Fees for BSN - Activate Fees for LST Optimizer Product

Introduction

Blockswap Network protocols are fully deployed and available for all of Ethereum without the intervention of other users or the core team. With this milestone in place, it’s now time to start collecting fees for the DAO.

Starting with a fee to use the LST Optimizer, this will create income for the DAO, hopefully make liquidity more sticky, and all while still providing a high ETH staking rate of return.

Motivation

Blockswap Network's protocols have been free public-goods since inception. To help the DAO bootstrap revenue for future ecosystem growth, it is suggested that we start adding fees where we can without sabotaging the value proposition of each product.

The community came up with 3-4 ideas for how BSN can acquire fees in this research post and positive feedback was provided by community members to start the process of adding fees.

Specification

This proposal suggests adding an exit fee for ETH stakers to the LST Optimizer. The LST Optimizer product will still increase the ETH staking rewards for those who participate and additional opportunities in the future.

Additional opportunities are:

1. BSN farming with kETH (when this campaign is live, which it currently is not) 2) kETH is currently planned to be used as collateral for other protocols such as Restaking Cloud

How Will the Fee be Implemented?

When users choose to redeem ETH from the LST Optimizer, the protocol will charge a fee based on the rewards earned. This encourages users to stay in the pool as they are not continually charged but rather only on redemption.

How Much for the Exit Fee?

The LST Optimizer has a target rate at 4.25% and current APR of 4.62%.

Most ETH Staking Protocols charge 5% - 25% for their service. Here is a breakdown of the different fee levels on total returns for users.

• 5% Fee - The target rate of return would be 4.04% and current (variable) would be 4.39%
• 10% Fee - The target rate of return would be 3.83% and current (variable) would be 4.19%

These ETH staking APR rates are still above the largest staking providers.

With the fee implemented the LST Optimizer would still be a competitive product for the highest ETH staking rewards for liquid staking investors. [DeFiLamma LSD reference] (https://defillama.com/lsd)

Proposal

The proposal here is to vote if a fee should be added to the LST Optimizer and if Yes, how much of a fee; a 5% or a 10% fee.

A No vote means that the LST Optimizer should not implement a fee yet.

Once a quorum has been reached by the DAO, the community will work to have the fee implemented within the next 30-60 days.