Thanks for putting this together. I agree with the directional intent of the proposal, especially the idea of re-evaluating where marginal incentives create the most long-term value for stLINK. I also agree that credit markets are strategically important for stLINK’s maturation and balance-sheet relevance.
That said, I’m against this proposal as currently structured (expressing this here as Snapshot went live a few hours ago).
One of the most important properties for stLINK to be considered robust and institutionally viable is fee stability and predictability, changing the destination of protocol fees weakens this property and increases governance risk.
It’s easy to see how this blurs the line between protocol revenue and growth subsidies, it increases perceived governance risk, and it makes it harder for external actors to model stLINK long-term.
From my pov, fees should ossify as early as possible. Incentives can and should be flexible; fees should not.
If the goal is to temporarily rebalance incentives away from DEX liquidity and toward credit markets, SDL emissions are the right tool.
Also, at current prices the 250k SDL allocated for future DeFi integrations in SLURP-57 is roughly $86k and should be sufficient for a temporary lender bootstrap without changing protocol fees.
Using stLINK fees to grow external credit markets is a balance-sheet decision, not an incentive tweak. That’s a much stronger (and harder to reverse) signal, and I don’t think the proposal demonstrates why that escalation is necessary before exhausting simpler options like reducing SDL emissions to the Curve pool and redirecting them elsewhere temporarily.
I also don’t think borrower incentives are justified here. stLINK already offers a native positive carry trade via looping (or not). ~4.9% base stLINK yield, potentially ~7%+ via stLINK/LINK looping when borrow rates are low. That is more than sufficient to bootstrap borrow demand organically imho.
Incentivizing borrowers distorts rate discovery, subsidizes leverage that would exist anyway,
and weakens the signal that stLINK can clear on its own merits.
If incentives are used in credit markets, they should focus on lenders, be clearly time-bounded, and not by default.
To be clear: I support the strategic discussion this proposal opens and I agree that credit markets are too priority for stLINK. However, I don’t think redirecting protocol fees is the right first step.
Fee ossification, clean incentive separation, and predictable economics are critical for stLINK’s long-term credibility, and this proposal weakens those properties from multiple optics.
Happy to keep discussing refinements, especially around incentive-only approaches that preserve fee stability.