Fee Distribution Revamp

Introduction

Stargate has accrued a significant amount of POL and will continue to do so. Furthermore, with the emergence of Hydra, there is no need for external liquidity, meaning emissions can be routed elsewhere. With over $130m in POL (at time of writing, 04.03.2025) and Hydra operating as intended, the amount being routed toward this POL accrual should be examined.

Background

Since its inception, Stargate has amassed nearly $70m (at time of writing, 04.03.2025) in non-STG tokens through POL accrual. The original intent was to eventually allow for Stargate to operate as a no-emission self-sustaining protocol without the need for external liquidity providers. Hydra’s advancements now render traditional liquidity provisions. Emissions toward said provisions are obsolete and can be routed elsewhere. Therefore, the rate of POL accrual, particularly given the significant capital already amassed, should be reevaluated, given this revenue could be to better benefit Stargate’s market position.

This is not to say POL is unnecessary entirely, and accrual should still occur, but at a different rate. The change in rate should go toward locked stakers instead, resulting in a higher APY, further promoting locks.

In regards to veSTG, initial targets of STG tokens locked have reached over double the expected amount (15m expected vs 36m at time of writing, 04.03.2025). However, the average stake duration is less than one year, which is less than half of the expected amount.

Proposal

Currently, ⅚ of fees go to POL whereas locked stakers only receive ⅙. This proposal suggests 4/6 of total fees go to stakers instead and 2/6 of total fees continue to pool into POL accrual. This increase in fees will most likely be highly beneficial, heightening interest in the protocol, while rewarding long term participants.

Execution

If this proposal passes, reroute 4/6 of fees to go to lockers, with 2/6 of fees continuing to contribute to POL. Implementation should be scheduled for on June 1, 2025, with the initial distribution under the revised structure will occurring on July 10, 2025, reflecting earnings from the month of June. All financial accounting and implementation expenses will be covered by the existing Stargate DAO budget.

Conclusion

In the past few years, Stargate has amassed a large sum of POL through fees. As a result, a large amount of these fees should be distributed toward locked stakers instead, especially with the exciting new advancement, Hydra, which is currently allowing for much higher capital efficiency . Accrual should still continue, but at a slower rate