution. E.g. FTX has been buying back FTT for years but FTT price remains depressed.

On the other hand, if we were to offer yield in USDC, SD price will go up significantly which will allow treasury more flexibility in releasing SD into the market.

In order to decide on the percentage of revenue to be distributed to SD stakers, we will need to know the current ongoing expense incurred by Stader. Could the team provide more colours on this?

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Hi @emanuel, thanks for your message. You cite FTT as a “not so good example” or buyback. but for instance BNB token is bought from open market with same mechanism for their quarterly burn, and the effect in BNB price is unquestionable. So I am not sure that paying the yield in USDC vs paying it in SD token will make a difference on SD token appreciation (I contend that both would have the same effect).

Let’s see what more users think! I love these kind of debates!

I would argue that BNB is rather different because there’s real utility and demand for BNB token ie to pay for gas in BSC chain.

Another example is BIFI. Its token didn’t really move much despite a solid business, significant buy backs and almost zero inflation.

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I agree that it would be better to receive staking rewards that’s not the native SD token, and personally would prefer a stablecoin.

There is always a percentage of stakers who automatically sell their rewards which would negate the impact of the team buying the SD token.

In terms of the % revenue, well I would of course prefer 100% of the revenue be shared with stakers :slight_smile:

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Really interesting, I will dive on this. Thanks a lot Emanuel.

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May be interesting to explore the multiplier points mechanism of GMX for those stakers who stake longer time

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I agree that the concept of real yield is paying the share of revenue in USDC.
We all understand that Stader will sell part of their staked coins to USDC to take profits and spend the money to keep building and expanding the platform and maybe create a treasury.

The buyback of SD tokens is not a good idea unless you decide to burn them. Buyback SD tokens to distribute them back to community holders that will sell them for taking profit, a long and unwanted path. That will cause unreal trading volumes on platforms, and whales always win with big bags of tokens staked in such cases.

One problem with paying in stablecoins, Stader can face difficulties with SEC. Paying in stablecoin for stakeholders who hold SD tokens can be considered as having securities. Maybe Stader needs to check these legal issues. Otherwise, Stader does not care about SEC, and I respect it entirely, but it may cause problems in the future.

I like the KUJI example. Each staker receives a basket of coins that KUJI earns as fees and revenue.

Now, why is that cool? First of all, we will receive native coins on native chains, maybe even already liquid staked, to increase our yield. This is already diversifying our risks.
It’s cool to receive the revenue in BNBx\FTMx/NEARx, etc…
Mainly, I believe that each Staderean here is staking his BNB/FTM/NEAR/HBAR and other coins with Stader, so I’m with both hands supporting the idea of increasing my staked amount of coins in the basket.

Second, there might be nice to add the option of locking the SD staking period model, for example, 1/3/6/9/12 months. That will increase the yield that would provide incentives with SD tokens, and the amount of SD tokens staked is crucial for growing profits.
Every 1/2/3 days(Idk), Stader protocol claims rewards and distributes the staked coins to SD stakers.
This type of model is better for the community and Stader itself.

The community will receive a diversified portfolio with an increased yield during the permanent staking process.
Stader will receive a loyal community :slight_smile: Kidding
Stader gets’ even more native staked coins with Stader increases Stader revenue and one more utility for SD tokens that will decrease the selling pressure of SD tokens.
In other words, Stader will share the revenue that will keep generating income for Stader and Staker.

WIn WIN situation.

Here is how I see this plan:

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this is really interesting. We will have a look and come back to you soon.
Really appreciate your time and effort doing this! Do you mind sending me a DM here?

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Hey. sure. Sent you a message.

Here’s my opinions on the model suggested

  1. Locking ponzi tokenomics, Imo locking was a bad idea that started off in 2020, It is nothing short of gambling/basically throwing your money away, being locked means you dont actually own your position anymore, one of the big things regarding Stader that I liked is that they allow ur staked assets to be liquid, ironically your idea suggests that in a protocol where you get to stake and be liquid, that we be illiquid and locked.

2)Liquidity, I dont think many people understand how thin the SD liquidity is, as a project with such low liquidity the token will always remain a pump&dump token unless we work and use $ to increase liquidity, The cheapest most reliable way to do that is to Create a 20:80 (USDC-SD) Pool, and allow people to stake their LP recipt token for SD rewards/ Protocol yield or whatever form the protocol chooses to distribute rewards.

In a 20:80 pool the IL that a depositor might recieve isnt as large as a 50:50 pool, and this way the protocol gets to spend less $ trying to maintain both liquidity and rewarding SD holders.

tl;dr

  1. Locking concept was a bad 2020-2021 Ponzi that never should’ve happend
  2. Liquidity is almost non-existent right now and we require a big liquidity over-haul.
2 Likes

Hey, thank you for sharing your thought.
Partially I agree with you about the locking concept.
First, I’m not suggesting locking the native coins e.i. ETHx or MATICx, no.
The lock is for SD tokens only to increase the staking yield and share revenue from Stader.
Let’s look at the 1inch model:

image

There is no locking period at 1-inch, but there is a fundamental importance for holding the 1-inch token.
Creating such a utility will force holders to stake the token. That’s the idea.

Locking funds is NEVER a good option. We all felt that on our locked LUNA while it crashed. So I want to admit that your idea of making a liquidity pool sounds much better than just staking.
Creating such a pool to increase liquidity for the token is healthy for the whole ecosystem.

Why this model increased the yield while staking(adding LP) is essential?
Stader, as you @sweetcheeks mention, and it’s right, all about staking.
Holders and I believe big companies that will join Stader will always prefer to earn yield while holding assets. When you add such a tool of increasing profit by staking/LPing SD tokens, there is an overwhelming benefit for the Stader stakers:

  1. User stakes his BNB and gets BNBx, which is always liquid, while earning the staking yield.
  2. User receives a share of Stader’s revenue in the same assets he stakes, like BNBx.
  3. User increases the revenue share he receives from Stader by staking/LPing SD token.

Conclusion - Staking with Stader provides more impressive yields than ordinary staking and liquid staking platforms like LIDO/Stride/pStake.

This model will blow up the liquid staking of the COSMOS ecosystem that rolled out their WP 2.0. It is all about liquid staking and intensifies competition with other liquid staking protocols.

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The reason why I’m pushing for making the liquidity pool of SD-USDC The stakeable token for revenue sharing is for projects like AURA for example, a convex layer built ontop of balancer. It has very consistently been paying out yields for protocols that were willing to bribe holders.

Currently, for every 1000$ a protocol puts in as a bribe, 1700$ Worth of emissions is being delivered to users. This means that with the 1,000,000$ of revenue Stader has been able to achieve, we’d be able to (hypothetically) give out 1,700,000$ Worth of emissions to lpers.

An 80-20 Pool has very low IL, and in most cases can basically be count as almost a single sided stake. The good benefit is that we can put a 0.5-1% swap fee on the pool, and thus LP stakers will also be enjoying the benefit of their SD not being idle and collecting swap fees ontop of revenue shared!.

(For Bribe ROI see : Llama Airforce )

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