[BIP-160] Enable SD/USDC (50/50) and SD/WETH (80/20) Gauges with 2% emissions cap (Ethereum)

BAL Gauges
1

Summary

This is a proposal to enable Balancer gauges for 2 new pools on Balancer Eth:

  1. SD - USDC pool

  2. 80% SD - 20% WETH pool

Utility

SD (Stader Token) is Stader Labs’ protocol token. Users can use SD tokens to participate in governance decisions. With SD staking planned to go live soon, SD token holders will be able to get a share of the protocol revenue. Currently SD tokens are used to incentivize liquidity provisioning, as bribes to veBAL voters and as direct rewards to partner DeFi protocols across 6 different blockchains where Stader offers its Liquid Staked Derivative tokens (Polygon, BNB, Hedera, Fantom, Near, Terra 2.0) and will go live soon on Ethereum as well with the ETHx token

SD distribution

1063×604 102 KB

Link to litepaper

Motivation

SD currently has ~ $43M in trading volume over the last 30 days across centralized exchanges & DEXes. Most of the current SD liquidity resides in the form of a SD-USDC Uni v2 pool worth $450K. Despite the small size the pool has generated L7D volumes of ~$3M.

Stader labs would like to deepen the liquidity for the SD token on ETH to support low slippage transactions. The upcoming launch of the ETHx (liquid staked Ethereum derivative token) in Feb’23 would also lead to an inflow of SD tokens on the ETH network leading to an increase in trading volumes from current levels for the token.

Hence Stader would like to create 2 SD pools on ETH balancer and incentivize liquidity through bribes:

  1. SD-USDC pool (low slippage for trades)
  2. 80SD-20WETH pool (low impermanent loss for SD liquidity providers)

Stader on Balancer

Stader has a great partnership with the Balancer DAO, with 2 pools already present:

  1. MaticX-WMATIC ($9.4M TVL, 12.3% APY)
  2. 80SD-20MaticX ($92K TVL, 95% APY)

Stader has spent over $600K in terms of direct SD incentivization and bribes on Hidden Hand over the last 6 months and have promoted the pools through our marketing channels and embedded it into secondary yield products (like vaults, automated strategies) through partners

Specifications

Governance

Stader protocol is governed by the SD token. Holders can actively participate in governance decisions and share feedback on proposals put forward by the protocol. The following decisions will follow the governance mechanism process:

  • Any implication on smart contract parameters for liquid staking
  • Changes to validator selection criteria
  • Changes to fees
  • SD token related
  • Treasury management and SD staking

More details here

Oracles

The SD token does not use any oracles

Audits

All chain specific stader smart contracts are audited at least 2X by reputed audit firms. On-chain smart contract health monitoring through Forta integration & Bug Bounty programs are live.

Centralization vectors: n/a

Market History

SD has been live since 15th March 2022 on Polygon and currently has $42M in trading volume over the last 30 days across centralized exchanges & DEXes

Value

We expect that if Balancer were to enable these gauges, they could become the primary source of liquidity for SD on Ethereum and drive value to Balancer through trading volume and rewards to veBAL holders via bribes.

Contract

SD on ETH 0x30d20208d987713f46dfd34ef128bb16c404d10f

Useful Links:

Stader Labs

DApp

Twitter

Discord

Telegram

Author: Shanmug (Business Development & DeFi Partnerships, Stader Labs)

There will be two votes.

Vote 1: SD/USDC 50/50 w/2% emissions cap

Pool: 0xDb0cBcF1b8282dedc90e8c2CEFe11041d6d1e9f0
Gauge: 0x4dC35eC8562596ddA6aEe8EceE59a76D4d72b83E

Vote 2: SD/WETH 80/20 w/2% emissions cap

Pool: 0xE4010EF5E37dc23154680f23c4A0d48BFca91687
Gauge: 0x37eCa8DaaB052E722e3bf8ca861aa4e1C047143b

2 Likes
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Hello SD,

I renamed the topic of this forum post to start with [BIP-XXX] as we don’t assign BIP numbers until things go to snapshot.

Secondly, The gauge framework dictates that the 80/20 pool should be capped at 2% of veBAL emissions. Based on the fact that 2 pools are being requested at the same time, and this will be the third gauge for SD. I’d also recommend that the 50/50 pool be capped at 2%. We can reevaluate if/when those limits are exceeded.

Does this all work/make sense to you? Otherwise, we can we do more evaluation to consider if the 50/50 gauge meets the requirements for an uncapped gauge and if the community thinks it’s appropriate to stand up both a 50/50 and an 80/20 gauge for the same token at the same time in order to have both n 80/20 pool with emissions and a 50/50 pool that trades with lots more emissions.

In general 80/20 pools are a lot more lucrative in terms of fees and DAO revenue when they are the primary liquidty source on chain, and not a sideshow to a bigger pool with the primary purpose of providing LPs with higher rewards for less risk by using lots of BAL emissions.

2 Likes
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Hi Tritium,

Thanks for the help! Yes - we can go ahead with a 2% emission cap for each pool and re-evaluate later if limits are exceeded.

2 Likes
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updated the OP with pools and gauges. clear to vote

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https://snapshot.org/#/balancer.eth/proposal/0x9d624bdba84b73265d4128de10b64100338c13165b5bc31f633da796b876b31b

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Thank you @Xeonus @solarcurve @Tritium for the help!

1 Like