January 22, 2025
The next put up comprises a recap of stories, initiatives, and necessary updates from the Spartan Council and Core Contributors from final week.
👉TLDR
SIP-420: Protocol Owned SNAX presentation recap (see under for particulars)Create a mechanism for SNX stakers to offer staked SNX to protocol-owned staking pool, the place the protocol will personal the debt and use it to generate yield by way of Ethena.Q&A session after presentation
Spartan Council and SIP updates
Final week Kain introduced SIP-420 — a proposal to create a mechanism for SNX stakers to offer staked SNX to protocol-owned staking pool, the place the protocol will personal the debt and use it to generate yield by way of Ethena.
The important thing facets of this proposal are that:
Stakers would have the chance to delegate their SNX to a single, protocol-directed staking poolThe c-ratio on this pool could be 200% permitting it to be extra capital efficientThere could be a “penalty” c-ratio assigned to particular person stakers (1000%)The pool would then mint sUSD, then sUSDe, to generate further yield and distribute that again to delegators within the pool250k SNX from the treasury might be allotted to supply bonuses to CCs who implement this proposal (on the discretion of the Spartan Council)
Presently, SNX is without doubt one of the solely remaining crypto property that’s nonetheless accepted as collateral for minting stablecoins (sUSD). This SIP due to this fact goals to leverage that fame as a stablecoin supplier to generate income for the protocol and stakers. Kain acknowledged that there are numerous parameterization and optimization particulars to nonetheless be labored out, however he thinks that is directionally useful for the protocol.
Fairly than incentivizing stakers to difficulty and allocate debt the place it’s wanted, the motivation could be to delegate the collateral in order that the centralized pool managers can allocate it as they see match. This reduces the danger of ‘dangerous debt’ as any debt issued on this pool might be allotted on the pool supervisor’s discretion. There are, nonetheless, nonetheless market forces at play to get customers to delegate collateral to the pool.
Kain additionally careworn that the time to do that is now, on the cusp of a bull market, quite than ready and doubtlessly lacking out on the yield. And to ensure that this to have the ability to work now, the latest peg points must first be corrected (for which Kain stated there’ll must be incentives to arb the curve pool).
There have been a number of questions within the chat after the presentation, so let’s evaluate what was requested and the way Kain responded:
How will yield be generated?
Kain stated primarily with Ethena to start out, with a c-ratio discount from 400% to 200% immediately. With this, twice as a lot debt might be minted on the identical collateral to generate yield. He added that Ethena wants staked ETH to scale their stablecoin, and there was not as a lot demand to offer staked ETH to the protocol for collateral, in order that they’ve modified their method and have begun accepting stablecoins.
Is Ethena promoting sUSD for staked ETH?
The reply is sure, and the curve pool will must be incentivized to accommodate this promoting. Kain estimates $10–20 million TVL could be wanted to permit for gross sales of $1 million a day.
Will this begin on mainnet or will it’s launched on Optimism as effectively?
Kain stated this can be a fairly technical query for the scope of the proposal, and actually simply the subsequent step is to see an implementation plan from the CCs inside 48 hours from an approval vote to make sure accountability and transparency.
How lengthy would a hypothetical debt discount program final if that’s the course the council decides to take with the proceeds of this pool?
And it was answered that this is without doubt one of the optimization levers that the pool managers must resolve on to sufficiently incentivize the delegators to maintain their collateral delegated.
Have there been talks with Ethena about this already?
Sure, Ethena is comfortable to have extra collateral so long as there may be liquidity to transform it to staked ETH.
Total Kain is bullish and thinks the Council must ruthlessly prioritize doing no matter has the potential to reinvigorate the challenge — beginning with protocol owned SNAX!
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SIP/SCCP standing tracker:
SIP-420: Protocol Owned SNAX, Standing: draft
