This proposal seeks to approve the bulk sale of 1.25 million SDL tokens from Stake.link’s treasury to protocol aligned investors Waxl.eth and Zedzies (or entities under their control) at a defined price of $250,000 USDC ($0.20/SDL), with an accompanying agreement by the buyers to make a minimum deposit of 100,000 LINK tokens into the Stake.Link priority pool. This Slurp will generate substantial deployable liquid capital.
Rationale
As the Chainlink network rapidly expands across both decentralized finance and the global capital markets, Stake.link is well positioned to further its dominance in the Chainlink liquid staking vertical. In order to rapidly scale to meet the needs of new users and market participants and to effectively navigate the future competitive LST landscape, the DAO is considering diversifying a portion of its holdings into readily deployable liquid assets such as USDC. However, due to the relatively illiquid nature of the SDL token, acquiring sufficient liquidity at scale presents certain challenges such as significant slippage and/or professional fees and could result in significant downward pressure on the token price.
This proposal offers an alternative: a one-time bulk sale of 1.25 million SDL tokens to long-time Chainlink/SDL-aligned investors. This approach benefits Stake.link in several ways:
Cost Efficiency: Given the current low liquidity and demand for the SDL token, a bulk OTC sale would avoid the substantial slippage costs associated with decentralized exchanges (over 60% on Uniswap as of this proposal).
Strategic Placement: The sale ensures that tokens are placed with dedicated supporters who understand the ecosystem’s value and are amenable to longer-term holding.
Protocol Alignment: Buyers would agree to deposit a minimum of 100,000 new LINK tokens (over $1.2 million USD) into the Stake.Link priority pool, demonstrating their alignment with the protocol.
Specification
If approved via community/council vote, 1.25 million SDL will be distributed from the DAO treasury multi-sig via a trustless swap protocol in amounts proportional to the USDC contributed by the respective entities or individuals ($250,000 total). Upon completion of the sale,100,000 LINK will be deposited into the priority pool by the buyers.
Conclusion
By diversifying a small portion of the treasury into readily deployable liquid assets, Stake.Link will be better positioned to accelerate development of the protocol, enabling it to more rapidly scale and to expand its market footprint in advance of the inevitable entry of additional competitors. Additionally, the liquidity can further support the expansion of Stake.link into the Metis L2 ecosystem as well as introduce greater agility to pursue other opportunities that may arise, thereby cementing Stake.link as the pre-eminent LST provider within the burgeoning Chainlink ecosystem and beyond.
With this slurp showing that we have outside demand on SDL and stLINK from entities it is nothing short of bullish long term for the protocol and should / will effect all decision making knowing that people WANT SDL.
I am in favor of this proposal. This will mark the first time where the treasury will have stables, and won’t rely on LinkPool fronting costs. We already have multiple expenses lined up, including Harris & Trotter, Hypernative and probably more to come.
1.25M SDL tokens are quite a lot, but if anyone should be buying them via OTC, I think it should be individuals who are already active in the Chainlink ecosystem (you can look both of them up on twitter), and understand the long term vision we’re building here.
“Since they are buying much lower than market price (try to buy 1.1m sdl from open market and see the price impact) and no contract stops them from withdrawing the 100k link deposited right after.
i would kindly ask for a minimum lock of 1 year of at least 50% of the sdl bought?
Thoughts?” - Hugo
“I would negociate a slightly higher price than 0.20$, my only comment :)” - Hugo
wrt above comment "This. Seems a bit unfair as we ate fees and slippage for 2 years. As long as they dont stake that huge stack " - Kennypowers
“Is the buy-in also implying a 4y lock ?” - Zobdog
Definitely for this. It’s a huge boost to the PP as well as confidence in the protocol. Some of the others asking questions bring up good points. But I’m all systems go on this
Hey @Zedzies, thanks for raising this proposal and showing your strong support.
I’m in favour of this proposal. As others has mentioned, LinkPool fronting costs for the DAO is unfeasible as time goes on as it both restricts the DAO and also the growth of LinkPool. The DAO holding a stables balance is ideal and will be able to sustain current amount of expenses for 2+ years while making payments more seamless for the DAOs partners.
The ideal scenario for any proposal like this is to get a reasonable price based on current market conditions with the buying party being involved in the Chainlink network for a long period. In my opinion, this proposal meets that criteria resulting in a good signal for the wider community and solidifying it’s long-term prospects for the larger audience.
To be candid, the treasury making a deal at the current SDL price is far from ideal. Although with the size of the deal respective to the amount in treasury, I would argue that the deal amount is in an ideal spot in respective to current expenses and provides too much benefit to vote against.
I support this in principle as it’s good to diversify the Treasury assets. The sale would be around 5% of the remaining SDL Treasury funds.
I do think it’s a good deal for the buyers. The price is historically low both in terms of USD and SDL/LINK and with the potential for a positive market in the coming year. There will also likely be an update to Chainlink staking in December (as there has been the last two years) which could be positive for stake.link or at least get more eyes on staking.
One option would be structuring the OTC deal over a three month period and taking the market price at a set date. For example, 15 October, 15 November and 15 December. The price could of course be manipulated in this scenario so there are trade-offs. Perhaps for simplicity and the benefit of having that amount of USDC reserves available immediately, it is worth taking the deal as it is.
Thanks for the questions. At the outset, I should mention that both parties are long term LINK/SDL holders, dating back to the LPL days.
To be concise, the main concerns seem to stem from what will be done with the tokens post sale. Specifically, a concern relating to the tokens being quickly sold as opposed to staking a large portion of them. This shouldn’t be a concern for two reasons. First, given our cost basis, it would be economically irrational to sell at par given the substantial amount of slippage. Second, and directly answering the questions about staking, it is our intention to stake a large portion of the tokens upon acquisition. SDL is currently a low liquidity, low distribution token (several hundred holders) that we think will appreciate over a longer time horizon with more adoption. This proposal should provide the much needed liquid capital (up to 2 year runway) to accelerate that process.
I’d like to express my full support for this SLURP, aligning with the points that have already been raised. On one hand, it’s clear that the DAO needs liquidity to fulfill its commitments, particularly with previously approved agreements with key service providers like Harry’s & Trotter, Hypernative, and NAILs. Securing this funding is essential to maintain the operational momentum we’ve built.
On the other hand, the proposed OTC sale presents a unique opportunity to partner with investors who not only understand but also believe in the long-term vision of the stake.link protocol. This alignment of interests is crucial—it ensures that these investors can contribute strategically, beyond just capital, as we continue to expand and develop critical relationships with service providers and advance business development efforts.
In my view, this proposal represents a win-win: the DAO secures necessary resources while partnering with like-minded, long-term stakeholders who are invested in our shared success. While it isn’t without risk for either party, I firmly believe this move will help position us for a more sustainable growth. It will provide the DAO with a solid runway to pursue its objectives, giving us the momentum we need to achieve long-term success, while also keeping us mindful of the need for continued strategic planning.
" - Kennypowers