Stader's SD Utility Pool: lowering the barrier to run ETHx validators
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Explains that Stader's SD Utility Pool lets ETHx node operators borrow SD for a fee instead of buying it, with a 4 ETH bond giving 8x leverage on node capital. Argues delegation plus rising operator demand shrinks circulating SD.
Key claims
ETHx has 200+ node operators running 1300+ validators
A 4 ETH bond gives 8x leverage on running a node
SD delegators earn fees paid by borrowers
Restaking season is upon us and it will be a major catalyst for liquid staking protocols
As restaking allows LST holders to earn additional yield on their assets, billions are flowing into the LST space
The protocols that capture this can be major plays
Alpha-🧵
1/ The LSD protocols and the whole LSDfi narrative was strong a few months ago.
Recently, it has lost the spotlight to restaking protocols and @eigencloud hype.
However, as a layer below restaking, liquid staking protocols will play a pivotal role in the restaking economy.
2/ In my research, I have explored solutions different LST providers offer in depth.
Ideally, the liquid staking layer is decentralized, secure & permissionless.
Low barriers of entry and contributing to the decentralization and security of the underlying PoS network is key.
3/ One of the most innovative protocols I have come across is @staderlabs.
A multi-chain staking provider, @staderlabs_eth has launched ETHx a few months ago and has been getting some great traction on it.
4/ ETHx stands out as a staking solution that is very accessible, even if you want to run a validator.
ETHx allows you to do that with just 4 ETH! 🤯
5/ While ETHx design lowered the capital required for Ethereum node ops, low-cost infrastructure solutions in collaboration with @AvadoCloud and @Allnodes knocked the technical barriers down.
With its newest feature launch, barriers of entry will be reduced even more.
6/ ETHx has seen tremendous success with 200+ node operators running 1300+ validators and bonding 2.25 Mn+ $SD with us, treasury limitations and market movements have often hindered their ability to scale effectively.
The SD Utility Pool will change this.
7/ The SD Utility Pool enables node operators to run ETHx validators with zero governance token exposure by eliminating the need to own SD.
They can simply use SD from the Utility Pool for a nominal fee as required and adjust their SD position on demand at no additional cost.
8/ Here’s how it addresses the key issues:
✦ Optimised capital requirement: Operators can run validators with ETH-only exposure eliminating the need to procure and manage an additional asset (governance token).
9/
✦ Circumventing treasury limits: Big operators can bypass treasury restrictions around holding governance tokens.
✦ Easy balancing of governance token position: Node operators can adjust their SD bond in tandem with price movements of ETH & SD by tapping into the pool.
10/ The SD Utility Pool continues to lower financial barriers and empowers node operators with choice.
Node operators now have the flexibility to run ETHx validators without SD exposure while still earning lucrative rewards.
11/ They can source the necessary SD in any of the following ways:
✦ 100% from the pool
✦ Partially from the pool
✦ Complete self-bonding.
12/ Thus retail operators and institutions, who have conventionally stayed away from liquid staking solutions, can achieve higher capital efficiency on their invested capital via the 8x leverage on running a node made possible by ETHx’s 4 ETH bond.
13/ Moreover, the introduction of the Utility Pool doesn’t change the rewards equation.
The node operators continue to receive SD rewards against the amount bonded on their validator.
14/ @staderlabs is continuing to innovate at the frontier of liquid staking technology and is definitely among the leaders in the game.
With its low barriers of entry for node operators, @staderlabs_eth is primed for attention both on the institutional side and a retail level.
15/ The low barriers of entry, alongside its DVT integration with @ssv_network further bolsters the strong fundamental position from which stader is coming.
I have covered this a few months ago. 📚👇
x.com/zerokn0wledge_/status/1681363246283120640
16/ ETHx provides a secure, liquid & versatile solution for ETH stakers that look to maintain position liquidity while earning staking yield.
With @KelpDAO, ETHx is also well-positioned as one of the leading LST assets fueling @eigencloud's crypto-economic security.
17/ @KelpDAO is among the leading restaking protocols and I have covered it extensively in the past.
For more info, check my thread below. 📚👇
x.com/zerokn0wledge_/status/1736726918530310462
18/ But back to the SD utility pool.
This is not just improving the value proposition of @staderlabs as a protocol, but also acts as a powerful catalyst for SD.
With more people delegating SD tokens to the SD Utility Pool, a smaller number of tokens is available in the market.
19/ Coupled with a likely growing demand for SD by node operators that can enter with unprecedentedly low barriers of entry, this is a very interesting set up.
20/ Additionally, this also adds utility for SD holders that can now contribute to ETH decentralization by enabling operators to borrow from the Utility Pool.
SD holders that delegate to the pool will also earn APR from the fees SD borrowers pay. Might be a good play.
21/ Overall, I think @staderlabs or more specifically, @staderlabs_eth & ETHx are among the most interesting solutions in the liquid staking space.
As the demand for LSTs grows, identifying the key plays on the narrative is key.
DYOR and educate yourself anon. 👀
22/ If you're looking to get exposure, you can buy SD on major exchanges like @kucoincom or leading DEX platforms such as @Uniswap, @Balancer or @CoWSwap.
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