LPL Migration
Pretext
If you haven’t yet, please read Introducing stake.link and stake.link Protocol Deep Dive, as they detail the launch of the stake.link platform, the first-of-its-kind liquid staking platform built on top of Chainlink Economics 2.0.
Introduction
With the introduction of the new stake.link protocol, it’s brought in the requirement for tokenomics changes that will aid the protocol in meeting its long term vision. stake.link is built to be larger than any one node operator, including LinkPool. It’s designed to be the definitive liquid staking protocol that bolsters and secures the incredible value that the Chainlink Network secures; bringing together incentive-aligned, high-reputation node operators and community members looking to delegate their LINK stake.
LPL Token Migration
With this broader vision in mind, LPL will be migrating to the new platform token SDL. The primary differentiator between LPL and SDL is the expanded, global vision of the stake.link protocol and SDL’s role within it. The SDL token performs three key functions:
- SDL enables stake.link governance — SDL holders actively contribute to the platform by proposing, discussing, and refining SLURPs, electing Governing Council Members, and providing input on strategic decisions.
- SDL facilitates reward distribution — it streamlines the allocation of rewards to platform participants. Stakers earn rewards and offer their collateral to Providers, while Providers receive incentives for making their staking allocations available.
- SDL offers priority staking access — by staking SDL, stakers can reserve their spot in the queue for guaranteed LINK staking allocations when additional space is offered.
LPL holders can connect their wallet to the stake.link app and migrate their tokens today. As the creators of stake.link LinkPool is allocated 50,000,000 SDL, making the migration ratio from LPL to SDL 1:0.5. LinkPool holds 68,679,592.00 LPL Tokens, and the community holds 31,320,408.00 LPL Tokens. After the migration, LinkPool will hold 34,339,796.00 SDL Tokens, which are subject to the same vesting schedule as the rest of the stake.link founding node operators, specifically 99% of these tokens will be staked and vest with a 6-month cliff, and 18-month linear vest. The LinkPool community will receive a total of 15,660,204.00 SDL Tokens after migration, which are not subject to any vesting schedule. Once migrated, users can stake their SDL into the SDL Pool, guaranteeing staking access in the reserved access period.
LPL Migration Steps
To migrate your LPL, simply open up stake.link and connect to your wallet that either has a LPL/LPLA balance. Upon connecting, a banner will appear and direct you to the SDL pool that will give the option to migrate.
It’s important to emphasise that with the pool being set to Reserve Mode initially, if SDL is staked, it cannot be withdrawn until the pool is then set to general access mode.
LPL LINK Rewards
With this complete migration to the SDL token, the LINK rewards that were distributed solely from the LinkPool Chainlink nodes through the LPL token will no longer take place. Even though this is a substantial change, there are several important reasons for this.
From a business perspective, given the current market conditions, it’s critical to secure LinkPool’s future without relying on external funding. By keeping LINK revenues from our node’s services, it simply allows the business to be sustainable and to grow with the vision of the team, with no dependence upon external parties. Distributing LINK rewards from gross revenue without taking into account gas costs, infrastructure costs, or labour costs is hugely detrimental to being a sustainable business that has a clear growth plan.
LPL and stake.link
In addition, indirectly sharing stake.link protocol fees with LPL holders would be increasingly difficult over time. Our aim with stake.link was to build a protocol that incentivises the highest reputational node operators to join, and with that, it needs the right economic incentives. By setting a high platform fee that is distributed solely to LPL holders, it reduces the delegation fee from node operators thus lowering their incentive to participate. In the future, we expect that as stake.link evolves and expands, LinkPool’s voting weight will decrease. Although this is a favourable path when building a decentralised protocol, it’s reasonable to imagine that any higher protocol fee directed to LPL holders would be removed by a governance vote as there’s no overall protocol-aligned motivation to keep it.
With the launch of stake.link, it now means the realisation of our vision that was cast five years ago is being put into practise. We’ve launched a protocol that is destined to transact vastly more value through it than any individual node could; a protocol of grand scale that will be the backbone to Chainlink’s upstream DeFi composability.
Growth Fund
On October 31, we earmarked 25% of the LPL supply for a growth fund as we neared the final stages of a fundraising strategy. This growth fund allocated 2.77% of the total supply before the fundraising space began to change dramatically in early November. As a result, the remainder of the earmarked LPL was not used.
Snapshot Results
Based on the above, the snapshot of LPL holders and stakers taken on November 25th is going to be used for the last distribution of LINK rewards to LPL holders through the new stake.link app. Users who held LPL at the time of the snapshot and migrate to SDL will receive the final LINK distribution, based on the amount of LPL migrated.
In the coming weeks, we will distribute an NFT to the LPL holders at the time of the snapshot to commemorate their long-standing support. Initially, this NFT will be used for access to private stake.link discussion channels. All users who held or staked LPL at the time of the snapshot will receive the NFT.
SDL Liquidity
Incentivizing access to, and therefore adequate liquidity for, the SDL Token is crucial for the stake.link platform. As such, an SDL/LINK pool will be established on SushiSwap, and the stake.link DAO will be provisioning liquidity mining rewards in the form of an estimated 1,400,000 SDL tokens for the first year from the DAO Treasury.
Towards a Decentralised Future for Chainlink Staking
We couldn’t be more proud and excited to release stake.link to the world. It is the culmination of years of ideation and iteration, countless hours of discussion and collaboration, and many hard-won lessons. We’re honoured to offer you, our ardent supporters, first rights at participating and a significant portion of the tokens reserved for founders. We look forward to your feedback, and to collaborating with you to build the future of stake.link.
Join stake.link and share your thoughts on Twitter: @stakedotlink and on Telegram: https://t.me/stakedotlink.
