Thanks for raising this proposal @Tokenized2027.
I’m personally in favour of generating POL and mentioned a similar idea to the team last week. The only difficult part is the how, as each mechanism has its own pros and cons.
I think the most feasible solution, especially considering the long-term is this option:
In an ideal scenario, there needs to be a positive flywheel that increases the amount of secondary liquidity the more the platform grows. This can then negate the need of the treasury to spend SDL on incentives as time goes on, while also increasing the amount of stLINK incentives that get funnelled to the pools as the amount staked increases.
As identified, this is especially important for DeFi composability that will retain the platforms competitive edge.
The only other feasible option is the idea for the treasury to mint reSDL. Although in practise, it’s similar to the change in protocol fees as it’s essentially lowering the “fee” received by SDL stakers as the treasury is diluting the reward rate but with the side-effect of a large treasury SDL spend to dilute SDL stakers to earn stLINK rewards.
Changing the protocol fee structure would be the simplest and easiest solution for users to understand. The problem is just how the fees are changed.
I will write a reply to TEMP CHECK | Increasing Community Pool delegation fee to reSDL stakers shortly after this, but if both temp checks are seen as favourable then they could be bundled as one as an overall protocol fee structure change.
To properly direct any fee change in regards to POL, it needs to be modelled so the incentive reward rate into the pools overtime is known based on target liquidity. I will take this on, which can then also feed into any future proposal for SDL incentives.