Proposal for Utilisation Rate Change of SD Utility Pool

Stader Utility Pool has seen tremendous growth since its inception in early ‘24 with ~90% of the delegated SD from the Utility Pool being utilized by Node Operators, serving as a testament to its efficacy. It has more than delivered on its promise to allow Node Operators to maintain delta neutrality to SD which has been a major blocker for the ones looking to run nodes exclusively with ETH exposure. It is a crucial step in reducing the entry barriers into the Stader ecosystem and the broader Ethereum staking realm in general

Continuing that trend and with the express intent of bringing in more Node Operators into the fold, we are proposing a change to the Utilisation Rate to make it more affordable and competitive vis-a-vis the broader DeFi landscape

Executive Summary The idea is to effectively bring the rate down to 6% from the current 10% in a staggered fashion to ensure a smooth transition. And here’s how it plays out for different stakeholders

Node Operators: Currently not all Node Operators can access the utility pool at the existing utilisation rate without some SD exposure. This change will significantly increase the coverage thereby making it way more accessible to anyone looking for a delta neutral solution and generating higher demand for the pool

SD Delegators: Delegators will see an increased demand for the pool which would scale up the pool and the overall rewards by extension. In terms of the reward rate, the dip in the organic rate will be offset by the boosted rewards from Permissioned Node Operators which has been live since the start of October and will be activated alongside this change ensuring a stable reward rate