Everyone is talking about transferability, but doing so without establishing tokenomics undermines the Sturdy protocol as a whole. Below i will outline a proposal that i see fit for the STRDY token. In doing so, transferability will therefore allow the market to play its course as the token will have true utility.
Would love to model actual fees generated to date but due to Sturdy’s nature, the main driver of fees comes from time of high UR. There isn’t a good data set to see aggregate fees as UR fluctuates daily.
Currently the STURDY Company takes 10% of fees generated. That’s reasonable but can’t tell at the moment how significant that is. My initial thought is that the Sturdy Company should cut that in half and grant half of those fees to the token. The reasons are for the following:
- They certainly have an allocation of sturdy, as well as have assets on Sturdy generating the token. By forfeiting some of the yield to the token, they inherently can generate more value from token appreciation than the 5% of fees.
- They should keep 5% in fees for liquidity purposes. As the token generates fees as stated below, they can successfully stay afloat. The company has people to pay and would rather them dump ETH than STRDY tokens for bills to paid.
So, in establishing a 50/50 split of current fees, it’s important that LPs have a stake in the game too. With that said, lenders receive 90% of fees generated at the moment. For clarity that’s all CVX fees for CRV pools that get auto swapped to ETH and 300 bps of interest every percent above 80% in UR. Rather than earning 90% I believe lenders should receive 60%, generating 35% of fees to STRDY stakers. Lenders are the main receivers of STRDY tokens. Instilling a value to STRDY in this fashion should inherently create value to the token and should make up for any loss in yield and then some. This could also meaningfully increase TVL for the protocol attracting more users.
For STRDY holders to claim these fees, they must stake them. Fees are paid to STRDY holders in LPs. Essentially while being staked, you are accruing LP share of the respective ETH and stablecoin markets. This not only rewards token holders but creates a flywheel in users earn yield that earns more STRDY that earns more yield. I believe that STRDY staking itself should require a lock. A lock for the reason being that UR fluctuates. Larger more sophisticated players could then easily maneuver in and out of staking to amass yield, hurting the opportunity of holders that have remained staked. The lock should be 30 days. Users may unlock prior to the 30 days, however that incurs a 10% penalty of tokens staked that immediately gets burned. This allows liquidity for those in need while generating value to those who remain staked.
To conclude the staking module, LP share earned by stakers should also incur a 30 day lock. This allows the protocol to maintain sustainable growth. Being that the LP shares also earn fees, this is a win win for all users. To make the lock time simple for users, LP shares should accrue and be distributed to users on a weekly basis pro rata.
Looking forward to the discussions revolving the above. I believe this could help pave the path forward to Sturdy Protocol growing to become a prominent DeFi platform.