[Temperature Check] Fees for BSN (for community discussion)

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[Temperature Check] Fees for BSN (for community discussion)

Overview

Blockswap Network protocols are fully deployed and available for all of Ethereum without the intervention of other users or the core team. With this milestone in place, it’s now time to start collecting fees for the DAO. Placing fees on the two most popular Blockswap protocols may create sticky liquidity while simultaneously increasing income for the DAO.

Stakehouse LSD Networks

LST Optimizer

This temperature check is to get community feedback and spark discussions on how to create revenue for the DAO.

Stakehouse & LSD Networks Overview

The LSD Network is a trustless immutable smart contract protocol that allows anyone to participate in Ethereum staking trustlessly. It’s compatible with all Ethereum infrastructure setups, including solo stakers platforms like dappnodes or other setups, as well as the DVT tech stack and various LST networks custom requirements. This agnostic nature with easy integration brings a loosely connected stake liquidity across LSD-enabled validators and their liquid stake.

With the LSD Network, solo stakers can access DeFi, MEV, and Restaking opportunities while retaining control over yield optimization and feature enhancements to maximize earnings for their stakers. Additionally, the network offers a hybrid observability and monitoring layer through Stakehouse, enabling users to track and analyze their staked assets. LSD Network serves as the enabling platform for various stake coordination innovations, empowering regular users to verify and audit their liquid stake earnings and validator performance.

LSD Network Owners

Many users have already created LSD Networks sourcing their own ETH deposits and validators. This is 100% user driven activity without extensive marketing nor known investor initiatives. These LSD Network owners were able to do so free of charge and Stakehouse continues to see more deposits and networks created. By establishing a credit system for converting BSN to Stakehouse Credits, LSD Network owners could be charged a fee in Stakehouse Credits. The advantage is that these owners are already collecting a % of all MEV revenue from the network. Stakehouse Credits could trade separately or in correlation to the price of BSN & ETH.

The user mints Stakehouse Credits by burning BSN tokens. They must burn enough BSN to equal the price of ETH. The more Stakehouse Credits that are minted and not used the higher the mint cost for Stakehouse Credits.

For example: If 10,000 BSN = 1 ETH - Then 10,000 BSN = 1 Stakehouse Credit

If there are already many Stakehouse Credits circulating a multiplier could be added.

For example: If 50 Stakehouse Credits are unburned and circulating when 10,000 = 1 ETH then 12,000 BSN = 1 Stakehouse Credit.

This is based on BSN Price 0.1 USD - 0.7 USD. We take ETH Price 1839.17 USD to 4891 USD with every subsequent Credit bought, BSN is burned. This is done to make an arithmetic progression whose sum is sufficient to increase BSN price to USD 0.7).

An alternative to Stakehouse Credits is to allow LSD Network owners to pay per validator slot. They could then in turn pass on these costs to the validators. Although this is a simpler method, it prevents a secondary market from forming driving additional demand for Stakehouse Credits while shrinking the supply of BSN.

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LSD Networks Validator Exit

Validators looking to Rage Quit and exit Stakehouse could be asked to pay a fee. This fee can be applied separately for both MEV stakers as well as the liquid stakers. SLOT & dETH tokens respectively. Each could be charged 0.5% of the total validator balance. Although there is a disproportional amount of dETH tokens, SLOT tokens receive MEV and presumably have been at a higher rate of return.

  1. Validator chooses to exit
  2. 0.5% is charged from the node operator & SLOT token holders
  3. 0.5% is charged from dETH holders
  4. 1% of the validator balance ~0.32 ETH is sent to the DAO treasury

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LST Optimizer Exit

Those using the LST Optimizer for their stETH, rETH, and other LSTs receive kETH. This kETH can be used as a benchmark yield rate token. Recently users have seen over a 5% average APR with some users seeing over 10% APR. kETH is currently planned to be used as collateral for other protocols such as Restaking Cloud. When users choose to redeem ETH from the LST Optimizer, the protocol could charge a fee based on the rewards earned. This encourages users to stay in the pool as they are not continually charged but rather only on redemption. There are many advantages to this as users could be using the protocol to redeem ETH for their stETH or other LST. 5% fee could be charged for for ETH redemptions.

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This is an excellent topic with 3 good ideas presented. Here is my initial input that will be updated as I digest the concepts more.

My immediate input is that StakeHouse Credits sound great, but seems a bit complicated and may need time for the market to digest. Could we simplify to charge LSD Network’s a BSN fee create a new network? This is a straightforwad model that I can digest.

As for Exit fees for LSD Network validators and LST Optimizers exits these two are already common practice across DeFi and make sense to me. With the right fee pricing (aka not too much to make rates unattractive, but not too little… maybe 0.5% or 50 basis points) these two could be a great way to start generating revenue immediately.

From my experience, most of retail does not take into account the total costs of positions as they follow top line revenue yield estimates. Larger investors are more aware of total costs and could more easily digest / support a 2nd Stakehouse Credits model. I look forward to other’s opinions.

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An alternative to Stakehouse Credits is to allow LSD Network owners to pay per validator slot.

its mentioned there

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Now that restaking cloud has pivoted from using cloud credits, will there be any type of revenue accruing to bsn dao from cloud? I realize kETH will benefit tremendously from restaking cloud adoption as that is an accepted collateral, and above we have outlined where 5% of yield from kETH would go to the DAO upon redemption - however, I am wondering if there are possible avenues to revisit any other paths for monetization of cloud for the DAO in the future? What are current fees for Cloud and where do they accrue (i.e slashing fees)? Would it be possible to potentially route x% of reporter fees to the DAO? What about fees validators would pay for opting in to cloud etc etc

If none of the above is possible then an explanation on why not would be greatly appreciated! ty

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I like seeing BSN price at .1 to .7…let’s make it happen. What do we need? I am all for this proposal. Let’s move!!!

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The kHOLE product has been funded and is looking for feedback on how kHOLE could accrue value for BSN.

Any thoughts from others on kHOLE requiring BSN to be used?

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Good news - the first revenue opportunity for Blockswap DAO’s treasury has been approved to turn on a 5% fee for using the LST Optimizer.

Here is the Snapshot vote - Snapshot

Now we need to have the Smart Contract for the LST Optimizer updated to include the 5% fee. @BlockswapDAO is aware of this and will hopefully provide some guidance on how best the DAO will implement the change.

Right now the BSN farming on the LST Optmizier for the staking of kETH is active so we are hopeful to get the fee turned in in the near future.

3 Likes