Thanks for asking!
Currently, we are working on implementing staking on NEAR.
Aurora will be supported at later stages.
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Appreciate the response. Looking at the liquid staking market or lack thereof on NEAR, I come to a different conclusion regarding fees. As you’re aware the value add of LIDO is in the liquidity, and given that there are no players in this sub-segment of staking with more than a few % of share, I don’t believe it’s necessary to compete exclusively on fees.
What makes liquid staking on NEAR so different than on Polygon, Polkadot, or Kusama?
Some quick back of the napkin math:
Total NEAR MC: $7.9B
Total Staked at Maturity: assuming 70%, or $5.5B
Lido Market Share: 20%, $1.1B
Yield at Maturity: assuming 6%, or $66M
LidoDAO cut @ 2.4% = $1.58M
Everstake cut = $0.4M
LDO is valued at about $2.90 today, so LidoDAO would pay $5.8M. My own models suggest LDO should be valued at $5 today, under quite conservative inputs.
So at 20% market share, LidoDAO is out $5.8M (likely significantly more after the market wakes up post-merge) and and we take at least four years to breakeven for this investment. The incentives here just seem quite misaligned with LidoDAO, and as structured, makes it a bet on NEAR taking off and LidoDAO taking majority market share of the NEAR liquid staking market, neither of which are certain.
As it stands, I strongly believe the payouts need to be restructured to more closely align the incentives of Everstake and LidoDAO.
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Thanks for a detailed question.
Essentially, staking on NEAR provides similar functionality to delegators. As I mentioned before, we were building the fee structure based on the market situation rather than specific differences of NEAR.
Regarding the model you provided, we have seen that NEAR APY fluctuates between 10.5% - 11.7%. Let’s use 11% as the average.
With updated parameters, the model should look more like this:
Total NEAR MC: $7.9B
Total Staked at Maturity: assuming 70%, $5.5B
Lido Market Share: 20%, $1.1B
Yield at Maturity: 11%, $121M
Lido DAO cut @ 2.4% = $2.9M
Everstake cut @ 0.6% = $0.7M
Based on updated amounts, it should take ~2 years to reach the breakeven.
Another aspect that should be considered is NEAR price.
If we build a similar model where NEAR price is $18 instead of current $11.80, the Lido DAO cut @ 2.4% = $4.4M
That said, the 6% Lido fee is not set in stone. During later stages, if performance is not satisfactory, we can revise the fee structure. This might involve another vote or a call where all stakeholders can share their point of view. Currently, we believe that this model is optimal.
The APY I provided was an estimate of yield at maturity of the staking market - as more NEAR is staked, won’t the APY drop similar to other PoS chains? If not, it would be great to understand why that is the case as I’m just starting to learn about NEAR.
Not sure if this is relevant, NEAR has spent <1 week above that price and the recent spike was driven by rumors of USN offering 20%+ APY, which turned out to be false.
This deal seems like a call option on the success of Lido - currently dictated by ETH and LUNA and only delivers economic value to LDO holders if NEAR takes off significantly, which is not a bet I’m sure LDO holders should make. I think the terms would make much more sense if they were restructured to more closely align with the success of NEAR rather than success of LDO overall.
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Staking on NEAR is in a pretty mature state already. As of today, the total stake is ~67% of the circulating supply. So the model that we discussed was close to a real-time situation.
NEAR rewards mechanism does not rely solely on stake percentage. The model is quite complicated. Even though APY might decrease due to increased stake, another important aspect is the number of transactions per day. Referring to the model provided in the blog, currently, the amount staked is less than 45% of total supply, and we are averaging around 1,000,000 transactions per day. That gets us an APY of ~10% - 11%.
Please find additional information on NEAR Economics below:
NEAR Explorer
NEAR Staking Dashboard
Blog: Introduction to NEAR Protocol’s Economics
NEAR Docs: Economics FAQ
Paper: Economics in a Sharded Blockchain
The goal of that example was to provide a visual representation of what happens in a different scenario, rather than discussing/forecasting the price. We do not control this aspect and have no impact on it. Therefore, we can review/analyze cases with various parameters: If NEAR price is = $X or $Y or $Z. That way, we can forecast outcomes in multiple scenarios and prepare to take a certain action if needed.
Regarding the terms, we agree that NEAR plays an important role in this initiative. However, we do not believe that aligning our terms with the success of NEAR is the right decision, since we have no control over it. On the other hand, the success of Lido on NEAR is something that we control. Therefore, the terms are built around the actual work that will be performed by Everstake.
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Thank you @vma for this proposal (and thank you Everstake for the continued support of Ukraine).
FreshNEARs charges a 1.9% fee, has been active since genesis and sits on the NEAR validator advisory board. We would be very interested in participating in Lido for NEAR (we are currently active in Lido for Terra).
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Wow, @vma I think this is awesome proposal.
Hi, I am D.K from DSRV and we are so interested in joining on Lido NEAR. DSRV is a member of NEAR advisory board since its genesis and as well as on CELO.
We are currently running Lido for ETH, Solana, Terra, Polygon.
Let’s keep in touch for next move on this proposal.
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Has this implementation been discussed any further or has it fallen prey to crypto winter?
The development is moving according to the roadmap.
We will resubmit the snapshot after finalizing some details.
Stay tuned!
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Great! Thanks for the update
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Is there any update for LIdo for NEAR.
new update Lido for NEAR?
Any Update? because It’s been a while, since last update.
Hey @xellos00,
Sorry for taking a while with the response.
We should have an update next week after December 7.
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I didn’t see any update since you put the last comment, is there any update it?
Hello everyone! I will pick up here on the behalf of my colleague @vma.
Thanks you for expressing interest in joining Lido on NEAR.
After multiple discussions and evaluations, Lido and Everstake came to the decision to cease any further operations related to Lido on NEAR.
To provide more background, the current market situation does not fulfill the business goals of both Lido and Everstake. We are sorry if we haven’t met your expectations.
Since Everstake has completed the development, we decided to keep the smart contract open sourced for anyone who is willing to launch a liquid staking pool on NEAR.
Once the contract is ready to be released, Everstake will make an announcement on its social channels.
Also, we hope there will be other opportunities for our cooperation, and the market conditions will make us happy again soon.
With the deepest respect,
Irina on the behalf of Everstake Team
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We would like to express our sincere gratitude for your dedication and investment of time towards this collaboration. We truly appreciate your efforts, and we understand the amount of hard work and commitment that have gone into making this project possible.
It is unfortunate that the current market situation has not been favorable, and the outcome of this collaboration turned out not be as promising as we had hoped for.
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As promised, I am sharing with the community links to the smart contract for anyone who is willing to launch a liquid staking pool on NEAR:
If any questions, will be happy to help find answers for them.
Kind regards,
Irina
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