Author : James Nexus, CurveYield Developer
Summary
This is a proposal to share 4% of all Stake DAO Liquid Locker revenue with vlSDT stakers.
It’s funded by a 3% increase in Liquid Locker fees and a 1% reduction in the Liquid Locker Treasury fee — leaving an even split: 4% to the Treasury, 4% to vlSDT stakers.
At current token values and locker revenue, this adds approximately +3.5% APR to vlSDT staking.
| Now | Proposed | |
|---|---|---|
| sdCRV/CRV LP | 10% | 10% |
| Treasury share | 5% | 4% |
| vlSDT staker share | — | 4% |
| Harvest fee | 0.1% | 0.1% |
| Total Liquid Locker fee | 15.1% | 18.1% |
Motivation
Liquid Lockers are one of Stake DAO’s most exceptional and innovative products, consistently offering some of the best yield rates in DeFi. Stake DAO is a true DAO, which makes vlSDT stakers the effective owners of the protocol — and I believe it’s a natural evolution for the owners of Stake DAO to receive a share of what its best product earns.
Implementing this revenue share would increase vlSDT yield by roughly 30% against its historical average. A significant increase, and one that moves vlSDT toward parity with Stake DAO’s other high-yielding products.
The Treasury gives up 1%, and gets more back than it loses. Stake DAO has roughly 35M SDT still to be minted or distributed. A higher vlSDT yield makes SDT more valuable, and every increase in SDT’s value increases what that remaining supply can buy — in incentives, in partnerships, in runway. Trading 1% of Liquid Locker revenue for a stronger SDT is a good trade for the Treasury on its own terms, before counting the effect of a more attractive governance asset drawing more SDT into vote-locking.
vlSDT is arguably Stake DAO’s most important product, and I’d like to see its yield reach a rate comparable to the products it makes possible.
The cost to Liquid Locker depositors
This proposal does increase the total fee on Liquid Lockers by 3%, and it’s worth being precise about what that costs a depositor.
The 3% comes out of gross locker revenue. Take a locker displaying 21.8% APR today — at a 15.1% fee, that implies gross revenue of 25.7%. Three percent of that is 0.77 points, leaving the depositor 21.03%.
Stake DAO’s Liquid Lockers routinely pay 1.5–2.5x the yield of the native tokens they’re built on. Against a margin that size, a reduction of well under a percentage point is unlikely to change where depositors put capital — the product still wins by the same wide margin it wins by today.
Specification
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Increase the total fee on all Liquid Lockers by 3%.
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Decrease the Liquid Locker Treasury fee share by 1%, to 4%.
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Distribute the taxed Liquid Locker rewards to vlSDT stakers as USDC or sdCRV.