It seems a big inspiration for this proposal is stkAAVE but the other half of their system (stkABPT) never got mentioned. I think there’s a lot of benefits to taking a dual approach here and adopting both parts. For those who may not know what stkABPT is - as part of Aavenomics an 80/20 AAVE/WETH pool was created on Balancer v1 as an additional option for stakers beyond just staking AAVE.
Since the inception of that pool at the end of January 2021 it has facilitated $7.3B of swap volume and earned LP’s $7.3M. For much of that time it also received BAL incentives in addition to AAVE given to stakers.
The benefits of including 80/20 LDO/WETH as a second staking option are numerous and significant:
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In addition to the earnings provided to stakers by Lido you gain two additional revenue streams: swap fees and BAL emissions. With a relatively high swap fee (0.5-1%) this would likely be mid-high 8 figures in additional annual revenue to stakers. Protocol/admin fees earned by Balancer on this pool would be used as voting incentives, thus securing significant BAL emissions “for free”.
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It’s conceivable that this staking program leads to lower LDO market liquidity as a new massive sink is created. By including 80/20 as an option this program will instead deepen LDO on-chain liquidity significantly all for zero additional cost to Lido. The benefits of deeper liquidity speak for themselves, perhaps chief among them: a big stack of locked liquidity would dampen selling pressure if a slashing event were to be on the horizon.
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Balancer has an 80/20 staking incentives program for projects who adopt this standard. It’s a near certainty Lido would hit all TVL & revenue milestones to get the full 250k BAL. This could be used as a strategic asset to direct additional emissions to the 80/20 or to staking product liquidity on Balancer.
We’re big believers in the future of LST’s to displace WETH as the dominant on-chain liquidity pairing. Balancer’s partnership with Lido is a critical part of seeing that future become a reality as we continue to proliferate the use of wstETH everywhere Balancer operates. It would be very exciting to see Lido follow in Aave and others’ footsteps with adopting 80/20 BPT staking.