SLURP-31 | Optimizing Liquidity for Growth

SLURPs
1

Abstract

Core Contributors of the stake.link DAO propose reprioritizing DAO efforts by scaling back previously approved liquidity initiatives on Metis L2 and refocusing on maintaining liquidity and incentives on Ethereum mainnet. The goal is to support the listing of wrapped staked LINK (wstLINK) on Aave, which requires robust liquidity on Ethereum.

This proposal specifically seeks to:

  • Supersede SLURP-29:
    • Scrap plans for SDL and wstLINK liquidity pools on Metis L2.
    • Eliminate liquidity mining incentives for the above pools.
  • Propose New Incentives:
    • Reassess and optimize emissions for the stMETIS/METIS liquidity pool.

Note: This does not impact stake.link’s deployment to Metis L2 as an LST protocol and focuses solely on liquidity and incentive adjustments.

Rationale

The DAO is in a position of strength, as evidenced by:

  • The Priority Pool reaching levels not seen since April/May.
  • Strong current and future projected inflows into the Priority Pool.
  • Increased staking dominance, now at 6.821%.
  • High outflows from the Chainlink Community Staking Pool, positioning stake.link to secure a larger market share.
  • No announced staking expansion from Chainlink Labs.

Given these factors, Core Contributors believe the DAO should focus on listing wstLINK on Aave, which is in high demand from LINK holders. This initiative will:

  1. Solidify Stake.link’s Position in the Chainlink Network
  • Achieving LINK LST Lending on Aave establishes stake.link as the premier LINK LST protocol, with unmatched DeFi composability.
  1. Avoid Fracturing Liquidity:
  • Retaining liquidity on Ethereum mainnet is critical for a successful Aave listing and DeFi ecosystem stickiness.
  1. Optimize Treasury Spend:
  • Scaling back SDL emissions on Metis L2 conserves resources and aligns with current market conditions.

Specification

  1. Reprioritize Liquidity Efforts:
  • Focus liquidity and incentives on Ethereum mainnet.
  • Scrap SDL and wstLINK liquidity pools on Metis L2.
  1. Optimize Emissions:
  • Amend the previously-approved SDL emissions for the stMETIS/METIS pool, currently set at 1,956.95 SDL/day per SLURP-18, to 10% for $400,000 TVL and adjust every 45 days. As of publication, this would equate to 102.419 SDL per day and 4,608.885 SDL per 45 day period, resulting in substantial savings for the stake.link DAO Treasury.
  • Retain 1,590 SDL/day previously allocated for the proposed scrapped SDL and wstLINK Metis liquidity pools, saving 47,700 SDL/month.
  1. Reinforce Strategic Goals:

We aim to leverage our dominant position to build a sustainable foundation for long-term growth as well as focus efforts on initiatives that solidify stake.link as the leading Chainlink LST protocol in the face of future possible competition.

Conclusion

SLURP-31 marks a big shift as one of the final SLURPs of 2024. This year brought both challenges and opportunities, and stake.link has emerged stronger than ever. By capitalizing on our position of strength in pursuit of an Aave listing for wstLINK which Core Contributors feel is the right moment for, we lay the groundwork to be a dominant player in the Chainlink Ecosystem and beyond for the forseable future.

We’re excited for the discussion on this SLURP, the AMA this Friday, December 20, and our end-of-year note to the DAO.

We’re all in this together.

2 Likes
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Sounds good, let’s do it!

3

This sounds a lot nicer

4

This is great! Thank you for putting this up LPM!
If I understood correctly, if this slurps passes, the next step would be to reinforce the incentives for the LINK/Stlink pool on curve in order to attract deeper liquidity for Stlink?
Cheers

1 Like
5

Listing on AAVE is mission critical.

If there is anything we can do to help foster this relationship, do not hesitate to let us know.

1 Like
6

I would like to add that having wstLINK accepted in a lending protocol such as Aave reinforces the narrative for the liquid aspect of the protocol, since being able to lend wstLINK and borrow other assets would indirectly create a new liquidity buffer for LINK stakers staking through us beyond the Priority Pool and Curve, which is honestly great. For that reason and because I love how conscious we are all becoming about treasury spending, I fully support this SLURP.

2 Likes