[Stader Labs] LTIPP Application - FINAL

Archive Long Term Incentives Pilot Program (LTIPP)
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SECTION 1: APPLICANT INFORMATION

Provide personal or organizational details, including applicant name, contact information, and any associated organization. This information ensures proper identification and communication throughout the grant process.

Applicant Name: Aditya Deorukhkar

Project Name: Stader Labs

Project Description: Stader is a non-custodial smart contract-based staking platform that helps you conveniently discover and access staking solutions. We are building key staking middleware infra for multiple PoS networks for retail crypto users, exchanges and custodians.

Stader’s liquid staking token on Ethereum (ETHx) has a unique design with multi-pool architecture that enables scalability and decentralization at the same time. Here are some key value propositions which make ETHx a game changer on the supply and demand side-

  • Decentralized LST on ETH - ETHx is a decentralized LST, which allows permissionless operators to validate. On the other hand, Lido is centralized and does not allow for permissionsless Operators to validate.
  • More Capital Efficient - Node operators can run nodes on ETHx with <80% of the current capital requirements. Capital requirements are 4.4 Eth with ETHx while they have to bond 32 Eth for solo staking, 10.4 Eth with RPL
  • Higher rewards - Stakers don’t have to choose from paying 50% extra commissions to closest competitor (RPL) while Stader’s commissions will be competitive at 10%
  • Supply Upside-
    • ETHx is a highly decentralized and censorship resistant liquid staking powered by 100s of unique node operators.
    • Offers Implicit slashing protection safeguarding user’s Eth against penalties and slashing i.e. users face no principal loss in case of any slashing events.
  • Demand Advantage- Leveraging partnerships with Ledger, OKX, and key DeFi players like Aave, Balancer, etc., will ensure sustainable TVL growth of ETHx and enhanced yields for ETHx users

Team Members and Roles:

Project Links:

Website - Ethereum Staking - Stake Ether & Earn Eth2 Rewards | Stader Labs

Twitter - https://twitter.com/staderlabs_eth

TG - Telegram: Contact @Staderlabs_Ethereum_Official

Github - GitHub - stader-labs/ethx

Docs - Ethereum | StaderLabs docs

Dune - https://dune.com/stader_labs/dashboard-catalogue

Contact Information

Point of Contact (note: this should be an individual’s name, not the name of the protocol):

Business Head - Anoothi Kumar

Point of Contact’s TG handle: @AnoothiKumar

Twitter: https://twitter.com/AnoothiKumar

Email: anoothi.kumar@staderlabs.com

SECTION 2a: Team and Product Information

Provide details on your team’s past and current experience. Any details relating to past projects, recent achievements and any past experience utilizing incentives. Additionally, please provide further details on the state of your product, audience segments, and how you expect incentives to impact the product’s long-term growth and sustainability.

Team experience (Any relevant experience that may be useful in evaluating ability to ship, or execution with grant incentives. Please provide references knowledgeable about past work, where relevant. If you wish to do so privately, indicate that. [Optional, but recommended]):

What novelty or innovation does your product bring to Arbitrum?

  1. Cross-Chain Compatibility: By integrating with Arbitrum, our platform can offer cross-chain compatibility, allowing users to seamlessly transition their staked assets between Ethereum and Arbitrum chains. This interoperability enhances flexibility and liquidity for users, enabling them to optimize their staking strategies across different networks.

  2. Enhanced Scalability and Throughput: Leveraging Arbitrum’s layer 2 scaling solution, our platform can significantly enhance scalability and throughput compared to the Ethereum mainnet. This means faster transaction speeds, lower fees, and an overall improved user experience, making staking more accessible and efficient for participants.

  3. Reduced Gas Costs: Arbitrum’s rollup technology enables transaction batching and compression, resulting in lower gas costs compared to Ethereum mainnet transactions. By migrating to Arbitrum, our platform can offer users a more cost-effective staking experience, reducing barriers to entry and increasing accessibility for a wider range of participants.

  4. Innovative Staking Mechanisms: Expanding to Arbitrum opens up possibilities for implementing innovative staking mechanisms and incentive structures that leverage the unique features of layer 2 scaling solutions. For example, we could explore dynamic staking parameters, liquidity mining programs, or novel reward distribution models tailored specifically for Arbitrum users.

  5. Enhanced Security and Reliability: Arbitrum’s security model, which relies on Ethereum as its base layer, provides strong security guarantees and ensures compatibility with existing Ethereum-based protocols and standards. By utilizing Arbitrum’s security infrastructure, our platform can offer users a high level of security and reliability, further bolstering confidence in our staking services.

Is your project composable with other projects on Arbitrum? If so, please explain:

  1. Interoperability: Our smart contracts are built with compatibility in mind, adhering to industry standards and protocols commonly used on Arbitrum. This ensures that our platform can seamlessly interact with other projects, protocols, and DeFi applications deployed on Arbitrum.

  2. Token Standards: ETHx is an ERC-20 token contract, enabling easy integration with other projects and allowing users to transfer or utilize their staked assets across various Arbitrum-based platforms.

Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?

Comparable protocols include -

  1. Lido
  2. Rocketpool

How do you measure and think about retention internally? (metrics, target KPIs)

Retention metrics recorded are as mentioned below -

  1. Weekly Total Value Locked (TVL): This metric evaluates the total value locked in the platform measured in both tokens and its equivalent in dollars ($TVL). It offers insights into the platform’s liquidity and its attractiveness to users.

  2. Active User Engagement: Tracking active users on a daily, weekly, and monthly basis provides a comprehensive view of user engagement. Additionally, segmenting users based on the size of their holdings offers nuanced insights into user behavior and retention trends.

  3. Circulating Supply of LST Tokens: Monitoring the circulating supply of LST tokens offers a vital indicator of token liquidity and adoption within the ecosystem. This metric reflects the community’s interest and participation in the protocol over time.

Relevant usage metrics - Please refer to the OBL relevant metrics chart 26. For your category (DEX, lending, gaming, etc) please provide a list of all respective metrics as well as all metrics in the general section:

Stader Labs metrics for ETHx -

TVL: We currently stand at $464Mn TVL. This can be viewed on our mainnet dashboard

Trading Volume: Trading volume for ETHx stands at $3Mn for the last 30 days (Source - CoinmarketCap)

Total Circulating LST Tokens: ETHx in ciruculating supply can be viewed on our mainnet dashboard

List of Depositors / Holders: Query for ETHx depositors

General Metrics -

Daily Active Users: Active stakers per day

Daily Protocol Fee: Revenue from staking rewards on Ethereum

Do you agree to remove team-controlled wallets from all milestone metrics AND exclude team-controlled wallets from any incentives included in your plan: [Yes/No]

Yes

Did you utilize a grants consultant or other third party not named as a grantee to draft this proposal? If so, please disclose the details of that arrangement here, including conflicts of interest (Note: this does NOT disqualify an applicant):

No grants consultant or third parties were involved in drafting this proposal

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SECTION 2b: PROTOCOL DETAILS

Provide details about the Arbitrum protocol requirements relevant to the grant. This information ensures that the applicant is aligned with the technical specifications and commitments of the grant.

Is the protocol native to Arbitrum?: [Yes/No, and provide explanation]

No, Stader Labs is native to Ethereum Mainnet. We plan to enable Native staking on Arbitrum.

On what other networks is the protocol deployed?:

ETHx is currently live only on Ethereum and Arbitrum is the first network we’re expanding to

What date did you deploy on Arbitrum mainnet?:

Arbitrum deployment is planned for the second week of March. We have been a relatively new entrant on ETH (launched in Q3 ‘24) and the primary focus for the first two quarters has been to cement the liquidity on mainnet before expanding to L2s. With 100K+ ETH under the belt we are poised to replicate the success on other chains

Do you have a native token?: Yes, $SD which is live on Ethreum, Polygon, BNB.

Link to Tokenomics - introduction | StaderLabs docs

Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run? Please share results and dashboards, as applicable?

  1. LPs are the primary focus for any LST at the start and it’s been the case with us. We’ve predominantly incentivized on Balancer and Curve with the latter being our current source of liquidity across multiple pools
  2. Curve Monitor has the emission stats for all Curve pools; Similar stats for Balancer can be accessed here
  3. Outside of LPs, we also incentivise $3.5K - $4K a week on Pendle via Penpie and Equilibria

Current Incentivization: How are you currently incentivizing your protocol?

Current incentivization include -

  1. Liquidity providers across multiple DeFi protocols receive rewards for contributing liquidity to pools either through bribing systems or direct $SD incentives.
  2. As mentioned, we also incentivise Pendle through Penpie and Equilibria but we temporarily paused incentives on Curve due to low bribing efficiency but will restart whenever the efficiencies pick up

Have you received a grant from the DAO, Foundation, or any Arbitrum ecosystem related program?

No

Protocol Performance:

Current TVL (all LSTs): $727 Million
ETH Staked: 133,628
Current active users: 85K+

Protocol Roadmap: [Describe relevant roadmap details for your protocol or relevant products to your grant application. Include tangible milestones over the next 12 months.]

Arbitrum based Roadmap

  • 2024 Q2-
    • Arbitrum & Grant Specific Update
      • Hit $15-20M TVL on Arbitrum with liquidity across 2 DeXs
      • Launch on other DeFi hotspots like Pendle & AAVE on Arbitrum
      • Kickstart the native staking option via the Stake Ease/Router partnership
      • Wallet partnerships across Ledger, Exodus etc

Goals and Milestones for H1 2024

  • Reach 200,000-ETH-staked milestone
  • Reach 400-Node-Operator-count milestone

Audit History & Security Vendors: [Provide historic audits and audit results. Do you have a bug bounty program? Please provide details around your security implementation including any advisors and vendors.]

Stader Labs has undergone rigorous audits conducted by leading firms in the industry, such as Halborn Audits, PeckSheild Audits, Blocksec Audit, ImmuneBytes Audit, and Osec Audit.

The historical audit reports can be found here - Audit reports

Security Incidents: [Has your protocol ever been exploited? If so, please describe what, when and how for ALL incidents as well as the remedies to solve and mitigate for future incidents]

No

SECTION 3: GRANT INFORMATION

Detail the requested grant size, provide an overview of the budget breakdown, specify the funding and contract addresses, and describe any matching funds if relevant.

Requested Grant Size: 250K ARB tokens

Justification for the size of the grant:

The mainnet TVL is predominantly driven by DeFi incentives and $SD boosts (our governance token). Since $SD won’t have the same level of utility on Arbitrum to begin with, this grant would be the major incentivisation lever to ensure a sustainable LST ecosystem on Arbitrum which would ultimately benefit all the stakeholders in the long run

Grant Matching:

As mentioned above, $SD’s current predominant utility (besides governance) is centered around Node Operator bonding on the mainnet. However, the token’s always been multi-chain and has use cases across chains and we plan to build up similar DeFi use cases on Arbitrum. Which should enable us to incentivize with it on Arbitrum and eventually propose a grant matching program to the Stader DAO. However, the team can not guarantee the outcome with Stader DAO being a decentralized entity; so budget and details may vary

Grant Breakdown: [Please provide a high-level overview of the budget breakdown and planned use of funds]

Spending Category Amount allocated Comments
Bridging Incentives 25K ARB Early adopter incentives to reduce switching costs and improve Arbitrum adoption. Stader will cover the Bridging cost for the first 500 users who bridge ETHx to Arbitrum
Growth Incentives (DeFi) 225K ARB Sustainably scaling on DEXs (Camelot, Ramses) for building ETHx liquidity - a vital prerequisite for LST adoption; followed by DeFi integrations across yield optimizers (Pendle) and lending markets (AAVE, Radiant)

Funding Address: 0xE0b2590a09d5Da40cB6D3D8d5436B5Cafe2B4b9F

Funding Address Characteristics: ⅔ vault shared between Sid (cofounder), Dev wallet and Kranthi

Treasury Address:

Break up of our Treasury wallets are listed in the following forum post - List of SD Wallets and balances - Announcements & Updates - Stader Community Governance

SECTION 4: GRANT OBJECTIVES, EXECUTION AND MILESTONES

Clearly outline the primary objectives of the program and the Key Performance Indicators (KPIs), execution strategy, and milestones used to measure success. This helps reviewers understand what the program aims to achieve and how progress will be assessed.

Objectives:

The grant spending avenues can be broadly clustered into three pockets

  • Bridging Compensation: Aimed to drive early adoption for ETHx on Arbitrum by easing the switching costs that can be prohibitive for retail users
  • DeFi Incentives: A major portion of the grant would be funneled into DeFi to fuel the growth of ETHx adoption on Arbitrum via critical and rewarding DeFi usecases. Adhering to our mainnet approach, LPs would be the primary area of focus followed by yield trading platforms, Lending markets, CDPs etc…

Execution strategy: [Describe the plan for executing including token distribution method (e.g. farming, staking, bonds, referral program, etc), what you are incentivizing, resources, products, use of funds, and risk management. This includes allocations for specific pools, eligible assets, products, etc.]

We have always followed a staggered approach to incentivisation and will continue to do so on Arbitrum too. As mentioned, all decisions are routed through the DAO but the team would propose a monthly plan outlining the TVL & APR targets and the budget required to achieve it.

  • Bridging Incentives:

    • We are planning a bridging campaign (Galxe, Intract etc…) to build awareness around our entry into Arbitrum
    • It costs ~$100 (at current prices) in gas to bridge, so the construct is expected to airdrop around $100 (could vary based on price movements) factoring in the overall switching cost; which comes to $50K (500 users*$100 ~25K ARB) total
    • We would ensure the standard volume thresholds and Sybil guardrails to avoid gamification
    • Frequency: We plan to do this as a monthly construct from an operational standpoint but reserve the provision to turn it into a bi-weekly affair depending on the traction
    • This will be on top of the staking boosts in SD (our gov. token) we usually provide during these campaigns

  • Growth Incentives (DeFi):

    • We are targeting a $15-20M TVL in the first quarter with around half ($7M-$10M) sitting in LPs which brings the LP size to $14M-$20M (Assuming 50-50 asset split and ideally across 2 pools)
    • Assuming a 10% APR (based on mainnet stats. L2 APRs seem to be much higher with concentrated liquidity solutions running into triple digit APRs), the spend comes to a minimum $350K (175K ARB) a quarter ($14M*10%/4)
    • Pendle - We bribe ~$3.5K-4K a week on mainnet against a $5-6M TVL and intend to maintain similar level of spends on Arbitrum which comes out to another ~$50K (25K ARB) a quarter
    • 25K ARB reserves - Lending & CDP protocols are of utmost priority to us but we recognise the requirements and the timelines for going live on those are much longer than LPs
      • Hence we are reserving a small portion of the grant for the likes of AAVE, Radiant and the strategy vaults built on top by players like Sommelier, CIAN etc… offering leveraged loops and such; should they go live in the proposed time frame
      • However, if the timeline extends beyond the grant specifications, we will route these funds to incentivise other protocols that might go live that we currently do not have visibility on or to further scale up the LPs

What mechanisms within the incentive design will you implement to incentivize “stickiness” whether it be users, liquidity or some other targeted metric?

Taking cues from the mainnet, Stader intends to drive growth through DeFi partnerships be it through the traditional routes (LPs or lending markets) or niches such as yield trading or the new restaking wave which has been way more sustainable and will continue to attract users for the foreseeable future

However, EigenLayer has been following a more measured approach when it comes to the LST route as opposed to the native restaking route. But the extra yields coupled with the boosts from the Arbitrum grant will always make it a more lucrative option for users which will only get better with the native staking + restaking capabilities we plan to introduce subsequently

Specify the KPIs that will be used to measure success in achieving the grant objectives and designate a source of truth for governance to use to verify accuracy. [Please also justify why these specific KPIs will indicate that the grant has met its objective. Distribution of the grant itself should not be one of the KPIs.]

  • TVL: The leading metric for any protocol especially LSTs considering the direct correlation with ETH. Positive TVL movement is a definite indicator of ecosystem’s trust and acts as a flywheel

  • Liquidity Depth: While ETHx went live with Redemptions from Day 1, deep secondary liquidity has always been a key priority and will continue to be in Arbitrum. Besides being a great Defi utility, this will enable instant liquidity as opposed to the protocol dictated timelines around unstaking

    • Source: The respective DEX dashboards

  • Peg Stability: Vital for any LST which further cements trust and eliminates unnecessary demand shocks driven by rebalancing/arbitrage efforts

    • Source: Our oracle providers (Redstone) or Dex Screener

  • Users: Probably a tricky metric considering the space and the anonymous nature of wallets but still a canary for gauging protocol adoption

Grant Timeline and Milestones: [Describe the timeline for the grant, including ideal milestones with respective KPIs.

Grant budget is built based on a 12 week timeline:

  • Milestone 1 (End of Week 6) : $15M TVL on Arb, $5-7M in LPs, $5M on Pendle
  • Milestone 2 (End of Week 12) : $20M TVL on Arb, $7-10M in LPs, $6M on Pendle

How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?

LSTs have unlocked a huge opportunity in DeFi which is evident from the scale of the space. However, to reach the end goal of being an ETH substitute, it’s vital to build DeFi utility that can match or even trump ETH. Scaling it up to that extent requires significant investments in infrastructure and incentivisation at all levels to drive adoption which has been the norm across every chain we have built so far

Once the volume picks up and reaches critical mass, it creates a flywheel centered around lending protocols bringing more and more TVL. As mentioned in the grant breakdown section, we plan to utilize a portion of the funds for dev work on Arbitrum, a good chunk on compensating the prohibitive bridging costs that end up damping the low gas advantage; especially for moderate users

Lastly, the rest of the grant would be funneled into DeFi activities to hit the TVL milestones mentioned in the previous section. We have managed to cross 100K ETH in just two quarters post launch on mainnet and we expect to hit similar strides on Arbitrum; proportional to the size of the chain of course and are confident in building up a sticky $15-20M TVL by the end of the launch quarter

Do you accept the funding of your grant streamed linearly for the duration of your grant proposal, and that the multisig holds the power to halt your stream? [Yes/No]

Yes

SECTION 5: Data and Reporting

OpenBlock Labs has developed a comprehensive data and reporting checklist for tracking essential metrics across participating protocols. Teams must adhere to the specifications outlined in the provided link here: Onboarding Checklist from OBL 26. Along with this list, please answer the following:

Is your team prepared to comply with OBL’s data requirements for the entire life of the program and three months following and then handoff to the Arbitrum DAO? Are there any special requests/considerations that should be considered?

Yes

Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread that reference your OBL dashboard? [Please describe your strategy and capabilities for data/reporting]

Yes

First Offense: In the event that a project does not provide a bi-weekly update, they will be reminded by an involved party (council, advisor, or program manager). Upon this reminder, the project is given 72 hours to complete the requirement or their funding will be halted.

Second Offense: Discussion with an involved party (advisor, pm, council member) that will lead to understanding if funds should keep flowing or not.

Third Offense: Funding is halted permanently

Does your team agree to provide a final closeout report not later than two weeks from the ending date of your program? This report should include summaries of work completed, final cost structure, whether any funds were returned, and any lessons the grantee feels came out of this grant. Where applicable, be sure to include final estimates of acquisition costs of any users, developers, or assets onboarded to Arbitrum chains. (NOTE: No future grants from this program can be given until a closeout report is provided.)
Yes

Does your team acknowledge that failure to comply with any of the above requests can result in the halting of the program’s funding stream?: [Y/N]

Yes

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Hello @Hedged_Adi

Thank you for your application! We can confirm your application has been submitted and you will be assigned an advisor shortly.

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Hello @Hedged_Adi ,

Thank you for your application! Your advisor will be @JoJo.

Please join the LTIPP discord and ping your advisor in the general chat so they can create a new channel and start communicating with you.

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Hey @cliffton.eth, Hope you’re well!

Can you please change the title from “Draft” to “Final”?

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Hey there, I’ve amended the post title to reflect that this proposal is FINAL. All the best!

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At CIAN, we have a long-standing collaboration history with Stader, a team that has shown incredible tenacity and professionalism since its inception. As we are passionately working towards expanding the LST ecosystem on Arbitrum, we are pleased to see this trusted partner finally make his entrance into the best L2. :saluting_face:

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ITU Blockchain supports StaderLabs because we believe that contributions such as building bridges to move transactions from Ethereum to Arbitrum, increasing DEX scaling, and scaling partnerships with other Arbitrum protocols will increase and highlight Arbitrum scaling. In addition, we believe that aiming for the adoption of ETHx for Arbitrum and increasing token stickiness in this direction will increase DeFi development. ETHx’s low cost, censorship resistance, and reward rate were the developments that stood out to us.