SLURP-10 | Mainnet Liquidity Mining Incentives and Optimism Bribes, Grants, and Liquidity Mining Incentives, Priority Pool and reSDL Retroactive Airdrop Incentives

SLURPs
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SLURP-10a | Retroactive SDL and OP Airdrops for Priority Pool Depositors and reSDL Minters

Abstract

Presuming the succesful acceptance and ratification of SLURP-9, SLURP-11 for the deployment of the Priority Pool, and a forthcoming Optimism Growth Experiment Grant conferring OP tokens, we propose retroactive SDL airdrops for reSDL lockers and Priority Pool stakers on all networks, and retroactive OP airdrops for reSDL lockers and Priority Pool stakers on Optimism.

Rationale

The launch of Chainlink Staking v0.2, the stake.link Priority Pool, and the launch of reSDL and stake.link Tokenomics 2.0 presents a rare moment of fortuitous confluence. By accruing a massive stake of LINK, and thereby generating a larger supply of stLINK, it will be much easier to broaden the reach of the stake.link protocol and seek additional DeFi interactions.

The future of interacting with Ethereum is Layer 2 based, and gas costs on Ethereum Mainnet will likely only grow as time goes on. The deployment of stake.link to Optimism (as proposed by SLURP-9) and the incentivization of users to migrate their interactions with stake.link as a protocol to Optimism (and in the future other Layer 2s) enables increased interaction with the protocol, and opens the protocol up to Layer 2 native users.

Specification

Note

There are multiple dependencies for the entirety of this SLURP to be enacted, including additional SLURPs, grant proposals, and technical deployments. At this time, there are technical blockers around the bridging of LINK to Optimism by leveraging CCIP.

The following sequence is proposed:

  1. Dependent upon SLURP-11, and after inaugural launch phase of Chainlink Staking v0.2: Issue retroactive SDL airdrop to eligible Priority Pool LINK stakers and reSDL Lock and Minters
  2. Dependent upon SLURP-9, SLURP-11, deployment of stake.link to Optimism, Optimism Growth Experiment Grant, and after inaugural launch phase of Chainlink Staking v0.2: issue retroactive OP airdrop to eligible Priority Pool LINK stakers and reSDL Lock and Minters on Optimism.

Priority Pool LINK Staking and reSDL Locking and Minting Incentives

We propose a substantial airdrop of both SDL tokens and OP tokens to users staking their LINK in the Priority Pool and locking their SDL to mint their reSDL NFTs. The precise eligibility calculations for the retroactive SDL and OP airdrops will be shared at a later date, but the general structure will reward individuals who:

  • Stake LINK via the Priority Pool (more LINK, more airdrop)
  • Lock SDL into reSDL NFTs (more SDL and longer lock, more airdrop)

It is proposed that up to 2,000,000 SDL be retroactively awarded, with up to 1,000,000 SDL directed to Priority Pool LINK stakers based on their staked amount, 200,000 SDL to be distributed amongst the top 5 stakers and randomly to other Priority Pool stakers using Chainlink VRF, and 800,000 SDL directed to reSDL Lock and Minters, irrespective of network.

It is proposed that 75,000 OP be retroactively awarded to stake.link users on Optimism, with 50,000 OP directed to Priority Pool LINK stakers and 25,000 OP directed to reSDL Lock and Minters.

Note: calculations for the airdrop will be based on LINK that is actually ultimately staked - not simply queued in the Priority Pool.

Priority Pool SDL and OP Incentives Specification

Up to 1,000,000 SDL to be distributed to Priority Pool stakers based on their staked LINK amount, irrespective of network. 0.2 SDL will be distributed for every LINK staked, up to 5,000,000 LINK. Precise calculations on how per-address airdrop amounts are calculated will be shared after eligibility closes in an effort to prevent manipulation.

For the top Priority Pool stakers:

  1. 40,000 SDL
  2. 30,000 SDL
  3. 20,000 SDL
  4. 15,000 SDL
  5. 15,000 SDL

To be randomly distributed to Priority Pool stakers using Chainlink VRF:
2,500 each to 32 individuals who have staked in excess of 10 LINK.

Presuming receipt of 75,000 OP tokens from a forthcoming Optimism Growth Experiment Grant, 50,000 OP tokens will be distributed to users staking their LINK through the Priority Pool on Optimism. Should the amount differ, a similar ratio will be preserved.

reSDL Lock and Minters SDL Incentives

800,000 SDL will be distributed to reSDL Lock and Minters based on the amount of reSDL minted (amount of initial SDL balance and lock duration), irrespective of network.

Presuming receipt of 75,000 OP tokens from a forthcoming Optimism Growth Experiment Grant, 25,000 OP tokens will be distributed to users locking SDL and minting reSDL on Optimism. Users that bridge their reSDL NFTs to Optimism will be considered as if they had minted their reSDL NFTs on Optimism.

Copyright

Copyright and related rights waived via CC0.

SLURP-10b | Mainnet Liquidity Mining Incentives and Optimism Grants and Liquidity Mining Incentives

Abstract

Presuming the successful acceptance and ratification of SLURP-9, SLURP-11 for the deployment of the Priority Pool, and a forthcoming Optimism Growth Experiment Grant conferring OP tokens, we propose modifications to the current liquidity mining incentives on Ethereum Mainnet, with a shift to direct a substantial portion of the current SDL rewards to incentivize the creation and growth of liquidity pools on Optimism based DEX Velodrome.

Additionally, we propose the deprecation of liquidity mining incentives for ixETH, and propose directing SDL and a portion of the possible OP token grant as incentives towards incentivizing an ETH/LINK pool on Velodrome, which would connect the proposed SDL/ETH and wstLINK/LINK pools on Velodrome to the rest of the liquidity on Velodrome.

We also propose the cessation of SDL incentives directed to the SushiSwap liquidity pool, and propose directing future incentives to a to-be-established Uniswap v2 liquidity pool.

Rationale

The future of interacting with Ethereum is Layer 2 based, and gas costs on Ethereum Mainnet will likely only grow as time goes on. The deployment of stake.link to Optimism (as proposed by SLURP-9) and the incentivization of users to migrate their interactions with stake.link as a protocol to Optimism (and in the future other Layer 2s) enables increased interaction with the protocol, and opens the protocol up to Layer 2 native users. Additionally, moving a substantial portion of the existing liquidity to a Velodrome will allow for lower gas fees for trading, and may lead to higher trading volume, benefitting LPers.

By directing a portion of the current incentive structure to incentives to veVELO holders we unlock a possible flywheel where LPers receive VELO tokens, lock them, and vote for increased incentives for these same pools. Velodrome indicates that for every dollar spent on incentives for an individual liquidity pool, $3 in VELO emissions are directed to LPers for that pool.

Our proposed pools are: wstLINK/LINK, SDL/ETH, and ETH/LINK. Additionally, we propose the deprecation of liquidity mining rewards to the ixETH/ETH pool.

Motivation

Establishing deep liquidity pools on Optimism provides new users with access to the fundamental stake.link protocol tokens, reducing the friction for them to begin to interact with the protocol. We believe that focusing development efforts and incentives here will represent a substantial growth opportunity for stake.link as a whole.

With respect to the existing liquidity pools and incentive structures on Ethereum Mainnet, the growth and fee generation opportunities for ixETH are limited in comparison to the stake.link deployment to Optimism. Liquidity Mining emissions to the Curve stLINK/LINK pool will continue, at a reduced rate.

Liquidity Mining incentives for the SDL/LINK pool will be directed to a yet-to-be established Uniswap v2 SDL/LINK pool. While the SushiSwap team has been attentive and helpful, several issues have arisen during the period of time the SDL/LINK pool has been hosted there. Routing to DEX aggregators has never been established, and we’ve attempted to address the issue of only being able to trade SDL against LINK twice, once to good effect. A simple Uniswap v2 pool will allow current LPers to enjoy the same set and forget liquidity provision, and they’ll be able to earn and claim their SDL rewards on mainnet with (hopefully) increased trading volume.

Specification

Note

There are multiple dependencies for the entirety of this SLURP to be enacted, including additional SLURPs, grant proposals, and technical deployments. At this time, there are technical blockers around the bridging of LINK to Optimism by leveraging CCIP. As such, in lieu of an SDL/LINK pool’s deployment on Velodrome, it is proposed that an SDL/ETH pool be established and bribes directed towards this pool on Velodrome. This will enable prospective stake.link users to acquire the fundamental protocol token for stake.link in advance of a full deployment.

Upon remediation of the aforementioned technical blockers, an ETH/LINK pool and wstLINK/LINK pool will be created using the newly CCIP-enabled LINK token. The ETH/LINK pair will serve as a public good, enabling users to readily acquire both SDL and wstLINK on Velodrome.

The following sequence is proposed:

  1. Allow ixETH/ETH Curve liquidity mining rewards to run out.
  2. The migration of liquidity mining incentives for the SDL/LINK SushiSwap pool to a to-be-established SDL/LINK Uniswap v2 pool. This allows for the same low friction, set-and-forget liquidity provision and remediates the issues experienced with the current SushiSwap pool including inconsistently effective routing, enabling users to exchange SDL with tokens other than LINK. Until such a time as LINK is able to be freely bridged to Optimism using CCIP, the current amounts of SDL LM incentives will be directed to the new SDL/LINK Uniswap Pool.
  3. Dependent upon the SDL token’s CCIP integration: the establishment of SDL incentives for the to-be-established SDL/ETH liquidity pool on Velodrome.
  4. Dependent upon the remediation of technical blockers around bridging the LINK token using CCIP: reduction of future liquidity mining rewards to the SDL/LINK Uniswap pool and the stLINK/LINK Curve pool. Begin directing SDL incentives to the to-be-established ETH/LINK and wstLINK/LINK Velodrome pools.

The following current liquidity and target APR values are calculated using the current liquidity amounts and SDL price from 09/07/2023.

Duration of Incentives

All incentives are to be run for a period of 12 weeks, then publicly reassessed via talk.stake.link. Should it be decided major changes are required (e.g. new pairs, or new DEXes), or should it be proposed to substantially increase any amounts, a new SLURP will be required.

Ethereum Mainnet Incentives, Current and Proposed

SDL/LINK Sushi stLINK/LINK Curve ixETH/ETH Curve SDL/LINK Uniswap
Current Liquidity ($) 750,000 1,125,000 250,000
Current 1 Day SDL Emissions (tkn) 2520 1240 825 0
Proposed Target Liquidity ($) 0 500,000 N/A 330,000
Proposed Target SDL APR (%) 0 10 0 15
Proposed 1 Day SDL Emissions (tkn) 0 978.47 0 968.69

Optimism Grants and Velodrome Liquidity Mining Incentives

In a forthcoming Optimism Growth Experiments proposal, we are requesting 150,000 OP tokens to incentivize users to bridge to Optimism and engage with stake.link there. 50% of these tokens are being reserved for incentives to veVELO lockers to request VELO emissions to our proposed liquidity pools. We additionally propose directing the following SDL as incentives to veVELO lockers.

SDL/ETH wstLINK/LINK ETH/LINK
Target Liquidity ($) 1,000,000 1,000,000 2,000,000
Target SDL APR (%) 15 10 5
1 Day SDL Emissions (tkn) 2,935.42 1,956.95 1,956.95
1 Day OP Emissions (tkn) 130 90 190

In summary, this represents a total increase of daily SDL spend from the current amount of approximately 4,600 SDL per day to approximately 8,800 SDL.

Copyright

Copyright and related rights waived via CC0.

1 Like
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While I am in favour of SDL distribution to v0.2 Priority Pool stakers to incentivise greater LINK deposits, I do have some concerns:

  • Over what time scale is the 2,000,000 SDL to be retroactively awarded? Is the 1.5m SDL all for v0.2 staking? Is it available for anyone who adds LINK to the Priority Pool including those who don’t currently hold or stake SDL?

  • After what duration of time would the 500,000 SDL be distributed to reSDL Lock and Minters? How long do people have to migrate/stake?

  • What happens in a situation where only a low amount of LINK from the Priority Pool makes it into Chainlink’s v0.2 Community staking pool due to the space already being taken. Likewise, there could be a lack of interest in the Priority Pool from the market which leads to a low amount of LINK being deposited. Either situation would lead to large SDL allocations to a small number of people and/or to those staking relatively small amounts of LINK.

  • There is a fairness factor here for people who bought LPL at high prices and could see their SDL holdings dwarfed by those staking relatively low amounts of LINK. This situation could inflame negativity towards the project.

Potential Changes:

  1. An alternative for SDL distribution for Priority Pool stakers would be significant but set awards for the top 10/20/50 depositors. Chainlink VRF could also be used to distribute random prizes to other smaller stakers.

For example:

1. 50,000 SDL (~$6000 USD at current prices)
2. 25,000 SDL
3. 15,000 SDL
4-10. 10,000 SDL

25 x 2,500 SDL random prizes

This would ensure significant incentives for Priority Pool deposits while maintaining fairness. It would also reduce the amount of SDL withdrawn from the Treasury.

  1. Distribute more of the 2mSDL to reSDL Lock and Minters if this amount of distribution was to be retained. A split of 1m SDL between reSDL Lock and Minters and Priority Pool stakers could help to assuage ongoing negativity from former LPL holders. Even a reverse of the split (ie. 1.5m to reSDL Lock and Minters) is arguably fairer. Some of this 2m SDL could also be distributed to those with stLINK from v0.1 staking to reward early adopters.
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Hey @EqS, as always, thanks so much for chiming in!

This initial proposal is for the duration of time between the launch of the Priority Pool and reSDL minting leading up to the initial filling of the v0.2 staking allocation increase (Chainlink Staking v0.2 Phase 2).

This is a great question, I’ll take it back to the rest of the team to come up with a lower limit, or some bracketed goals. E.g.:

  • 1 Million LINK Staked: 400k SDL allocated
  • 2 Million LINK Staked: 800k SDL allocated
  • 3 Million LINK Staked: 1.2 Million SDL allocated
  • 4 Million LINK Staked: 1.6 Million SDL allocated
  • 5 Million LINK Staked: 2 Million SDL allocated

Would a strategy like the above mitigate that? If not this, what do you think makes sense?

I don’t love this, personally. There are always far more smaller depositors, and a proposal like this asymmetrically attracts and rewards those larger depositors. That said I quite like the idea of a bonus for the top X and a raffle for smaller depositors on top of an existing airdrop scheme. Lets assume both coexist. Not big changes, obvs, but what would you think about:

1. 50,000 SDL (~$6000 USD at current prices)
2. 25,000 SDL
3. 15,000 SDL
4-5. 10,000 SDL

25 x 3,000 SDL random prizes

Only reducing/saving 40000 or so, but still retaining the overall bonus structure and idea. We could flatten the top 3 a little more too maybe.

Even a reverse of the split (ie. 1.5m to reSDL Lock and Minters) is arguably fairer.

Fairer in what way? The primary goal here is ultimately to get people to stake more LINK, and of course to a degree to incentivize new joiners to the stake.link ecosystem as a whole, and reward existing participants for performing the fundamental actions that make the system work. I could see a split moving more towards 1.25m to LINK stakers in the Priority Pool and .75m to reSDL minters - but a complete flip feels like a loss of the plot.

Lets assume the above prize pool plan (185k SDL), with 1.065m SDL rewarded out to Priority Pool LINK stakers (or we give away the rest of that 65k randomly to stakers), and 750k to reSDL mint/lockers.

Does that feel fair, properly incentivizing the behaviors we’re looking for, and also interesting?

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Thanks for the response here Eric, my primary concern around fairness is addressed with your approach, or similar. A few comments:

This is a great question, I’ll take it back to the rest of the team to come up with a lower limit, or some bracketed goals. E.g.:

  • 1 Million LINK Staked: 400k SDL allocated

The only issue here is if you have, for example, 1.01m LINK staked then suddenly there’s a far bigger distribution of SDL. Also I am not sure why the amount of LINK deposited impacts the amount distributed for reSDL lockers? I would think it would just make sense for the reSDL lockers allocation to be set aside independent of how much LINK is deposited as they are separate issues, as far as I can see. One is to get LINK deposited, the other is to get people to lock their SDL as reSDL for long time periods.

Another option would be to set a ratio of SDL for the amount of LINK deposited. If we did 0.3 SDL per LINK staked then we would get:

Deposit amount

100 LINK = 30 SDL
1000 LINK = 300 SDL
10,000 LINK = 3000 SDL

This would be 300,000 SDL per 1 million LINK staked. Could be adjusted as needed.

This approach would probably need a cap however. Working with your numbers this could be set at 3.5m LINK which would see 1,050,000 SDL set aside for distribution and then 200,000 to the prize pool. Then the remaining 750,000 SDL would be for the reSDL lockers.

If the 3.5m LINK amount is not reached then the extra SDL could be returned to the Treasury. Another option of course would be to have no cap but this would see an unknown amount of SDL taken from the Treasury. 5 million deposited would be 1.5m SDL for example.

I also wonder if a cap (such as at 3.5m LINK) is useful as it could be a bad look if SDL takes up too much of the Community Pool. This could particularly be the case if a lot of the allocation is taken during the initial two phases of v0.2 staking and then SDL rushes to fill the rest.

A set SDL per LINK deposited amount would also be nice from a UX perspective as the user can be told how much SDL they will be awarded when depositing while also being made aware of the prize pool incentives. (You are depositing 1000 LINK! You will receive 1000 stLINK + 300 SDL + are entered into our prize pool. If you are one of our top depositors then the following awards are available… etc.)

That said I quite like the idea of a bonus for the top X and a raffle for smaller depositors on top of an existing airdrop scheme. Lets assume both coexist.

I think incentives like this can really help. Have seen people fight for those top positions for extra bonuses in other projects and it can be a really powerful factor in driving activity. Your numbers for the prize pool look good to me.

It could also be worth mentioning this SLURP on social media as would be good to have others inputting on this. Also could drive some interest and positivity as people always like incentives.

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I like the incentives layout, but this seems to be two different proposals imo. Maybe three. Multichain LP incentive program and airdrop rewarding of lockers/priority pool.
As @EqS pointed out, there is a likely a different sentiment around airdropping rewards for lockers than there is to liquidity incentives. I also don’t like the idea of putting hypothetical grant amounts into a formal slurp. We can always start pool incentives with a trickle of SDL and do another SLURP down the road if/when funds are secured. That being said, airdropping OP to users migrating to optimism is the correct use case for funds and any potential grant.

Alternative:
This slurp to focus on liquidity incentives for optimism and mainnet
New slurp to set up priority pool rewards with SDL incentives
New slurp to setup locking rewards for reSDL

Separating them allows for better controls over ending one program, extending it with increased runway, and/or making alterations based on potential OP grant funds down the road.

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It was clear from the beginning that we were already positioned to make the move to Optimism and these SLURPs have been more or less perfunctory. That’s fine. Less fine are the questionable financial entanglements with Velodrome and the very funny discussion of “bribes” in this context, but with Arbitrum apparently out of the question, that leaves Optimism as our L2 of choice, where there is functionally only one DEX, since ponzi schemes are hypercompetitive when backed by a bank printing the money.

With that in mind, it seems our decision is made for us, we MUST go to Optimism and we MUST go to Velodrome, right now, because it is our only choice. Fair enough.

But it turns out we won’t even be using CCIP. We’ll be using a LINK token that takes 7 days to bridge back to mainnet (making it non-functional for the queue), for which there is clearly no demand on Optimism to begin with, and even if there was demand, the proposed design of the system involves incentivizing people to bridge LINK from Mainnet to Optimism, so it can be bought and bridged back to Mainnet.

What is the point? Is there really no way to simplify access to the Mainnet queue from Optimism? And given the ease of exiting stLINK via the Priority Pool swap (which is a great idea by the way), why does there need to be a wstLINK/LINK stable pool on both L2 and Mainnet, if its primary purpose is to act as a backstop?

I have to say I’m disappointed. What was originally fronted as an exploratory measure has escalated into a massive treasury dump. There is absolutely no need for this scale of expenditure. People were already going to stake their LINK and were already going to lock their reSDL.

There is no clear path to a functioning queue on Optimism, and there are so many contingencies that the distillation of this proposal is simply the creation of three pairs on Velodrome that are then massively incentivized. I think we can all figure out what the effect of that will be. Does this need to happen? What is the enduring effect of these incentives and airdrops supposed to be?

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@EqS and @SethVdL ty both for the follow up, reply inbound shortly - Im traveling the last couple days.

@Fox let me be absolutely clear and in no uncertain terms: THANK YOU as always. You are as ever thoughtful, and thoughtful and specific disagreement is important. I want to better understand and try to address some concerns.

These are not intended to be perfunctory, or shoved down anybody’s throat. Hence the lack of vote on SLURP-9 so far.

Not sure what you mean by “financial entanglements” - the LinkPool team and stake.link contributors at large have no relationship with the Velodrome team any further than being in a telegram chat with them, excepting @SethVdL’s connections. “Bribes” are the common parlance for the form external LM incentives take for DEXes like Velodrome, which comes from Curve’s mechanism of incentivizing emissions from the DEX/DAO.

I’m not certain on how you came to this conclusion. I tried to make it crystal clear that we would NOT be making a full migration until the Chainlink team has the LINK token sorted out fully on Optimism. To be clear, to my understanding more or less the exact same situation is present on every other L2 or alt L1 currently, so this isn’t an Optimism specific issue.

A couple major goals in migrating:

  1. Increase the Total Addressable Market of users by bringing the entire protocol to an L2 AND to reduce the costs for interacting with the protocol for the existing userbase - some users simply cannot afford to interact on mainnet, and the costs of mainnet will only ever rise
  2. Generate a “Scoreboard Win” - Optimism’s lower LINK count vs. Arbitrum is an opportunity for us - not an impediment. If we 10x the LINK on Optimism, this would be a strong feather in our cap for favorable terms/assists when we look to migrate to additional L2s in the future - and we will be doing that.

With respect to the stLINK/LINK queue the ability to get new LINK in is only as good as the LINK exiting the underlying Chainlink Staking contracts. Providing another mechanism for easing pressure on that system bidirectionally is a value add for when the pool is full, for large and small transactions. It also provides us with a necessary step on the path towards defi integrations for stLINK: pools that show the market valuation for stLINK over LINK, trading volume there, and is a step towards a possible CEX listing for stLINK. All of these are necessary or beneficial elements for Chainlink price feeds for stLINK, and defi integrations.

This is simply inaccurate.

Candidly I’m surprised to read this from you in aggregate. Obviously Im not surprised by specific elements of it, you’ve made your opposition to Optimism quite clear. My impression is that you don’t see any utility in expanding the protocol to be accessible to new users, and providing a lower gas cost mechanism for interacting with the protocol longterm. I want to ensure I understand your overall reasons against it, please let me know if Im missing something or mischaracterizing anything.

  1. You believe its too early to bother deploying to an L2
  2. You believe Optimism is the wrong choice of L2s
  3. You believe we shouldn’t be incentivizing pairs
  4. You have a problem with Velodrome specifically

Is that a fair summation?

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  1. No. I think it’s wise to explore different L2s, and look for opportunities where they can be found. I am surprised by the scale of this deployment and skeptical about what it will accomplish. I believe part of the problem is my uncertainty about the intended timing of bribes, see below.

  2. No. There are really only two mature L2s, and given the apparent urgency of this proposal, we have to pick one. Arbitrum is not perfect either.

  3. No. We need liquidity, which means we need to incentivize pairs. I want our strategy to be more efficient, because the treasury is not inexhaustible, and as you’ve said, the goal is to expand to many chains.

  4. Yes. As I have said previously, these forks have a lot of potential. ve3,3 works under specific conditions and those conditions are probably happening soon. I don’t like ve3,3 economics, I don’t like the people and the dealings involved with these protocols, and they are a reminder of the many mistakes that were made in 2020-21.

I don’t care if you’ve been convinced that magically you conjure money at a 4:1 ratio by bribing, bottom line is that we will be increasing SDL treasury spend by moving to Velodrome, and that SDL goes to their voters and not our LP providers (who have a much greater skin in the game).

That said, making inroads into an established high volume protocol means we will be buying more than just VELO incentives. I am not a soothsayer, I can imagine what will happen in the short term, longer term we will all find out together whether this was a great idea.

As I mentioned above, perhaps there is a miscommunication regarding the timing for bribes. Under Rationale the proposed pools are wstLINK/LINK, SDL/ETH, and ETH/LINK. Under Specification the proposed pools are SDL/ETH and ETH/LINK, citing the technical blockers around deploying ccipLINK. In the Sequence, all the LINK pairs are gated behind “the remediation of technical blockers”, which I presume to mean CLabs’ deployment of ccipLINK.

If I ignore half the Specification and just take the Sequence at face value, we will only be creating SDL/ETH to start with, and no LINK pairs until ccipLINK has been deployed, is that the correct interpretation?

Regarding the cross-chain staking queue, I’ve already expressed my belief that forgoing the queue in favor of a wstLINK/ETH** pair and SDL/ETH** pair would be a lot more efficient, particularly if it is technically feasible for an Optimism reSDL holder to gain priority access into the pool for LINK they hold on mainnet. I grasp that this would push the cost of mainnet staking onto users, but the existence of the L2 wstLINK/ETH pool means that smaller buyers could still enter and exit according to their price tolerance, without having to fool with mainnet.

If you don’t like that idea, you all already have a solution for the queue in mind, you are the ones engineering it, and it sounds like it will work. Not much more I can ask for, despite my misgivings. But the queue can’t exist until ccipLINK does. If I’m again to take the Sequence at face value, then supposedly it will be ready before v0.2. If we’re not going to bribe LINK pairs until ccipLINK is available, then great, that dispels my concern about wasting incentives when no cross-chain queue actually exists.

The airdrop I’m less concerned about. It is a big expense, but in theory will be a net benefit, one that is much clearer given how rarely the staking pool expands.

ETH/stETH makes sense because ETH is a common pair token and trades at a high volume. I don’t think this is a pattern we necessarily need to follow in every cross-chain deployment of wstLINK. It’s not scalable to incentivize wstLINK/LINK and ccipLINK/XXX liquidity every time we expand. It’s also not the job of the SDL treasury to create ccipLINK liquidity across multiple chains, given that the ccipLINK token can be purchased on one chain and sent elsewhere if needed.

Likewise, a wstLINK/XXX pair would receive trading volume and track the market value of the token just as much as a wstLINK/LINK stable pool. The mainnet stLINK/LINK pair is a backstop, an exit of last resort, it doesn’t need to be recreated all over the place, and if someone on a random L2 really wants to exit their staking position, they could sell it into XXX just as easily as they could sell it for ccipLINK, with the difference being that XXX liquidity already readily exists on their chain while ccipLINK liquidity will not.

** or wstLINK/ETH and SDL/wstLINK

1 Like
9

Alright, incorporating some feedback from @eqs and @SethVdL here, broke the retroactive airdrop and liquidity mining incentives into two SLURPs, broke Priority Pool airdrop and reSDL Lock and Mint airdrop up, and tied the amount of the Priority Pool airdrop to the amount of LINK staked through the Priority Pool.

Havent forgotten you @Fox, will respond tomorrow!

SLURP-10a | Retroactive SDL and OP Airdrops for Priority Pool Depositors and reSDL Minters

Abstract

Presuming the succesful acceptance and ratification of SLURP-9, SLURP-11 for the deployment of the Priority Pool, and a forthcoming Optimism Growth Experiment Grant conferring OP tokens, we propose retroactive SDL airdrops for reSDL lockers and Priority Pool stakers on all networks, and retroactive OP airdrops for reSDL lockers and Priority Pool stakers on Optimism.

Rationale

The launch of Chainlink Staking v0.2, the stake.link Priority Pool, and the launch of reSDL and stake.link Tokenomics 2.0 presents a rare moment of fortuitous confluence. By accruing a massive stake of LINK, and thereby generating a larger supply of stLINK, it will be much easier to broaden the reach of the stake.link protocol and seek additional DeFi interactions.

The future of interacting with Ethereum is Layer 2 based, and gas costs on Ethereum Mainnet will likely only grow as time goes on. The deployment of stake.link to Optimism (as proposed by SLURP-9) and the incentivization of users to migrate their interactions with stake.link as a protocol to Optimism (and in the future other Layer 2s) enables increased interaction with the protocol, and opens the protocol up to Layer 2 native users.

Specification

Note

There are multiple dependencies for the entirety of this SLURP to be enacted, including additional SLURPs, grant proposals, and technical deployments. At this time, there are technical blockers around the bridging of LINK to Optimism by leveraging CCIP.

The following sequence is proposed:

  1. Dependent upon SLURP-11, and after inaugural launch phase of Chainlink Staking v0.2: Issue retroactive SDL airdrop to eligible Priority Pool LINK stakers and reSDL Lock and Minters
  2. Dependent upon SLURP-9, SLURP-11, deployment of stake.link to Optimism, Optimism Growth Experiment Grant, and after inaugural launch phase of Chainlink Staking v0.2: issue retroactive OP airdrop to eligible Priority Pool LINK stakers and reSDL Lock and Minters on Optimism.

Priority Pool LINK Staking and reSDL Locking and Minting Incentives

We propose a substantial airdrop of both SDL tokens and OP tokens to users staking their LINK in the Priority Pool and locking their SDL to mint their reSDL NFTs. The precise eligibility calculations for the retroactive SDL and OP airdrops will be shared at a later date, but the general structure will reward individuals who:

  • Stake LINK via the Priority Pool (more LINK, more airdrop)
  • Lock SDL into reSDL NFTs (more SDL and longer lock, more airdrop)

It is proposed that up to 2,000,000 SDL be retroactively awarded, with up to 1,000,000 SDL directed to Priority Pool LINK stakers based on their staked amount, 200,000 SDL to be distributed amongst the top 5 stakers and randomly to other Priority Pool stakers using Chainlink VRF, and 800,000 SDL directed to reSDL Lock and Minters, irrespective of network.

It is proposed that 75,000 OP be retroactively awarded to stake.link users on Optimism, with 50,000 OP directed to Priority Pool LINK stakers and 25,000 OP directed to reSDL Lock and Minters.

Note: calculations for the airdrop will be based on LINK that is actually ultimately staked - not simply queued in the Priority Pool.

Priority Pool SDL and OP Incentives Specification

Up to 1,000,000 SDL to be distributed to Priority Pool stakers based on their staked LINK amount, irrespective of network. 0.2 SDL will be distributed for every LINK staked, up to 5,000,000 LINK. Precise calculations on how per-address airdrop amounts are calculated will be shared after eligibility closes in an effort to prevent manipulation.

For the top Priority Pool stakers:

  1. 40,000 SDL
  2. 30,000 SDL
  3. 20,000 SDL
  4. 15,000 SDL
  5. 15,000 SDL

To be randomly distributed to Priority Pool stakers using Chainlink VRF:
2,500 each to 32 individuals who have staked in excess of 10 LINK.

Presuming receipt of 75,000 OP tokens from a forthcoming Optimism Growth Experiment Grant, 50,000 OP tokens will be distributed to users staking their LINK through the Priority Pool on Optimism. Should the amount differ, a similar ratio will be preserved.

reSDL Lock and Minters SDL Incentives

800,000 SDL will be distributed to reSDL Lock and Minters based on the amount of reSDL minted (amount of initial SDL balance and lock duration), irrespective of network.

Presuming receipt of 75,000 OP tokens from a forthcoming Optimism Growth Experiment Grant, 25,000 OP tokens will be distributed to users locking SDL and minting reSDL on Optimism.

Copyright

Copyright and related rights waived via CC0.

SLURP-10b | Mainnet Liquidity Mining Incentives and Optimism Grants and Liquidity Mining Incentives

Abstract

Presuming the successful acceptance and ratification of SLURP-9, SLURP-11 for the deployment of the Priority Pool, and a forthcoming Optimism Growth Experiment Grant conferring OP tokens, we propose modifications to the current liquidity mining incentives on Ethereum Mainnet, with a shift to direct a substantial portion of the current SDL rewards to incentivize the creation and growth of liquidity pools on Optimism based DEX Velodrome.

Additionally, we propose the deprecation of liquidity mining incentives for ixETH, and propose directing SDL and a portion of the possible OP token grant as incentives towards incentivizing an ETH/LINK pool on Velodrome, which would connect the proposed SDL/ETH and wstLINK/LINK pools on Velodrome to the rest of the liquidity on Velodrome.

We also propose the cessation of SDL incentives directed to the SushiSwap liquidity pool, and propose directing future incentives to a to-be-established Uniswap v2 liquidity pool.

Rationale

The future of interacting with Ethereum is Layer 2 based, and gas costs on Ethereum Mainnet will likely only grow as time goes on. The deployment of stake.link to Optimism (as proposed by SLURP-9) and the incentivization of users to migrate their interactions with stake.link as a protocol to Optimism (and in the future other Layer 2s) enables increased interaction with the protocol, and opens the protocol up to Layer 2 native users. Additionally, moving a substantial portion of the existing liquidity to a Velodrome will allow for lower gas fees for trading, and may lead to higher trading volume, benefitting LPers.

By directing a portion of the current incentive structure to incentives to veVELO holders we unlock a possible flywheel where LPers receive VELO tokens, lock them, and vote for increased incentives for these same pools. Velodrome indicates that for every dollar spent on incentives for an individual liquidity pool, $3 in VELO emissions are directed to LPers for that pool.

Our proposed pools are: wstLINK/LINK, SDL/ETH, and ETH/LINK. Additionally, we propose the deprecation of liquidity mining rewards to the ixETH/ETH pool.

Motivation

Establishing deep liquidity pools on Optimism provides new users with access to the fundamental stake.link protocol tokens, reducing the friction for them to begin to interact with the protocol. We believe that focusing development efforts and incentives here will represent a substantial growth opportunity for stake.link as a whole.

With respect to the existing liquidity pools and incentive structures on Ethereum Mainnet, the growth and fee generation opportunities for ixETH are limited in comparison to the stake.link deployment to Optimism. Liquidity Mining emissions to the Curve stLINK/LINK pool will continue, at a reduced rate.

Liquidity Mining incentives for the SDL/LINK pool will be directed to a yet-to-be established Uniswap v2 SDL/LINK pool. While the SushiSwap team has been attentive and helpful, several issues have arisen during the period of time the SDL/LINK pool has been hosted there. Routing to DEX aggregators has never been established, and we’ve attempted to address the issue of only being able to trade SDL against LINK twice, once to good effect. A simple Uniswap v2 pool will allow current LPers to enjoy the same set and forget liquidity provision, and they’ll be able to earn and claim their SDL rewards on mainnet with (hopefully) increased trading volume.

Specification

Note

There are multiple dependencies for the entirety of this SLURP to be enacted, including additional SLURPs, grant proposals, and technical deployments. At this time, there are technical blockers around the bridging of LINK to Optimism by leveraging CCIP. As such, in lieu of an SDL/LINK pool’s deployment on Velodrome, it is proposed that an SDL/ETH pool be established and bribes directed towards this pool on Velodrome. This will enable prospective stake.link users to acquire the fundamental protocol token for stake.link in advance of a full deployment.

Upon remediation of the aforementioned technical blockers, an ETH/LINK pool and wstLINK/LINK pool will be created using the newly CCIP-enabled LINK token. The ETH/LINK pair will serve as a public good, enabling users to readily acquire both SDL and wstLINK on Velodrome.

The following sequence is proposed:

  1. Allow ixETH/ETH Curve liquidity mining rewards to run out.
  2. The migration of liquidity mining incentives for the SDL/LINK SushiSwap pool to a to-be-established SDL/LINK Uniswap v2 pool. This allows for the same low friction, set-and-forget liquidity provision and remediates the issues experienced with the current SushiSwap pool including inconsistently effective routing, enabling users to exchange SDL with tokens other than LINK. Until such a time as LINK is able to be freely bridged to Optimism using CCIP, the current amounts of SDL LM incentives will be directed to the new SDL/LINK Uniswap Pool.
  3. Dependent upon the SDL token’s CCIP integration: the establishment of SDL incentives for the to-be-established SDL/ETH liquidity pool on Velodrome.
  4. Dependent upon the remediation of technical blockers around bridging the LINK token using CCIP: reduction of future liquidity mining rewards to the SDL/LINK Uniswap pool and the stLINK/LINK Curve pool. Begin directing SDL incentives to the to-be-established ETH/LINK and wstLINK/LINK Velodrome pools.

The following current liquidity and target APR values are calculated using the current liquidity amounts and SDL price from 09/07/2023.

Duration of Incentives

All incentives are to be run for a period of 12 weeks, then publicly reassessed via talk.stake.link. Should it be decided major changes are required (e.g. new pairs, or new DEXes), or should it be proposed to substantially increase any amounts, a new SLURP will be required.

Ethereum Mainnet Incentives, Current and Proposed

SDL/LINK Sushi stLINK/LINK Curve ixETH/ETH Curve SDL/LINK Uniswap
Current Liquidity ($) 750,000 1,125,000 250,000
Current 1 Day SDL Emissions (tkn) 2520 1240 825 0
Proposed Target Liquidity ($) 0 500,000 N/A 330,000
Proposed Target SDL APR (%) 0 10 0 15
Proposed 1 Day SDL Emissions (tkn) 0 978.47 0 968.69

Optimism Grants and Velodrome Liquidity Mining Incentives

In a forthcoming Optimism Growth Experiments proposal, we are requesting 150,000 OP tokens to incentivize users to bridge to Optimism and engage with stake.link there. 50% of these tokens are being reserved for incentives to veVELO lockers to request VELO emissions to our proposed liquidity pools. We additionally propose directing the following SDL as incentives to veVELO lockers.

SDL/ETH wstLINK/LINK ETH/LINK
Target Liquidity ($) 1,000,000 1,000,000 2,000,000
Target SDL APR (%) 15 10 5
1 Day SDL Emissions (tkn) 2,935.42 1,956.95 1,956.95
1 Day OP Emissions (tkn) 130 90 190

In summary, this represents a total increase of daily SDL spend from the current amount of approximately 4,600 SDL per day to approximately 8,800 SDL.

Copyright

Copyright and related rights waived via CC0.

10

Thanks for good discussion and incorporation of feedback. I think that SLURP-10a looks good at this stage. Just a couple of comments:

Up to 1,000,000 SDL to be distributed to Priority Pool stakers based on their staked LINK amount, irrespective of network. 0.2 SDL will be distributed for every LINK staked, up to 5,000,000 LINK. Precise calculations on how per-address airdrop amounts are calculated will be shared after eligibility closes in an effort to prevent manipulation.

What kind of manipulation is expected here? Given that the 0.2 SDL per LINK staked figure is now public then people can just do these calculations themselves? I would have thought that making the calculations public would only incentise deposits.

One form of manipulation I could see however would be people making multiple small deposits to increase their chances of getting of the random prizes. Perhaps a minimum deposit could be put in place to mitigate against this. We wouldn’t want to exclude those with low amounts of LINK but maybe 10 or 25 LINK? Alternatively, addresses which have recently received LINK could be excluded from the prize pool.

Presuming receipt of 75,000 OP tokens from a forthcoming Optimism Growth Experiment Grant, 50,000 OP tokens will be distributed to users staking their LINK through the Priority Pool on Optimism. Should the amount differ, a similar ratio will be preserved.

I think should this be 25,000 OP? (Both categories are allocated 50,000 OP currently.)

I am also just a bit confused about the timing with the OP rewards. Are we sure that Optimism deployment (if SLURP-9 is advanced) will be ready before v0.2 staking goes live? With the Code4rena audit completed recently, the go live date could be reasonably close. Or is this just over the longer term as the Priority Pool will continue into the future?

Likewise, people who are now staking reSDL on mainnet may have liked to have known about the potential OP rewards for reSDL staking on Optimism. Or is this again a longer term initiative?

Regarding SLURP-10b, I just wonder why the OP incentives component needs to be progressed at this stage when the decision to progress SLURP-9 is still pending? As with @Fox, I continue to be wary about deployment to Optimism as I have set out in the SLURP-8 thread. I would also say that an increase of SDL emissions of 4,200 SDL per day is significant.

Perhaps SLURP-10b could be cut down to just the first two steps (retirement of ixETH/ETH Curve rewards and shift to a Uniswap V2 pool).

2 Likes
11

10a looks good. I’m ok with the amounts, but also would be fine with less. I personally think this is the sweet spot.

10b we need to change the word “bribe” to “incentives”. As we pursue the OP grants, this will be important. Velo has pivoted away from that as well. Bribe was an old Andre Cronje term from Solidly that stuck but has since been cancelled. I’m also not a fan of not having a end date on an LP program, especially to start. I’m likely one of the bigger velodrome proponents, but the community has expressed some reservations. In respectful of that, I’d like to put a 12 week trail on it. That forces the council to either extend or consider another alternative within 3 months. An extension is likely even if a move is considered, but I feel regular dialogue around LPs/emissions is better than it always being on the back burner.

3 Likes
12

This is a salient point, and I hear you. I’m well aware of the burn rate that this is suggesting. All in, for this SDL incentive spend rate its 2.5 million SDL/year, plus the one time cost of 2 million SDL for the Priority Pool and reSDL lock and mint incentive structure. The hope with these spends is to attract new users and increase engagement with the protocol during this moment of confluence.

Importantly: the incentives don’t need to run for a full year. Should a lower amount suffice, then its easy enough to lower emissions. We’ve issued them in 3 month intervals previously but there’s no technical requirement that it even be for that long.

Similarly, if for some reason Velodrome isn’t working out - simply pull bribes, pull liquidity, and migrate to another DEX.

I am not sure what you mean by “we will be buying more than just VELO incentives”

That’s correct. If I’ve got a typo or there’s a specific section that requires clarification please do let me know, I’ll be happy to edit!

Thats correct as well

For the record, in the pairs that I’ve proposed on Optimism for all instances of LINK, we’d be using EITHER ccipLINK or the already existing OP LINK, whichever Chainlink ultimately dictates should be considered canonical, considering there is functionally 0 LINK liquidity in DEXes on Optimism.

Fair points here, but does the clarification above move the needle for you at all?

I think that makes sense!

Oops - typo there.

Candidly, no, we’re not sure. If the timing doesn’t work out we’ll propose a different use for that 75,000 OP.

2 Likes
13

Thanks for clarification about the timing of incentives. Without modifying what seems to be the original intent, you could break up the information about pairs in the Note:

There are multiple dependencies for the entirety of this SLURP to be enacted, including additional SLURPs, grant proposals, and technical deployments. At this time, there are technical blockers around the bridging of LINK to Optimism by leveraging CCIP. As such, in lieu of an SDL/LINK pool’s deployment on Velodrome, it is proposed that an SDL/ETH pool be established and bribes directed towards this pool on Velodrome. This will enable prospective stake.link users to acquire the fundamental protocol token for stake.link in advance of a full deployment.

Upon remediation of the aforementioned technical blockers, an ETH/LINK pool and wstLINK/LINK pool will be created using the newly CCIP-enabled LINK token. The ETH/LINK pair will serve as a public good, enabling users to readily acquire both SDL and wstLINK on Velodrome.

I do think that as more SDL is shifted into reSDL, more LINK becomes stLINK, and LINK demand increases in general, further discussion about the composition of our pairs is warranted, and about our overall DeFi strategy. There needs to be a balance between effective liquidity that will drive volume, pair compositions that are attractive to LP providers, increasing demand for stLINK, and incentives that are sustainable for the treasury. But for the goal of having an L2 deployment available before staking v0.2, what you’ve outlined here should be sufficient.

2 Likes
14

Great suggestion Fox, I appreciate it! I’ll have another draft up tonight that includes this suggestion and remediates the typo called out by @EqS.

I couldn’t agree more. Thank you as always for your thoughtful and detailed feedback!

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15

Thanks again to @EqS @Fox and @SethVdL. I’ve edited this version to include the suggested changes!

Specifically:

(oops)

Cheers again, gang

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16

Quick note, added verbiage to include this in SLURP-10b

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