The following is a proposal to allocate a portion of reWARDS budget to community generated “outside the box” ideas that have the potential to produce higher ROI than current strategies. I will provide some example ideas below in hopes of inspiring other submissions. We can then hold a vote to decide which, if any, ideas are worth pursuing and how much should be invested. I will focus on the Solana ecosystem because who doesn’t like an underdog?
Problem
A cursory review of reWARD incentives within the Solana ecosystem suggests that the market is not responding to the economic incentive for stSOL adoption and liquidity. mSOL has approximately 3X the circulation of stSOL despite more attractive APY’s across most stSOL trading pairs. Competition aside, reWARD incentives do not seem to be meaningfully increasing liquid staking adoption within the ecosystem and the vast majority of staked assets are illiquid.
Idea Submissions
Orca, one of our main reward partners on Solana is “The Dex for People, Not Programs”. I suggest we design and promote some adoption and liquidity incentives “for People, not Programs”.
Partner with Orca and Solana Foundation to create a program where USDC/stSOL or stSOL/SOL liquidity providers are awarded an NFT after xCapital*xTime that is redeemable for a SAGA phone.
Partner with Saber/Mercurial and Solend to allow stSOL/SOL pair to be used as collateral in Solend (currently they only support mSOL/SOL). All LDO/SBR/MER/SLND rewards (plus a contribution from our friends at Circle?) become seed funding for a DAO whose mission is to promote Solana Pay and USDC adoption in developing world.
Use either of the above pools or whatever but partner with Magic Eden to create “Lido stSOL Madness”. This is a tournament modeled after NCAA March Madness where 64 different artists submit a piece of art to compete in a tournament to crown the best submission. Increasing portion of rewards are given to surviving artists after each round of the tournament with the winner taking the grand prize. Pool depositors are given voting power based on the amount they deposit as well as a 1 of X (ordered by pool weight to discourage sybil) of each NFT they vote for throughout the tournament.
To encourage more ridiculously brilliant idea submission like these ones, consider giving 1% of LDO rewards that are allocated to this initiative to the idea submitter.
Lido on Solana has been partnering with many defi projects. My concern is if we have good liquidity for stSOL now? If so, we could try to expand stSOL to non-defi projects to let stSOL have more utilities (payment).
For example, try to partner with NFT markets (Magic Eden) and GameFi projects to accept stSOL as the payment unit.
Also, To solidly increase staking TVL, how to get shares from the existing validators is the key issue.
Yes, I agree that getting share from existing validators is key. I also support maintaining the majority of existing incentives to ensure liquidity.
I am suggesting that if we take 10ish% of the monthly budget that is allocated to Solana (90kish LDO per month right?) for 3 or 4 months, we could create a $1M+ prize (which we could increase with partners) for a marketing campaign that might capture the attention of the massive illiquid staking market.
It seems there is very little downside in doing this because from what I can tell, the market isn’t responding to the existing incentives. Maybe the market demands higher yield to hold exposure stSOL vs mSOL pairs but I find that unlikely. Even if that were the case, a stSOL brand building and awareness campaign would be worthwhile.
TL;DR
Incremental LDO being dripped to increase APY’s is not moving the needle. We should allocate 10% of Solana budget for creative/entertaining moonshot ideas that will likely fail but could have a massive payoff in liquid staking adoption. If we prove a concept, we could replicate it across other ecosystems.
Thank you for posting this and love the idea in general. However, not to be a naysayer and to bring some additional context into the conversation it is important to consider additional data points.
A number of large LPs are not interested in maximizing yield and instead focused on increasing adoption of their investment. This is neither good nor bad but a consideration in all LP activity. It is obvious that an entity with financial incentives in a project will provide economic support as well.
Lido is not a homegrown project outside of Ethereum so there is the localization work to be done.
The consideration around NFT payments was a focus of ours internally for Q2. The barrier to adoption with the NFT crowd was that they are not defi natives and thus there was no explicit demand. For many of them there was a much higher education threshold and then the whole market dumped.
The idea of focusing on LP integrations as collateral to lending platforms such as Solend is a great idea and should definitely be pursued.
Another consideration in all of this is that the Solana ecosystem is more fractured than ETH. There are 2-3 times as many providers on equal footing that there are in terms of scale on ETH.
All that being said, I also like the last suggestion as Solana has captured a huge amount of NFT users and activity.
I will happily suggest the Solana team to consider some of these suggestions.
do u know how the NFT platforms think of the stSOL integration. This part is the most bothering part to me. The platforms do not see direct benefits to their business if support stSOL as payment. It is hard to persuade the platforms to accept this solution.