Abstract
It is proposed to create a reSDL staking VIP Delegation Vault mechanism that allows SDL stakers to deposit their reSDL NFTs. This will enable third parties to leverage the combined priority of these NFTs to stake LINK through the Priority Pool. In return, reSDL owners will receive a fee (e.g., 1%, subject to discussion) of the stLINK provided in return from LINK staked via the smart contract, in addition to their regular rewards.
Rationale
This proposal aims to maximize the value and utility of reSDL NFTs by offering a new revenue stream. The fee incentivizes reSDL holders while promoting broader participation in the LINK staking process.
Motivation
This proposal emerges from community-driven discussions addressing two key concerns:
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Decreasing LINK in the Priority Pool: There’s been growing worry about the dwindling LINK in the Priority Pool.
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Increased Incentives for reSDL Holders: Community members have frequently discussed enhancing incentives for reSDL holders. ( Check TEMP CHECK 2 | Increasing Community Pool delegation fee to reSDL stakers)
The proposed reSDL staking VIP Delegation Vault mechanism tackles both issues while democratizing stLINK access.
Additionally, this mechanism would simplify staking for users through an intuitive UI, bypassing the complexities of the priority pool and stakedotlink protocol. This makes it more composable and easier for third-party protocols or DAOs to integrate. Importantly, no core protocol changes are required, allowing it to be built permissionlessly on top.
However, it’s crucial for stakedotlink to implement this solution due to the governance influence held by reSDL NFTs, mitigating risks if third parties were to build it. Furthermore, there is a clear incentive structure, as community are paying a fee to LPs plus slippage, plus premium, while many reSDL holders don’t fully utilize VIP mode.
Specification
VIP Delegation Vault Mechanism:
- reSDL NFT Staking:
- reSDL holders can deposit their NFTs into the VIP Delegation smart contract.
- reSDL NFTs will continue to receive their regular rewards.
- Additionally, they will receive a share of accumulated stLINK rewards from LINK staked via the Priority Pool through VIP Delegation.
- LINK Staking:
- Any user can deposit LINK into the Priority Pool through the VIP Delegation smart contract.
- Users can claim stLINK rewards once their LINK has been staked.
- A 1% fee of the stLINK rewards will be allocated to reSDL NFT holders.
- Share Model Example:
Initial deposits
- Depositor A: Owns 900 ppLINK
- Depositor B: Owns 100 ppLINK
After staking 100 LINK through the Priority Pool:
- Depositor A: Owns 90 stLINK - 1% fee (0.9 stLINK) = 89.1 stLINK + retains 810 ppLINK
- Depositor B: Owns 10 stLINK - 1% fee (0.1 stLINK) = 9.9 stLINK + retains 90 ppLINK
- Fee: 1 stLINK
It’s my understanding that operation gas fees would be paid by users when calling functions (no maintenance expenses). Hope core Devs can share som light about if there’s a any technical misunderstanding about how reSDL NFTs and Priority Pool dynamics work, and the complexity of developing this.
Conclusion
This reSDL VIP Delegation built on top of stakedotlink’s existing platform presents numerous advantages. It enhances flexibility by allowing VIP status to be transferred seamlessly, offers an additional layer of security through controlled delegation, and promotes increased engagement and loyalty within the community. By implementing this mechanism, we can provide a more dynamic and user-friendly experience for everyone.
Furthermore, this initiative will open the doors of stLINK to a wider audience, significantly boosting PR efforts. The increased accessibility and inclusivity will not only enhance our brand image but also contribute to the growth of the Priority Pool and the total value locked (TVL) in the protocol.
I do not foresee any significant drawbacks to this approach. The potential benefits far outweigh any minimal risks, which can be mitigated through robust design and implementation.
Eager to receive feedback from and look forward to incorporating your insights and suggestions to refine and perfect this mechanism.