SLURP-42 | FY2025 stake.link DAO Budget

SLURPs
1

Abstract

This proposal seeks to establish a structured annual discretionary budget for the stake.link DAO, allowing for efficient operational management, competitive hiring, and streamlined financial oversight. The budget will come with financial oversight and execution facilitated by Harris & Trotter (H&T) as the designated custodian. Due to subjective token prices the budgeting and value of the treasury as well as payout for some items cannot be determined with full accuracy. Therefore, this budget has to withstand certain uncertainties and might need intervention at a later stage.

Please note that some of the items in this budget have already been approved by the DAO (SLURP-21, SLURP-23, SLURP-24, SLURP-30) and are included here for the purpose of streamlining and providing a comprehensive budget overview.

In total we are looking at $696,00 at current price levels to be paid in SDL and $323,450 to be paid in Cash / Stables. However, both of these numbers could be lower significantly over the year depending on the implementation of PoL for incentives, seeking community grants covering audit and development cost as well as no bug bounties needed to be paid out ($110,000 alone). Should the treasury experience a shortage of Cash / Stables we would take the decision on how to proceed to governance.

The primary objectives of this and future budget proposals include:

  1. Allocating a structured discretionary budget in SDL & USDC, providing operational flexibility while maintaining DAO accountability.
  2. Defining core budget categories to align with DAO priorities, including staffing, development, marketing, security, and strategic growth initiatives.
  3. Securing and formalizing funding for strategic hires, ensuring compensation remains competitive and is managed transparently but discreetly.

1. Motivation & Rationale

The stake.link DAO has grown significantly, requiring a more structured approach to financial management to support scalability, operational efficiency, and strategic expansion.

Key pain points that this proposal addresses:

  • Inefficiencies & compensation concerns: Without a structured budget, every expense requires public DAO governance approval, which risks delays, unnecessary scrutiny, and reduced competitiveness when operating.

  • Financial predictability: A defined yearly budget ensures stable funding allocation, avoiding ad-hoc funding requests that slow down execution.

  • Confidentiality in staffing matters: The DAO needs the ability to allocate salaries and compensation without publicly disclosing individual pay.

By creating a pre-approved budget, the DAO empowers the Council to act swiftly within predefined financial limits, while maintaining transparency and accountability through H&T’s financial oversight.

2. Stake.link DAO Budget Framework

2.a. Operating Expenses (OpEx):

These are the recurring, fixed costs necessary to maintain daily operations, governance, legal compliance, and infrastructure. This category is predictable, covering the core functions of the organization.

2.a.1. Governance, Staff & Administrative Expenses - $116,600/year

  • Council Compensation: Fixed monthly payments to council members
    • $24,000/year in SDL ($1,000/month for each of the two Community Council Members) - 50,000 SDL
  • DAO Employee Compensation: Fixed monthly payments to DAO Employees
    • $36,000/year in SDL ($3,000/month for one DAO Employee) - 80,000 SDL (SLURP-23)
  • Legal & Compliance Fees: Retainers for legal counsel, compliance audits, regulatory advisory (SLURP-30)
    • $31,600/year director and compliance fees for Little Bay Directors Limited billed quarterly $7,900/quarter
    • $25,000/year registered agent, registered office, Nominee Guarantee Member, Service and Director Fees

2.a.2. Accounting & Financial Operations - approx. $91,000/year and subject to currency exchange

  • Professional Accounting Services: Ongoing services provided by Harris & Trotter (SLURP-24)
    • Fixed Costs: £60,000/year (core financial services)
    • Estimated Variable Costs: £10,000–£30,000/year (depending on DAO growth and additional service demands)

2.a.3. Security Subscription Services - $52,450/year

stake.link works with immunefi.com as a bug bounty platform and Hypernative Labs for real-time monitoring of stake.link smart contracts. Both are important parts of stake.link security which incentivize security researchers to submit vulnerabilities to stake.link instead of black market, and for 24/7/365 continuous protocol monitoring. Both programs cover smart contracts and apps, and focus on preventing loss of user funds, denial of service, governance hijacks, data breaches, and data leaks.

2.a.4. Software Subscription Services / Fees - $5,000/year

  • Retainer for cost incurred by Slack, Google Suite, Gnosis Safe, Snapshot

2.b. Strategic Investments (CapEx):

These represent project-based initiatives or departments focused on growth, research, and protocol development. Unlike OpEx, these can vary based on the DAO’s priorities and strategic goals for the year.

2.b.1. Business Development & Marketing - $35,000/year

The Business Development unit works to expand the penetration of stake.link’s staked assets across the Decentralized Finance ecosystem through integrations business development, tactical initiatives that increase stake.link’s network effects and increase stake.link’s staked capital base, protocol expansion, tradfi/CEX integrations, and generally maintaining relationships with partners and community stakeholders on an ongoing basis.

  • Strategic Sponsorships $5,000: E.g., ongoing partnerships with @CCIPMetrics
  • Travel and conference expenses $30,000
    • Staking Rewards Summit 2025 $10,000
    • SmartCon 2025 $20,000

2.b.2. Security Services - up to $140,000 depending on bug-bounty

  • Immunefi: Up to $110,000 depending on severity of found bug (low to critical)
  • Audit cost: $30,000 per LST voted positively by governance and not reimbursed by grants

2.b.3. DeFi Liquidity & Incentives Workstream - up to 1.3M SDL

  • Uniswap - $400K~ TVL, targeting up to 5% SDL APY: 50,000 SDL
  • Curve $9M~ TVL, targeting up to 5% SDL APY: 1M SDL
  • Potential Future DeFi integration: 250K SDL

2.b.4. Talent Acquisition & Contributor Development Workstream - Budget TBD

  • Recruitment Costs: For onboarding new contributors

2. Summary

Category Amount (USD/Year) Payment in Cash/Stables vs. SDL
2.a. Operational Expenses (OpEx) $265,050
1. Governance, Staff & Administrative Expenses $116,600 SDL (subject to SDL price)
2. Accounting & Financial Operations $91,000 Cash/Stables
3. Security Subscription Services $52,450 Cash/Stables
4. Software Subscription Services / Fees $5,000 Cash/Stables
2.b. Strategic Investments (CapEx) $755,000
1. DeFi Liquidity & Incentives Workstream $580,000 SDL (subject to targeted reward rate)
2. Security Services $140,000 Cash Stables (subject to bugs identified)
3. Business Development & Marketing $35,000 Cash/Stables

3. Conclusion & Next Steps

This proposal establishes a clear, structured approach to DAO financial management, ensuring:

  • Faster decision-making and hiring processes
  • Operational flexibility without governance bottlenecks
  • Competitive salaries and staffing confidentiality
  • Financial security and treasury oversight

By approving this budget framework, the stake.link DAO can scale efficiently while preserving governance integrity and operational transparency.

Next Steps:

  1. Community Discussion & Feedback (7-14 days)

  2. Formal Governance Vote

  3. Budget Execution & Treasury Allocation via H&T

We invite all parties to the DAO to review and provide feedback before submitting this proposal for a governance vote.

2 Likes
2

Dear Asymmetric,

Thank you for presenting this proposal to establish a structured annual discretionary budget for the Stake.link DAO.

While I am not well-versed in most of the services and subscriptions mentioned, I would like to provide feedback specifically regarding item 2.b.3, “DeFi Liquidity & Incentives Workstream.”

In particular, I have concerns regarding the proposed *Uniswap - $400K~ TVL, targeting up to 5% SDL APY: 50,000 SDL incentive. I believe a 5% incentive is too low relative to the risk that liquidity providers face. These risks include impermanent loss, the opportunity cost of missing out on the steady Stlink yield (currently 5.37%), as well as other DeFi opportunities and #build rewards.

As a holder of approximately 20% of the current SDL liquidity, I would consider significantly reducing my position if the incentive were to decrease to just 5%.

The liquidity of SDL is crucial for building a healthy market capitalization for Stake.link. Currently, we are facing challenges in attracting substantial liquidity, as our liquidity ratio stands at just 1.4% of the market cap, which is considered low. For example, a $10k buy order incurs a 4.5% price impact on swaps, which can discourage potential investors and traders. To bring SDL into the mainstream, it is vital that we maintain robust and deep liquidity for the protocol’s primary token.

The proposed allocation of 50k SDL for the year represents an 85% reduction from the current incentive structure (175k for six months). Given these concerns, I would like to propose a maximum reduction of the SDL liquidity incentive from 350k to 300k SDL annually, with the possibility of further adjustments in the future, depending on the growth of liquidity. Our long-term goal should be to target a liquidity ratio of 5% of market capitalization, which would reduce the price impact on swaps and not scare investors that we won’t be able to sell.

I look forward to hearing others’ perspectives on this matter.

Cheers,

2 Likes
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GM @hboss,

Thanks for providing this thoughtful feedback. I agree on everything you say especially the target for liquidity.

However, we need to setup the DAO for the longterm. Our emissions are not sustainable and there is not activity to justify this. From an ROI standpoint the incentives are just too high. We need to streamline emissions and align the longterm prospects of the protocol. An incremental approach will simply bleed out the treasury longer. WIth reference to proposals such as the new SLURP-43 and the setup of PoL I want to amplify that the DAO is looking for ways to generate rewards to then be able to bootstrap liquidity with it.

Best,
Asymmetric / Joe

1 Like
4

Thank you for putting this comprehensive budget proposal together. It’s encouraging to see stake.link DAO taking steps to ensure financial transparency and sustainability.

I understand this budget includes periodic updates from H&T on how resources are being spent, as outlined in the Comprehensive Financial Management Services proposal. That ongoing transparency is crucial for building trust and ensuring accountability, and I’m glad to see it being prioritized.

As for what @hboss noted, SDL liquidity remains a bit of a conundrum that requires a thoughtful conversation on its own. That said, it’s promising to see that a large portion of LP incentives currently directed toward stLINK liquidity could be optimized. With Protocol-Owned Liquidity via SLURP-26 expected to go live soon, we should be in a strong position to reduce our reliance on external incentives and put those resources to more strategic use, including potentially increasing SDL LP incentives and strengthening its role in the ecosystem.

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This budget, in tandem with SLURP-43, feels like a solid move toward aligning operational efficiency with long-term sustainability. While I don’t expect any critical bugs to emerge, budgeting for the possibility is the responsible approach, especially considering the potential financial exposure if something were to go wrong. At the same time, if security risks remain low and liquidity spending becomes more efficient, the DAO will be in a great position to reallocate or preserve funds as needed. Overall, this is a smart, forward-looking step that strengthens the foundation for stake.link’s continued growth.

Confident in the direction this is heading and fully supportive of the work being done here.

2 Likes
5

Hey Joe
Thank you for your prompt response.
In the same optic as the PoL slurp, why couldn’t the DAO acquire its own SDL/LINK liquidity and subsequently, generate SDL rewards from it? The SDL generated could then be utilized for the upcoming incentive period. This approach would establish a continuous loop cycle, thereby enhancing the stickiness and longevity of the SDL liquidity
I would like to express my concern that a 5% return is insufficient to adequately compensate for the opportunity cost and impairment loss faced by liquidity providers.
Hope we can find a common ground that satisfies everybody.
Best,

1 Like
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I agree that a framework is needed and this seems in line. I do question if we should consider skating to where the puck seems to be going (Base) vs our current direction, but I do not know the intricacies required to even consider such a move. Regarding what I quoted, I would like to see a cap on total SDL permitted to be moved in the year built into the SLURP. It could be higher than what is required now based on current token price, but it would be ideal to be able to check the chain and see what’s been moved vs what was approved. A way of having some (potential) checks and balances questions from the community instead of constantly needing a SLURP to pay bills.

1 Like
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GM @hboss and @SethVdL and thanks for chiming in for this important discussion.

@hboss My personal opinion is to fade out SDL emissions completely as incentives when possible. The protocol earns rewards in stLINK and any other LST that might be launched in the future. This rewards should be redirected to boost liquidity. From a longterm view it is simply to draining for the protocol to continue like this. It is a chicken and egg problem but we have to face this right on in my opinion which will benefit us later.

@SethVdL regarding Base I do think it is worth for the community to scan where we can subsidize our development for new LSTs and new chains. This includes development and audit costs. Development cost are currently borne by the Core Contributor soley for the purpose of enhancing the protocol. We should be able to transition this to a healthy economic on the DAO budget which will need outside capital in form of grants etc. unless the treasury grows. So for this I would like to see concrete plans and proposals to walk into a certain direction (i.e. Base).

Re/ Checks and Balances the idea is for H&T to be able to conduct the payments necessary and in line with the budget. As the books of the DAO will be published quarterly there will be transparency. My idea is to have something resembling an earnings call on a quarterly basis where the NAIL, Council and Core Contributor update NOPs and Community on the past quarter incl. financials and then the statements are released.

Regarding SDL cap: The two components are essentially the NAIL and Council reimbursement (which are non negotiable unless we change via a SLURP) and the Liquidity Incentives that I want to transition from SDL to DAO revenue as a source. For the case that we need to get Cash / stables for the treasury a SLURP would need to be raised anyway. In light of this the cap would only be for the NAIL and Council reimbursement where we have to live with the price fluctuations imo.

Thanks again,
Asymmetric / Joe