Abstract
This SLURP proposes increasing the Community Pool delegation fee to reSDL stakers from 5% to 10%. This follows two temperature checks that were discussed and then voted upon by the community. The first saw unanimous support for increasing the delegation fee to 10%, 15% or 20% and was supported by LinkPool, the core contributors. The second was to find the specific percentage that the fee should be increased to. Following further discussion, including from node operators, the community unanimously supported an increase to 10%.
The impact of increasing the fee to 10% will be an increase of stLINK rewards to reSDL stakers, while decreasing the stLINK reward rate.
Included in this SLURP are the rationale, the impact of the fee change and implementation details.
Rationale
By increasing the fee distribution from 5% to 10%, reSDL stakers will gain higher stLINK rewards, which should drive greater value for the token. An increased value of SDL can also have secondary benefits such as:
- Increased attention for the protocol
- Less distribution of SDL from the Treasury for payments denominated in USD
Given that the stLINK reward rate is already considerably higher than the standard Chainlink Community Pool rate (~6.65% compared to 4.32%), then the expected decreases will be unlikely to reduce demand for staking LINK through the protocol. By way of comparison, staking ETH natively yields 3.04%, while Lido’s stETH yields 3.9%.
In addition, as stLINK is a liquid staking token, this provides a further point of difference and advantage compared to standard Community Pool staking.
It should also be noted that node operators can benefit from this change as they hold and can stake SDL (each node operator has been allocated 1m SDL, which is vested over four years). As per SLURP-8, 2m SDL of the 20m SDL Core Contributor Allocation may also be staked by the end of 2025.
Specification
The fee rates for the two pools are currently:
The stLINK calculator provides a helpful tool for showing the impact of the proposed change.
The current fee shows:
By increasing the Community fee to 10% we get:
Impact of fee change:
Therefore, someone staking 10,000 SDL for four years (90,000 reSDL) will get an additional ~1.85 stLINK per year. Rewards will increase with more protocol LINK is staked in the Community Pool. Note that this may be offset by more SDL being staked.
The calculation assumes the current reSDL amount of 137,803,102.72. For example:
24,278.25 / 137,803,102.72 = 0.00017618072
90,000 * 0.00017618072 = 15.85626489
Risks
- As more LINK is staked in the Community Pool, there is downward pressure on the stLINK reward rate and a higher delegation fee adds to this. With 1m LINK staked in the Community Pool, the impact to the stLINK rate is ~0.1%, while with 2m LINK staked it increases to ~0.15%.
- If there was a significant increase to the amount of SDL staked as reSDL then this would place downward pressure on the reSDL reward rate.
In both situations, the delegation fee can be adjusted again through a further SLURP.
Implementation
The implementation of this fee change should be straightforward by using “updateFee” in the Community VCS contract.
Conclusion
This has been an excellent process to be part of, with broad engagement and discussion from across the community. It has also been really good to have node operator input on this proposal and I hope this continues more broadly in the Discourse Forum. A special thanks also to @LPM for his help throughout.