SLURP-62-A-X | wstLINK Incentive Framework

Summary

This SLURP expands and consolidates the existing wstLINK incentive program (originally authorized under SLURP-59) into a unified budget covering all current and planned DeFi markets where wstLINK or LINK liquidity serves the protocol.

Total unified budget: ~4,134 wstLINK over 10 months (existing ~3,127 wstLINK balance held by NAIL + ~1,007 stLINK transferred from governance multisig and wrapped to wstLINK).

No further SDL incentive emissions are authorized. Existing SDL campaigns on the Morpho wstLINK/LINK market run until their scheduled expiry (July 26, 2026) and will not be renewed.

Motivation

The original SLURP-59 authorized a 0.5% DeFi-PoL carve-out (~3,200 wstLINK/year) exclusively for the Morpho wstLINK/LINK market. Since then:

1. The Morpho market has grown to ~$2.8M TVL with 100+ depositors and healthy organic utilization (~86%).
2. New DeFi venues are emerging that benefit from protocol-owned liquidity incentives: the upcoming Morpho wstLINK/frxUSD market and the existing Uniswap V3 SDL/LINK pool.
3. wstLINK has proven to be the correct incentive token: real yield, no sell pressure, aligned with the protocol's core product (staked LINK). SDL incentives create unnecessary sell pressure and are unsuitable for attracting sustainable liquidity.

A unified budget with flexible allocation authority allows NAIL to respond to market conditions without requiring a new SLURP for each venue or adjustment.

Specification

Budget

Existing NAIL balance (from SLURP-59) ~3,126 wstLINK New transfer from governance multisig ~1,007 stLINK (to be wrapped to wstLINK) Total ~4,133 wstLINK budget for ~10 months

Eligible Markets

Morpho: Alpha LINK Enhanced V2 Vault (supply) wstLINK via Merk - ~1-5% Morpho: wstLINK/LINK market (borrow) wstLINK via Merkl- ~1-5% Morpho: wstLINK/frxUSD market (frxUSD depositors) wstLINK via Merkl ~5% for $200K initial seed, then based on Supply & Demand - 10% cieling (only if there is extreme organic demand for frxUSD) Morpho: wstLINK/frxUSD market (wstLINK depositors) wstLINK via Merkl up to 5% Uniswap V3: SDL/LINK pool (0x51d1...fC3) | wstLINK via Merkl Up to 10%

APY ceiling: up to 10% for the Uniswap V3 pool, averaging 1-7% for lending/borrowing markets, flexible while targeting being conservative.

Flexibility & Operational Authority

NAIL retains full operational authority to:

• Adjust allocation between eligible markets based on utilization, TVL, and market demand.
• Add new Merkl campaigns on eligible markets or remove underperforming ones.
• Increase or decrease APY within the stated ranges (1-5% for lending/borrowing, up to 10% for Uniswap V3).
• Manage blacklists and whitelists on campaigns to prevent whale dominance or protocol contract gaming.
• Set campaign durations (monthly, bi-monthly, quarterly) as appropriate.

**All adjustments stay within the total ~4,134 wstLINK budget. No additional funds may be drawn without a new SLURP. ** Transparency & Council Notification

NAIL will notify Council members (Ari & Michael) in advance or immediately after any material changes to the incentive program, including:

• New market deployments
• Significant reallocation between markets (>20% budget shift)
• Changes to blacklist/whitelist policies
• Campaign renewals or discontinuations

Notifications are informational. Operational decisions do not require Council approval within the authorized scope of this SLURP.

Override provision: If both Ari and Michael jointly agree that a specific operational decision by NAIL is detrimental to the protocol, they may override that decision and request it be reverted. NAIL will comply with any joint override and revert the change. This serves as a safeguard while preserving day-to-day operational speed.

SDL Incentives: Sunset No further SDL incentive campaigns will be issued under this SLURP or any extension of it.

• Existing SDL supply campaign (60,625 SDL): runs until July 26, 2026. Not renewable.
• Existing SDL borrow campaign (30,312.5 SDL): runs until July 26, 2026. Not renewable.

After July 2026, all DeFi incentives are wstLINK only.

AAVE Exclusion

This SLURP does not authorize the use of any wstLINK budget for a potential future AAVE pool. If an AAVE wstLINK market is established, a separate SLURP must be submitted and approved before any incentive budget is allocated to it.

Governance Actions Required

1. Council Snapshot vote to approve this SLURP.
2. Multisig transaction: Transfer ~1,007 stLINK from governance multisig to NAIL (0xCA4784Af7eBe83A7eafeFD1c8f81d00425F366D9).
3. NAIL wraps received stLINK to wstLINK and deploys per the authorized scope above.

Risk Considerations

• Budget exhaustion: Fixed pool, no replenishment without new SLURP. NAIL will pace deployment to cover the full 10-month period.
• Market conditions: If a venue underperforms, budget can be reallocated to higher-impact markets within scope.
• Smart contract risk: All incentives deployed via Merkl, a battle-tested distribution protocol. No custom contracts.
• AAVE boundary: Explicitly excluded to prevent scope creep. New venue = new SLURP.

References

• SLURP-59: Original 0.5% DeFi-PoL carve-out for Morpho wstLINK/LINK market
• NAIL multisig: 0xCA4784Af7eBe83A7eafeFD1c8f81d00425F366D9
• Merkl Distribution Creator: 0x8BB4C975Ff3c250e0ceEA271728547f3802B36Fd
• Alpha LINK Enhanced V2 Vault: 0x610f5B68bD1EED68Af649A3fD3DC2CAa1ee4Ae7E
• Morpho wstLINK/LINK Market ID: 0x987134eb...287816e9
• Uniswap V3 SDL/LINK Pool: 0x51d1026e35d0F9aa0fF243ebC84bb923852c1fC3 -SLURP-62-X Feedback https://talk.stake.link/t/slurp-62-x-a-defi-incentive-framework-for-stake-link-lsts/453