Stader Explained: Liquid Staking in Multiple Chains With Restaking
It seems like the idea sounds as simple as possible, doesn't it? But in reality, Stader presents a rather complex and intertwined architecture with different modules. Let's dive deeper.
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Introduction
1. Stader
2. ETHx
3. rsETH (Kelp)
4. Tokenomics
5. Token metrics
6. Involved Players
7. Who is behind the Stader?
Conclusion
Introduction
Our LSDFi research series (part 1, part 2, part 3) has provided insights into the diverse range of projects and technologies in the crypto industry. These innovations unlock substantial liquidity and enhance network security staking, offering a captivating experience. However, it is crucial to note that these projects predominantly focus on Ethereum, inadvertently disregarding other blockchains. Moreover, the cost of native Ethereum staking, particularly for small deposits, remains high due to associated gas fees for staking/unstaking, which also applies to LSD protocols. Additionally, many of the primary LSD protocols are relatively simplistic solutions developed several years ago.
In this context, Stader emerges as a new contender in the LSD landscape, introducing advanced technologies. Notably, it supports multiple blockchains and features a modular structure. Although our comprehensive LSDFi research only covered protocols that operate with ETH, it is important to explore what Stader is and how it functions. Let's delve deeper into this platform.
1. Stader
The process is as follows: token holders connect their wallet to the Stader Dapp and deposit tokens using our smart contract. In return, they receive an X-token (BNBx, HBARx, MATICx, etc.), which represents a liquid version of their asset. These X-tokens are bearing-reward tokens that accumulate value over time through rewards. Consequently, the value of the X-token grows relative to the underlying token. Separate audits from Halborn, Blocksec, and Osec have been conducted for each of these tokens, and Stader provides audit reports for each of them.
Unstaking has no impact on the X-token rate. During unstaking, the X-token is burned, and the underlying token (HBAR, BNB, MATIC, etc.) is transferred from the staking contract to the unstaking contract.
Furthermore, Stader maintains its own pool of approved validators for staking user funds. These validators are curated based on various parameters unique to each network, such as security (no history of cuts, community involvement, track record), commissions (the percentage of profit the validator takes for itself), voting strength, and performance (99-100% uptime). Stader also considers the length of time a validator has been staked, as it affects APY. Therefore, Stader selects validators who have been staking funds for a longer period of time. This means that delegators can benefit from the staking process and receive a liquid version of the token, while Stader automatically selects the best performing and most stable validators, eliminating the need for constant monitoring.
In the case of Ethereum, things become more complex, as the largest and most liquid market on the blockchain revolves around LSDs (Liquidity Staking Derivatives) with a wide variety of mechanics. Additionally, Ethereum offers advanced staking options, such as DVT (Distributed Validator Technology) or Eigen Layer restaking. Stader provides a solution based on Eigen Layer restaking and will delve into it later.
Stader's technology is built on a model-based system of multiple smart contracts, which allows for the separation of staking and the protocol itself, ultimately enhancing security. This modular system consists of several smart contracts:
Delegator Contract: Allows users to place and withdraw bets.
Validator Contract: Exclusive to foundation-approved validators for placing bets and used for prizes and giveaways.
Pools Contract: Manage validation contracts, track bet amounts for each validator pool, and maintain multiple pools.
Strategic Contract: Improves exchange performance with other DeFi/Gaming protocols through betting incentives and synthetic assets.
2. ETHx
Stader has developed a dedicated infrastructure for Ethereum, introducing ETHx as a Liquidity Staking Derivative (LSD) to enhance Ethereum's diversity and reduce the concentration of ETH staking on single platforms. ETHx Stader introduces a modular approach, categorizing validators into various groups. While other platforms like Lido and Rocket Pool are adopting a similar strategy, they are still in the early stages of launching their DVT-based infrastructure.
Let's break down the different categories of validators within ETHx Stader's architecture:
Permissionless Pool for Home Stakers: These individual stakers manage their own nodes without the need for whitelisting. Stader allows anyone to operate a permissionless node, requiring only a 4 ETH pledge. The Node Operator's Pledge and funds from ETHx Stader users are combined to create a total deposit of 32 ETH, which is necessary to register and operate the validator. This deposit ensures that the operator has no incentive to engage in MEV theft or any other harmful actions. The deposit amount is determined through a thorough analysis of various parameters and validator behaviors. In turn, the permissionless node operators receive 100% of staking rewards on their capital, and a commission of 6% on the capital delegated to them (28 ETH per validator).
Permissioned Node Operators: Unlike permissionless node operators, permissioned operators must demonstrate a track record of performance, possess a solid reputation, and sign a contract to run nodes for Stader right from the start. In return, they receive a competitive commission of 5% on staking rewards, MEV, and tips.
Distributed Validation Technology (DVT): In the future, ETHx will support DVT technology, which distributes validator responsibilities across multiple nodes to enhance decentralization. Stader has partnered with the SSV Network to conduct a test network for DVT pools.
With this multi-pool architecture, ETHx aims to minimize the risks associated with poor validator performance or unfavorable network conditions:
Moreover, Stader asserts its support for 6 networks for their liquid tokens and over 40 DeFi protocols. These include AAVE v3 (Polygon marketplace), Balancer, Beefy, Quickswap, Apeswap, Beethoven, Wombat, Cian, and more.
3. rsETH (Kelp)
rsETH was originally a token from Stader that enhances the rewards for ether staking by simultaneously restaking multiple Liquidity Staking Tokens. But further rsETH will be developed under the Kelp brand with a separate team. Built on the EigenLayer restaking protocol, it empowers users to stake assets like cbETH, stETH, and rETH across various networks. These assets are then allocated to node operators within the Stader network, with rsETH holders receiving a portion of the staking rewards. Thus, rsETH is an LRT - Liquid Restaking Token.
In addition to its staking benefits, rsETH can be utilized for trading on exchanges, integrated into other DeFi applications, and redeemed for underlying assets.
rsETH is supported by several key modules: the deposit pool, node delegator, rewards marketplace, and withdrawal manager contracts.
The deposit pool acts as a repository where restakers can transfer their liquid tokens and receive rsETH tokens based on the current exchange rate. It also ensures that these liquid assets are delegated from restakers to various LRT DAO operators, providing economic security for AVS aiming to develop Eigenlayer.
The node delegation module handles the movement of deposited liquid assets into contracts for each operator. Assets within each delegator node are delegated to a single operator, ensuring the economic security of the delegated assets for all nodes operated by the chosen operator.
The rewards market offers different strategies for utilizing various rewards, with decisions made by the DAO through management.
The Withdrawal Manager module assists rsETH holders in converting their rsETH tokens into a share of all assets managed by the protocol.
4. Tokenomics
Stader has its own SD token, which is closely tied to the protocol's operation. The Stader protocol implements a sophisticated tokenomics model tied to ETHx to ensure mutually beneficial cooperation between node operators and the protocol. This is achieved through several key points:
In phase 1 of the tokenomics launch (current one), permissionless validators must deposit an equivalent of 0.4 ETH in SD tokens to provide additional insurance for users against poor node operator performance.
In phase 2, which is planned for December 2023, SD holders will have the option to lend their tokens to stakers who solely want to bond ETH.
SD holders will also have the opportunity to earn a percentage of profits from staking.
The Stader community (SD holders, stakers) has the opportunity to participate in the management of the Stader platform through off-chain and on-chain governance.
5. Token metrics
The SD token is an ERC-20 token with a limited supply capped at 150M tokens. Distribution is as follows:
Rewards + Farming: 36%. Release schedule determined through individual rewards programs via governance.
Team + Advisors: 17%. 6-month cliff followed by linear vesting over 36 months.
Private Sale: 17%. Token Generation Event (TGE) Unlock: 0-5% of allotment unlocked at TGE. Vesting: Linear vesting over 36 months post TGE.
DAO Fund: 15%. To be determined through governance.
Ecosystem Fund: 11%. 0.5%-1.5% to be unlocked at TGE. Remaining tokens unlocking is based on governance.
Public Sale (Main sale): 4%. Option 1 - at $4.50 with 3 Mn supply, forty-day lockup followed by a twenty percent release on a monthly basis for March–July 2022. Option 2 - at $3.33 with 3 Mn supply, three-month lockup followed by a twenty percent release on a bi-monthly basis for April–December 2022.
Detailed information about SD token vesting.
6. Involved Players
Stader has garnered support from a wide range of esteemed backers, including Pantera Capital, Coinbase Ventures, True Ventures, Jump Capital, Proof Group, Hypersphere, Huobi Ventures, Solidity Ventures, Ledgerprime, Double Peak Group, Blockchain.com, Accomplice, DACM, GoldenTree Asset Management, Accel, Amber, 4RC, Figment, Better Capital, and Triblock.
Additionally, Stader enjoys valuable partnerships with Dewhales, EigenLayer, Cian Protocol, Stakin, Stakely, SwissBorg, dAppOS, and numerous others. Notably, their contracts have undergone thorough audits by reputable auditors such as Halborn, PeckShield, BlockSec, OSEC, and ImmuneBytes.
Furthermore, Stader has forged alliances with blockchain foundations like Solana Foundation, Near Foundation, and HBAR Foundation.
7. Who is behind the Stader?
Stader Labs was founded in Q1 2021 by Sidhartha Doddipalli, Dheeraj Borra, and Amitej Gajjala. The team comprises experienced professionals with diverse expertise in management, marketing, and development.
Amitej Gajjala, the CEO and Co-founder, holds a bachelor's degree in Electronics Engineering and an MBA in management. With over 10 years of experience in strategy consulting, business development, and start-up management, he has made significant contributions to companies like A.T. Kearney, Zapr Media Labs, and Swiggy.
Sidhartha Doddipalli, the CTO and Co-founder, brings deep knowledge in technology, data science, and operations research. With a strong background as a data scientist and developer, he has worked with renowned companies such as Shopzilla, FreeWheel, and Advanty Technologies.
Dheeraj Borra, the Protocol Lead and Co-founder, holds a bachelor's degree in Computer Science and Engineering. With more than a decade of experience as a developer at reputable companies like Deloitte, Facebook, Paypal, and Linkedin, he has showcased his expertise in the field.
Shawn Egger, the Global Head of Business Development & Partnerships, has a successful track record in the competitive FX Market sales area. With around 10 years of experience in sales roles related to foreign exchange markets and electronic market making algorithms, he played a pivotal role in establishing the off-exchange trading department at Crypto.com.
Gautam Midha, the Head of Strategy and Expansion, General Manager for Hedera and Bnb, has an extensive background in i-banking, consulting, and investing. With experience at JP Morgan, Deutsche Bank, A.T. Kearney, and BlackWatch Advisors, he brings valuable insights to the team.
Anoothi Kumar, the General Manager for Ethereum NEAR and Terra 2.0, holds a BA in Economics and an MBA from Harvard Business School. With a decade of experience in business consulting, strategy, and operations, he has worked with prestigious companies such as McKinsey, Abbott, and Citibank.
Kranthi Kiran is responsible for Growth Strategy and ETHx. Despite having a Bachelor's degree in Civil Engineering, he holds an MBA and has gained expertise in global liquidity and investment since 2017. He has served in various companies, focusing on growth strategy.
Abhishek Shetty, the Global CMO, brings a wealth of marketing experience and holds a Bachelor's degree in Electronics and Engineering. With a career spanning 15 years, he has held leadership positions in notable fashion brands, including Jack and Jones, and has contributed significantly to the marketing divisions of Sony Pictures.
Conclusion
As demonstrated above, Stader is a sophisticated and comprehensive protocol that encompasses various aspects of LSDFi. It covers a wide range of functionalities, including ETH staking with LSD issuance (ETHx), LRT restaking (rsETH), DVT support, work options for different types of ETH validators, and support for liquid token staking from different networks.
Given the extensive functionality, product complexity, and supported protocols, Stader provides a wealth of information through its blog and documentation. In fact, separate Twitter accounts have been created to support different areas, such as Stader BNB, Stader Polygon, Stader Near, Stader Aptos, Stader Hedera, and more. This demonstrates how Stader embodies the vision of a module-based architecture not only in its smart contract structure, but also in all its protocol activities.
With its focus on different networks, comprehensive multi-component architecture for ETH, and numerous partnerships and integrations, Stader emerges as a formidable player that offers more opportunities compared to prominent players in the LSD market like Lido, Rocket Pool, Swell, and others.
Stader links:
Website | Twitter | Discord | Blog | Medium | Docs | Stader Litepaper | ETHx Litepaper | Stader forum
ETHx Dashboard | Node Operator Dashboard
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