SLURP-62-A-X | wstLINK Incentive Framework

[Tokenized2027]

Summary

This SLURP expands and consolidates the existing wstLINK incentive program (originally authorized under SLURP-59) into a unified budget covering all current and planned DeFi markets where wstLINK or LINK liquidity serves the protocol.

Total unified budget: ~4,134 wstLINK over 10 months (existing ~3,127 wstLINK balance held by NAIL + ~1,007 stLINK transferred from governance multisig and wrapped to wstLINK).

No further SDL incentive emissions are authorized. Existing SDL campaigns on the Morpho wstLINK/LINK market run until their scheduled expiry (July 26, 2026) and will not be renewed.

Motivation

The original SLURP-59 authorized a 0.5% DeFi-PoL carve-out (~3,200 wstLINK/year) exclusively for the Morpho wstLINK/LINK market. Since then:

1. The Morpho market has grown to ~$2.8M TVL with 100+ depositors and healthy organic utilization (~86%).
2. New DeFi venues are emerging that benefit from protocol-owned liquidity incentives: the upcoming Morpho wstLINK/frxUSD market and the existing Uniswap V3 SDL/LINK pool.
3. wstLINK has proven to be the correct incentive token: real yield, no sell pressure, aligned with the protocol’s core product (staked LINK). SDL incentives create unnecessary sell pressure and are unsuitable for attracting sustainable liquidity.

A unified budget with flexible allocation authority allows NAIL to respond to market conditions without requiring a new SLURP for each venue or adjustment.

Specification

1. Budget

Existing NAIL balance (from SLURP-59) ~3,126 wstLINK
New transfer from governance multisig ~1,007 stLINK (to be wrapped to wstLINK)
Total ~4,133 wstLINK budget for ~10 months

2. Eligible Markets

Morpho: Alpha LINK Enhanced V2 Vault (supply) wstLINK via Merk - ~1-5%
Morpho: wstLINK/LINK market (borrow) wstLINK via Merkl- ~1-5%
Morpho: wstLINK/frxUSD market (frxUSD depositors) wstLINK via Merkl ~5% for $200K initial seed, then based on Supply & Demand - 10% cieling (only if there is extreme organic demand for frxUSD)
Morpho: wstLINK/frxUSD market (wstLINK depositors) wstLINK via Merkl up to 5%
Uniswap V3: SDL/LINK pool (0x51d1…fC3) | wstLINK via Merkl Up to 10%

APY ceiling: up to 10% for the Uniswap V3 pool, averaging 1-7% for lending/borrowing markets, flexible while targeting being conservative.

Flexibility & Operational Authority

NAIL retains full operational authority to:

• Adjust allocation between eligible markets based on utilization, TVL, and market demand.
• Add new Merkl campaigns on eligible markets or remove underperforming ones.
• Increase or decrease APY within the stated ranges (1-5% for lending/borrowing, up to 10% for Uniswap V3).
• Manage blacklists and whitelists on campaigns to prevent whale dominance or protocol contract gaming.
• Set campaign durations (monthly, bi-monthly, quarterly) as appropriate.

**All adjustments stay within the total ~4,134 wstLINK budget. No additional funds may be drawn without a new SLURP.
**
Transparency & Council Notification

NAIL will notify Council members (Ari & Michael) in advance or immediately after any material changes to the incentive program, including:

• New market deployments
• Significant reallocation between markets (>20% budget shift)
• Changes to blacklist/whitelist policies
• Campaign renewals or discontinuations

Notifications are informational. Operational decisions do not require Council approval within the authorized scope of this SLURP.

Override provision: If both Ari and Michael jointly agree that a specific operational decision by NAIL is detrimental to the protocol, they may override that decision and request it be reverted. NAIL will comply with any joint override and revert the change. This serves as a safeguard while preserving day-to-day operational speed.

SDL Incentives: Sunset
No further SDL incentive campaigns will be issued under this SLURP or any extension of it.

• Existing SDL supply campaign (60,625 SDL): runs until July 26, 2026. Not renewable.
• Existing SDL borrow campaign (30,312.5 SDL): runs until July 26, 2026. Not renewable.

After July 2026, all DeFi incentives are wstLINK only.

AAVE Exclusion

This SLURP does not authorize the use of any wstLINK budget for a potential future AAVE pool. If an AAVE wstLINK market is established, a separate SLURP must be submitted and approved before any incentive budget is allocated to it.

Governance Actions Required

1. Council Snapshot vote to approve this SLURP.
2. Multisig transaction: Transfer ~1,007 stLINK from governance multisig to NAIL (0xCA4784Af7eBe83A7eafeFD1c8f81d00425F366D9).
3. NAIL wraps received stLINK to wstLINK and deploys per the authorized scope above.

Risk Considerations

• Budget exhaustion: Fixed pool, no replenishment without new SLURP. NAIL will pace deployment to cover the full 10-month period.
• Market conditions: If a venue underperforms, budget can be reallocated to higher-impact markets within scope.
• Smart contract risk: All incentives deployed via Merkl, a battle-tested distribution protocol. No custom contracts.
• AAVE boundary: Explicitly excluded to prevent scope creep. New venue = new SLURP.

References

• SLURP-59: Original 0.5% DeFi-PoL carve-out for Morpho wstLINK/LINK market
• NAIL multisig: 0xCA4784Af7eBe83A7eafeFD1c8f81d00425F366D9
• Merkl Distribution Creator: 0x8BB4C975Ff3c250e0ceEA271728547f3802B36Fd
• Alpha LINK Enhanced V2 Vault: 0x610f5B68bD1EED68Af649A3fD3DC2CAa1ee4Ae7E
• Morpho wstLINK/LINK Market ID: 0x987134eb…287816e9
• Uniswap V3 SDL/LINK Pool: 0x51d1026e35d0F9aa0fF243ebC84bb923852c1fC3
  -SLURP-62-X Feedback SLURP-62-X | A DeFi Incentive Framework for stake.link LSTs

[Ari]

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.

[Tokenized2027]

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.

[Michael]

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.

[Ari]

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.

[Tokenized2027]

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.

[Ari]

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

[hboss]

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.

[Michael]

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

[Tokenized2027]

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.

[Ari]

Appreciate @Tokenized2027 reworking the proposal and moving it forward. I fully support the consolidation around wstLINK incentives and keeping execution lightweight within a defined scope. As I said in my earlier reply to the previous version of this slurp, I believe it makes sense to ensure that increased flexibility is matched by enough visibility for users and community members to follow changes over time. So on that front, I’m happy to spend some time putting together a public tracker/dashboard so current allocations, active campaigns and major changes are easier to follow over time