{"componentChunkName":"component---src-pages-sips-sip-markdown-remark-frontmatter-sip-tsx","path":"/sips/sip-420/","result":{"data":{"markdownRemark":{"fileAbsolutePath":"/vercel/path0/content/sips/sip-420.md","frontmatter":{"sip":420,"sccp":null,"title":"Protocol Owned SNAX","network":"Ethereum, Optimism, Base & Arbitrum","author":"Kain Warwick (@kaiynne)","type":"Governance","proposal":"https://snapshot.org/#/snxgov.eth/proposal/0x6b6b9712c4b313f4e5e200983f5e031e12e57239110ecc87c128945b2cdec4ef","implementor":null,"release":null,"created":"2025-01-06T00:00:00.000Z","updated":null,"status":"Implemented"},"html":"\n

Simple Summary

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This SIP proposes a mechanism for SNX stakers to provide staked SNX to protocol-owned staking pool, where the protocol will own the debt and use it to generate yield (e.g. via Ethena). This reduces the complexity of staking for individual stakers while making the overall system more capital efficient.

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Abstract

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This SIP proposes the creation of a protocol-owned debt pool, effectively enabling “delegated staking.” SNX holders can contribute their existing debt positions to this pool, which can support a lower issuance ratio (e.g., 200%) because there is no concern about bad debtors within the pool. Over twelve months, debt positions (but not the collateral) will be transferred to this new staking pool. The protocol will use its newly minted sUSD to generate returns for the DAO and it's stakers (e.g. by minting sUSDe via the Ethena protocol). Meanwhile, a higher c-ratio (1000%) will be enforced for solo stakers, incentivizing them to join the delegated system. The collateral from the treasury staking position will be redistributed to all participating stakers over a multi-year period, and an sUSD/USDe liquidity pool will be incentivized for the liquidity of the stablecoin.

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Motivation

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No inflation and mediocre fees have created minimal incentive for SNX staking, even with the lower risk in the current system. Staking rates are at multi-year lows, and a large minority of SNX is unstaked and sitting idle on exchanges. This proposal removes the need for active individual staking and creates a capital-efficient structure that significantly enhances incentives. It also helps rectify past debt inflation issues by ensuring only willing participants remain in the protocol’s debt pool.

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Specification

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Overview

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  1. Create a delegated staking contract\n\n
    2. \n
  2. Raise the current c-ratio to 1000% for all solo stakers\n\n
    3. \n
  3. Set the issuance ratio for the delegated pool to 200%\n\n
    4. \n
  4. Transfer each debt position (but not collateral) over 12 months\n\n
    5. \n
  5. Use the sUSD from the delegated pool to generate returns\n\n
    6. \n
  6. Transfer a portion of the treasury staking collateral to other stakers over 2-3 years\n\n
    7. \n
  7. Incentivize a liquidity pool for sUSD/USDe\n\n
    8. \n
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Rationale

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The rationale behind this delegated staking model is twofold:

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  1. Capital Efficiency & Reduced Risk\n\n
    2. \n
  2. Enhanced Staking Incentives\n\n
    3. \n
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Technical Specification

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A detailed technical design and contract specification will follow upon community feedback. It will likely involve:

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Test Cases

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Planned tests will include:

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Configurable Values (Via SCCP)

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Copyright

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All content herein is licensed under CC BY 4.0.

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