SLURP-62-A | Unified wstLINK Incentive Program

SLURPs
1

Abstract

This proposal amends SLURP-62 to redirect the DAO’s idle treasury stLINK rewards (~765 stLINK/year) from a passive Morpho vault deposit (SLURP62 proposal) into an active incentive program. Combined with the existing wstLINK incentive budget from the Curve reallocation (SLURP-57), this creates a unified wstLINK incentive pool distributed across three DeFi venues:

  1. Uniswap V3 SDL/LINK - maintaining minimum viable liquidity for the governance token

  2. Morpho wstLINK/LINK - deepening the core lending market for leveraged stLINK staking

  3. Morpho frxUSD/wstLINK - bootstrapping a new stablecoin borrowing market against wstLINK collateral

Key Principle

All incentives are denominated in wstLINK only. No new SDL emissions. This is real yield distributed to participants, zero sell pressure on the governance token.

Motivation

Why Amend SLURP-62?

The original SLURP-62 proposed depositing ~765 stLINK (~$7,500) into the Morpho vault as DAO-owned liquidity. This would represent <0.4% of the market’s $2M supply, insufficient to meaningfully impact utilization or serve as a floor.

Redirecting these rewards into incentives delivers materially higher ROI per dollar spent. Incentives attract external capital; a $7,500 deposit attracts nothing.

Why Unify All Incentive Budgets?

The DAO currently has fragmented incentive programs:

Program Token Status Issue
Morpho SDL supply SDL (60,625) Active → July 26, ‘26 Creates sell pressure
Morpho SDL borrow SDL (30,312) Active →July 26, ‘26 Campaign parse failed
Morpho wstLINK wstLINK (~314) Active → Apr 9-11 Short test campaigns
UniV3 SDL/LINK SDL (14K of 50K) Killed after Round 5 8 LPs, 80K unclaimed

This proposal replaces the fragmented approach with a single, unified wstLINK program. Existing SDL campaigns run to natural expiry.

Why wstLINK Only?

  • Zero sell pressure. wstLINK is wrapped staked LINK - recipients hold productive collateral, not a governance token they need to dump.

  • Auto-compounding. wstLINK value in LINK terms grows over time. Recipients earn yield on their yield.

  • Aligned incentives. Every wstLINK distributed makes the recipient a stLINK holder - directly growing stake.link’s core product adoption.

  • Real yield character. The budget comes from protocol revenue (Curve reallocation + staking rewards), not token emissions.

Why Three Venues?

Pool Function Why It Matters
UniV3 SDL/LINK Governance token liquidity Minimum viable market for buying/selling SDL
Morpho wstLINK/LINK Core leveraged staking The flywheel: deposit wstLINK → borrow LINK → stake → repeat
Morpho frxUSD/wstLINK Stablecoin borrowing The missing piece — borrow stables against wstLINK collateral

“Unless you can use that pool to borrow stables.. it’ll never be self-sustainable.” — Ari, Council Member

Specification

Combined Budget

3,173 wstLINK/year
Curve Reallocation (SLURP-57)

750 wstLINK/year
Treasury stLINK (SLURP-62)

3,923 wstLINK/year Total
~$39,200 at $10/wstLINK

~314 wstLINK currently deployed in active campaigns (March 7 — April 9-11, 2026). Unified program begins after current cycle expires.

Proposed Allocation

Pool Allocation wstLINK/year Est. Incentive APY
UniV3 SDL/LINK 20% ~785 ~3.1% on $252K TVL
Morpho wstLINK/LINK 50% ~1,962 ~1.0% on $2M supply
Morpho frxUSD/wstLINK 30% ~1,177 ~5.9% on $200K initial
Total 100% ~3,923

Yield Projections (Full Range, Conservative)

UniV3 SDL/LINK — $252K TVL

Component APY
Trading fees (1% fee tier) ~1.0%
wstLINK incentives (785 on $252K) ~3.1%
Total LP APY ~4.1%

Morpho wstLINK/LINK — $2M Supply

Component APY
Organic lending rate ~3.3%
stLINK staking yield ~1.1%
wstLINK incentives (1,962 on $2M) ~1.0%
Existing SDL incentives (until Jan 2027) ~1.3%
Total Supply APY ~6.7%

Post January 2027 (SDL expiry): ~5.4%. Market has demonstrated organic demand at this level.

Morpho frxUSD/wstLINK — $200K Bootstrap

Component APY
Base stablecoin lending rate ~2-4%
wstLINK incentives (1,177 on $200K) ~5.9%
Total Supply APY ~8-10%

At $500K TVL → ~2.4% incentive. At $1M → ~1.2%. Early depositors rewarded for bootstrapping.

NAIL Allocation Guardrails

The DeFi NAIL representative adjusts monthly to reach the projected APY while maintaining full flexibility between all programs and diverting budget to whichever program might need more or less.

SDL Campaign Policy

  • Existing SDL campaigns: Run to natural expiry. No early termination.

  • No new SDL incentive campaigns for any pool unless approved by the Council. All future incentives in wstLINK only.

  • Exception: Bilateral partnerships requiring SDL need a separate governance proposal.

Financial Parameters

Year 1 Budget Summary

Destination wstLINK USD Value
UniV3 SDL/LINK ~785 ~$7,850
Morpho wstLINK/LINK ~1,962 ~$19,620
Morpho frxUSD/wstLINK ~1,177 ~$11,770
Total ~3,923 ~$39,240

Cost to the DAO

Zero incremental cost. Both sources are existing approved allocations.

Strategic Benefits

  1. Unified Real-Yield Model — One token, one program, three venues. The Lido playbook executed with discipline.

  2. frxUSD = The Missing Piece — Stablecoin borrowing against wstLINK. New use case, new users, deeper moat.

  3. SDL Liquidity Maintained — 20% allocation keeps the UniV3 market functional without over-investing in a low-activity pool.

  4. No New Asks — Reallocation of existing resources, not additional spending.

Risk Assessment

Risk Severity Mitigation
frxUSD fails to attract deposits Medium 30% cap limits downside. NAIL redirects if <$50K after 90 days
UniV3 TVL drops Low Lower TVL = higher APY per wstLINK. Self-correcting
wstLINK price volatility Low Budget in wstLINK, not USD. Protocol exposure unchanged
SDL campaign expiry Medium Adjust wstLINK allocation upward to compensate
Opportunity cost vs PoL Low $7,500 PoL earns ~$200/yr. Same in incentives attracts $50K+ TVL

Voting

FOR: Amend SLURP-62 to redirect treasury stLINK into unified wstLINK incentive program across UniV3, Morpho wstLINK/LINK, and Morpho frxUSD/wstLINK. Combine with Curve reallocation budget. No new SDL campaigns. NAIL has monthly allocation discretion within guardrails.

AGAINST: Reject both SLURP-62 and SLURP-62-A, no further action taken. Maintain current fragmented structure.

2 Likes
SLURP-62 | Establish DAO-Owned Liquidity in the Morpho LINK Vault
2

I think this is a solid step forward. The direction is much clearer.. consolidating incentives around wstLINK and focusing on actual usage, while still maintaining a baseline for SDL liquidity.

The addition of the frxUSD/wstLINK market is an exciting call. Expanding borrowing use cases around wstLINK is exactly how to deepen the product and build a more durable DeFi moat.

Perhaps one thing I’d flag is the NAIL role. It’s a big responsibility and while having a single person (even with agents) can be very effective for speed and execution, it also naturally limits the benefit of collective input over time. It can lead to decisions drifting a bit or being harder to reason about from a governance perspective.

I’m not suggesting we over-engineer this, but maybe there’s a simple middle ground. Either slightly clearer guardrails or just a lightweight feedback loop before making meaningful allocation changes. Even something like sharing intended adjustments and getting quick input from community/council would go a long way. It doesn’t need to be on a fixed cadence either, not necessarily monthly, but rather whenever changes are material, especially given how quickly market conditions can shift.

TL;DR this feels like a much more coherent framework than what we had before.. just a matter of tightening a couple of details so it holds up well as things scale.

1 Like
3

Appreciate the support Ari.

On the governance point, I want to be direct. The NAIL role exists because this work requires someone who’s deep in the data, monitoring venues daily, running on-chain
analysis, and making informed allocation decisions in real time. That’s what I do. The SLURPs, the on-chain reports, the counter-analyses - that’s the track record.

This proposal already is the transparency. It’s public, it’s data-backed, it’s open for discussion right now. Adding pre-approval layers on top of that doesn’t make the program better, it makes it slower. DeFi incentive management isn’t governance by committee. Markets move. Allocations need to respond.

If Council members or community have concerns about a specific allocation, my door is open - always has been. Raise it, bring data, and I’ll engage seriously. But the operational authority to manage the budget needs to sit with the role that’s actually doing the work. That’s what NAIL means.

The framework is here. The methodology is transparent. The results are on-chain. If someone wants to challenge a specific decision, they know where to find me.

4

I like the way we are moving away from SDL incentives and letting those reSDL rewards bring new customers, i saw that morpho is bringing 1 new (non prior stLINK ) user a day to our protocol and that is pretty bullish after these years to see it coming together.

If you have the data to back the slurps up as always the community broadly supports expansion of stake.link and wstLINK markets.

5

I’m not suggesting adding approval layers or slowing things down.. I fully agree incentives need to move fast.

What I had in mind is more of a lightweight signal layer, not a constraint. Something like sharing intended adjustments, giving a short window for input, and then executing (unless perhaps if there’s strong pushback). Just to surface context from others before making changes.

It also helps protect the NAIL role itself. For example.. if a meaningful portion of incentives gets moved from Uniswap to Morpho (or vice versa) without prior context, even if it’s the right call, it can look arbitrary from the outside. And for participants, it means they’re reacting after the fact instead of being able to prepare, reposition, unwind LP or move capital efficiently. A simple heads-up beforehand makes those transitions much smoother for everyone.

One thing I may be misunderstanding.. the proposal mentions that NAIL adjusts monthly to reach the projected APY. If that’s the intended cadence, then changes are already somewhat batched, and a short signal window wouldn’t really impact responsiveness. If instead changes can happen anytime (best imho), it might be worth clarifying the wording, since “adjusts monthly” reads more like a defined cadence.

6

Adding a “short window for input” before execution is a review gate, call it what you want. And I’m not implementing one. The entire point of the NAIL role is that someone is terminally online, watching venues daily, running the analysis, and executing when the data says MOVE. Not after a waiting period. Not after collecting silence from people who aren’t doing the work or reaching proactively, sorry.

let me clarify since the proposal wording needs tightening. Monthly is the minimum. Rebalancing happens AS OFTEN as needed, weekly, it can be daily for all I care, if conditions change. That’s the whole point of having a dedicated operator. If I see an allocation bleeding efficiency on a Tuesday, I’m not waiting until the next monthly window or polling the forum or the slack which you are inactive in for permission. I’m moving it.

On “protecting the NAIL role” - the protection is the on-chain record. Every allocation, every adjustment, every result is publicly verifiable. That’s harder accountability than any input window. If you think a specific decision was wrong, bring the data and I’ll engage. That offer is permanent and genuine. I’m not building process around hypothetical optics concerns and micro management.

7

Ok, crystal clear. Then it’s mainly about making sure users understand it’s fully reactive and need to actively monitor. Thanks

8

Great proposal, Tokenized. Significant work has clearly gone into this, the shift toward wstLINK incentives is very well thought.

I appreciate that SDL liquidity remains part of the incentive structure, as it’s a fundamental component of the project’s long-term success.

Regarding the guardrail, would it be possible to introduce a short process to notify the community whenever material changes are made to the incentive structure? Keeping everyone informed in real time would help maintain alignment.

9

Not sure why the hostility tbh in the comments but I’m against this after discussing with community especially after rereading your comments

10

Understood - I won’t be posting this to Snapshot, let’s wait for another proposal. I believe the budget can be maintained and operated by Ari or you as well, and it would help me to delegate some of the work.