[BIP-108] Enable SD/MaticX 80/20 Gauge with 2% emissions cap (Polygon)

Summary

This is a proposal to enable a Balancer gauge for the 80% SD - 20% MaticX pool on Polygon.

Utility

SD (Stader Token) is Stader Labs’ protocol token. Users can use SD tokens to participate in governance decisions. With SD staking planned to go live soon, SD token holders will be able to get a share of the protocol revenue. Currently SD tokens are used to incentivize liquidity provisioning, as bribes to veBAL voters and as direct rewards to LPers on the leading DEXes of Polygon.

SD distribution

Link to litepaper

Motivation

SD currently has $30.1M in trading volume over the last 30 days across centralized exchanges & DEXes. SD’s largest liquidity is currently on the ETH network. Given Polygon is an important market for Stader and we use SD tokens for rewarding users, we want to build further liquidity for SD on Balancer, our largest market. Hence Stader proposes to create a 80% SD - 20% MaticX pool on Balancer as the primary pool for SD on Polygon. Given the popularity of MaticX on Balancer Polygon (with MaticX having the second largest liquidity pool ~$20M) we believe this is the ideal pairing for the SD token, with the 80% concentration ensuring lower impermanent loss.

MaticX on Balancer

Stader has a great partnership with the Balancer DAO, with the MaticX-Matic pool being selected as part of the core set of pools that receive a % of fees as direct bribes from the Balancer DAO to promote healthy liquidity in a pool with a yield bearing token. The MaticX-Matic LP on Balancer is now the largest source of liquidity for MaticX on polygon and Stader has consistently rewarded LPers with high APY driven by steady spends on bribes on the Hidden Hand protocol (>$500K spent in bribes + direct rewards in the last 6 months)

Specifications

Governance

Stader protocol is governed by the SD token. Holders can actively participate in governance decisions and share feedback on proposals put forward by the protocol. The following decisions will follow the governance mechanism process:

• Any implication on smart contract parameters for liquid staking
• Changes to validator selection criteria
• Changes to fees
• SD token related
• Treasury management and SD staking

More details here

Oracles

The SD token does not use any oracles

Audits

The MaticX staking contracts are audited by Halborn and Immunebytes. A Bug Bounty worth $1M is currently live on Immunefi and we have also enabled onchain monitoring with Forta.

Centralization vectors: n/a

Market History

SD has been live since 15th March 2022 on Polygon and currently has $30.1M in trading volume over the last 30 days across centralized exchanges & DEXes

Value

We expect that if Balancer were to enable the gauge, this pool could become the primary source of liquidity for SD on Polygon, aided by the low impermanent loss due to the 80% SD concentration.

Contract

SD on Polygon 0x1d734a02ef1e1f5886e66b0673b71af5b53ffa94

MaticX on Polygon 0xfa68fb4628dff1028cfec22b4162fccd0d45efb6

Pool: 0x4973f591784D9c94052a6c3EBd553FCD37Bb0E55 2% Capped gauge: 0x285cBA395e3Acb82A42758638fA85da9936016a4

Useful Links: Stader Labs DApp Twitter Discord Telegram

Stader Polygon DApp Twitter Discord [Telegram]

Author - Shanmug (Lead for Business Development and Partnerships, Stader Polygon)