I am starting a discussion about the transferability of STRDY tokens. This discussion is necessary because a non-transferable token does not make sense, and eventually, token transferability will need to be implemented.
Here are some pros and cons:
Pros:
Tokens can be transferred from individuals who do not participate in Sturdy community and proposals to those who are actively engaged.
Investors who lent tokens can withdraw their profits from SIP-001 and convert them to any coin.
Cons:
There is a risk of a sell-off and a resulting price drop.
There may be a lack of liquidity in the market.
Token ownership may become concentrated in the hands of a few whales.
I think it is important to create liquidity while maintaining prices. I think it is desirable to have a structure that allows for transferability and at the same time provides benefits when locked.
Thanks for creating this discussion post! I know many users were curious about this topic.
My personal view is that it is too early to enable transferability based on looking at other lending protocols. For example, Morpho is currently at >$500m TVL and has yet to enable transferability. Similarly, Gearbox and Euler were able to grow TVL substantially by keeping the token non-transferable for some time. Would be curious to hear arguments for why now is a good time.
My view is that we should enable transferability as soon as possible. One reason is that currently with SIP-001, lenders don’t know when they can sell $STRD tokens or how much they’re worth because there’s no market price. This makes it risky to stake and affects the rewards for liquidity mining. Allowing transferability would reduce these risks and provide more certainty for liquidity providers. Additionally, the liquidity mining rewards in $STRD could be adjusted based on the known price.
Adding transfer-ability so soon will just attract Mercenary Capital who will only want to farm and dump the token. The majority of the TVL that sturdy has now is from users who were already here before the token was even announced. We might have seen some Mercenary Capital come in now that emissions have started, but keeping the governance in the hands of mostly long-term users is a good thing, and I beleive we are still doing just that.
If you are so inclined to evaluate your risk of lending, you can, of course, speculate on the potential future value of $STRDY, based on FDV at certain prices. This should give you a good baseline to evaluate if lending is a worthwhile use of your money.
In short, transfer-ability will attract short term players who simply want to extract value from the ecosystem, and the benefits aren’t huge at this moment.
I disagree, a user providing liquidity is always and very positive no matter if he will dump the tokens, also i believe all users deserve respect, there are no “Mercenary Capital”, be the early providers who may want sell for a variety of reasons or some one just farming now, they are all investor/stakers/entusiasts of the Sturdy.
I guess count me in the group that thinks it is premature to start swapping $STRDY. But absent that, I do think we need a more compelling use case (or at least the promise of a compelling use case in the future) beyond just governance because right now its not that meaningful to earn $STRDY from LM. The obvious routes would be a plan for revenue sharing, $STRDY locking, bribes, etc.
