January 22, 2025
The next put up accommodates a recap of stories, tasks, 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 supply staked SNX to protocol-owned staking pool, the place the protocol will personal the debt and use it to generate yield through Ethena.
- Q&A session after presentation
Spartan Council and SIP updates
Final week Kain offered SIP-420 — a proposal to create a mechanism for SNX stakers to supply staked SNX to protocol-owned staking pool, the place the protocol will personal the debt and use it to generate yield through Ethena.
The important thing elements of this proposal are that:
- Stakers would have the chance to delegate their SNX to a single, protocol-directed staking pool
- The c-ratio on this pool could be 200% permitting it to be extra capital environment friendly
- There could be a “penalty” c-ratio assigned to particular person stakers (1000%)
- The pool would then mint sUSD, then sUSDe, to generate extra yield and distribute that again to delegators within the pool
- 250k SNX from the treasury will likely be allotted to supply bonuses to CCs who implement this proposal (on the discretion of the Spartan Council)
At present, SNX is likely one of the solely remaining crypto belongings 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 a lot of parameterization and optimization particulars to nonetheless be labored out, however he thinks that is directionally useful for the protocol.
Moderately than incentivizing stakers to concern 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 ‘unhealthy debt’ as any debt issued on this pool will likely be allotted on the pool supervisor’s discretion. There are, nevertheless, nonetheless market forces at play to get customers to delegate collateral to the pool.
Kain additionally confused that the time to do that is now, on the cusp of a bull market, slightly than ready and probably lacking out on the yield. And to ensure that this to have the ability to work now, the current peg points have to first be corrected (for which Kain mentioned there’ll have to 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 mentioned primarily with Ethena to start out, with a c-ratio discount from 400% to 200% instantly. With this, twice as a lot debt may 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 supply 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 have to 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 properly?
Kain mentioned it is a fairly technical query for the scope of the proposal, and actually simply the following 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 likely one of the optimization levers that the pool managers should resolve on to sufficiently incentivize the delegators to maintain their collateral delegated.
- Have there been talks with Ethena about this already?
Sure, Ethena is completely satisfied to have extra collateral so long as there’s liquidity to transform it to staked ETH.
General 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
