Interpreting Stader: DVT hybrid node, can the multi-chain low-market-cap LSD protocol usher in spring?

Original title: 《 Interpreting Stader: DVT hybrid node, can the multi-chain low-market-value LSD protocol usher in spring? 》

Original author: Rain in the Rain, Deep Tide TechFlow

A consensus that the core narrative of the crypto market this year is LSD. Therefore, we can see that many protocol products are beginning to move closer to LSD, such as Frax Finance launched frxETH, MakerDAO is about to launch ETHD, Yearn is about to launch yETH, etc. The old staking protocol Stader Labs is also following the trend and launched Ethereum LSD-related products.

In this fiercely competitive track, we can roughly divide the track into three layers:

The bottom layer is SSV.Network and Obol Network, which are based on DVT (distributed validator technology) technology.

The second layer is the well-known Lido, Rocket Pool and other protocols, which are responsible for helping users stake Ethereum more easily and with higher capital efficiency.

The top layer is the DeFi layer, and the DeFi layer protocol will use various DeFi means to increase the yield of related LSD liquidity staking certificates such as stETH.

Stader Labs' upcoming ETHx belongs to the second layer.

The original product concept of Stader Labs was to provide liquidity staking services for Terra, but as the Terra building collapsed, Stader began to turn to multi-chain expansion and provide liquidity staking services for Polygon, BNB Chain, Near, Fantom, Hedera and Terra 2.0. According to DeFiLlama data, Stader's total locked value (TVL) is currently US$109 million. Its native Token $SD has a market value of 24 million and a FDV of 160 million.

Will ETHx, which will be launched by Stader Labs, become its new TVL booster? Let's take a look at Stader's LSD product design and model.

Hybrid Node Operator Model

Stader hopes that the main composition of ETHx's node operators will be family Stakers and independent node operators, with the aim of providing permissionless node operator support to stakers using Stader. This also strengthens the decentralization of ETHx and reduces the risk of being punished by Ethereum staking on another level. In this process, Stader will adopt DVT technology to achieve product goals.

In addition to the support of unlicensed node operators, Stader will also introduce licensed node operators. Licensed node operators will participate in Stader's staking ecosystem through the form of whitelisting. Unlicensed node operators need to pledge assets (margin), while licensed node operators have no/low asset collateral requirements.

By adopting DVT technology, Stader's advantage is that it can reduce the margin requirements of unlicensed node operators and the risk of margin being fined, thereby attracting more unlicensed node operators to ensure the decentralization of Ethereum staking. Currently, Stader has been tested on the SSV testnet.

The benefit is that at the beginning of the ecosystem, Stader meets the needs of users for Ethereum staking by obtaining licensed node operators.

Liquidity Staking Scheme

Thanks to the use of DVT technology, Stader has reduced the minimum Ethereum staking requirement to 4ETH. In contrast, Rocket Pool has a minimum staking requirement of 16ETH. To run a permissionless node, you also need to stake $SD worth 0.4ETH, which is Stader's native Token . At the same time, node operators can also participate in the governance of the Stader protocol through the staked $SD.

In order to further lower the threshold for node operators, Stader allows them to borrow $SD worth 0.4ETH in the form of unsecured lending. In exchange, $SD holders will receive $SD incentives reserved for node operators and 10% of the node operator's commission.

From the overall cost point of view, the 4.4ETH cost requirement of Stader node operators is lower than other decentralized Ethereum liquidity staking protocols, which is also the advantage of Stader. In addition, in order to attract more node operators to join, Stader will also provide 800,000-1.5 million $SD as an incentive for node operators.

At the same time, as the concept of modularization becomes popular, Stader's Ethereum liquidity staking solution has also launched a liquidity staking modular smart contract-anyone can use Stader's pre-built components to build their own staking solutions.

Liquidity Staking Certificates

Lido's advantage lies in the lack of Ethereum staking threshold and the issuance of stETH as a liquidity staking certificate. The ETHx launched by Stader is also applicable to various DeFi scenarios. Stader's confidence comes from the DeFi partners it has developed in the past when expanding its business, such as AAVE, Balancer and other protocols. At present, Stader has reached a cooperation with Aura Finance and started $SD-$ETH liquidity mining cooperation.

The four application directions of ETHx DeFi are:

Liquidity mining: Stader's $ETH-$ETHx LP has reached cooperation with Balancer, Quickswap, BeethovenX, Apeswap, Wombat and other protocols.

Lending: Stader ETHx has reached cooperation with Aave, 0vix, Granary and other lending protocols.

Stablecoin: QiDAO will support ETHx as collateral to mint stablecoins.

Option trading and option vaults: In this regard, Stader has reached cooperation with Olive Finance and Delta Theta.

In the distribution of Stader's partners, we can clearly see Stader's previous multi-chain stable partners and the future multi-chain expansion of ETHx. The expansion of multi-chain will promote the emergence of application scenarios for ETHx. At the same time, unlike other LSD protocols that focus on multi-chain expansion on Ethereum Layer2, ETHx will expand to more non-Ethereum Alt-Layer1 ecosystems.

Native Token $SD

In addition to the potential operator incentive selling pressure, the new product will be reflected in the following four aspects for Stader's native Token $SD:

Node operators need to pledge $SD to operate nodes.

$SD holders can lend Token to obtain $SD incentives and 10% of the node operator's deposit.

Stader has launched a new Token economics $xSD, $SD holders can pledge $SD to obtain $xSD. $xSD holders will receive a certain percentage of the protocol's revenue share, and will also obtain protocol governance rights. $xSD holders can redeem $SD at the real-time exchange rate for 7 days.

A certain percentage of the protocol's revenue will be used to repurchase $SD and pledge it as $xSD.

However, it should be noted that $SD also has a certain amount of selling pressure. In addition to the rewards given to node operators mentioned above, it started unlocking team shares in January this year after the unlocking was postponed.

Finally

It has to be mentioned that the ETHx model launched by Stader today is an optimization of the current market's liquidity pledge scheme in terms of decentralization and cost, as well as a promotion of the adoption of DVT technology.

From the overall product design perspective, Stader has a certain advantage in the current liquidity pledge scheme. However, other liquidity pledge schemes are also making adjustments and optimizations to their existing products. For example, Lido V2 is about to launch the Staking Router function, allowing anyone to become a node operator through modular plug-and-play modules to promote decentralization; Rocket Pool has also launched Mini Pool, reducing the ETH threshold to 8 ETH.

It is foreseeable that competition in the LSD track will become more and more fierce in the future. Therefore, building a DeFi ecosystem around derivatives such as stETH/ETHx will be a new battlefield.

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