Proposal: Incentive Program for decentralizing Liquid Staking for GRT

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Title: Proposal: Incentive Program for decentralizing Liquid Staking for GRT

Introduction
Tenderize here. We’re excited to be a part of the Graph ecosystem and look forward to keep playing a meaningful role in its future development. We would like to shed light on our commitment to the network, centered around decentralizing Liquid Staking for GRT.

We are building non-custodial GRT Liquid Staking. The protocol is called Tenderize v2. This decentralized, permissionless and open-source protocol can transform a previously staked position into a liquid staked token (LST), which Tenderize calls tTokens.

This new tToken cab instant liquidity because it can be swapped for the unstaked version of the same asset through Tenderize’s application specific AMM: TenderSwap v2. Users can always simply unstake as well and wait 26 days to reclaim their GRT.

Motivation: decentralizing liquid staking for GRT

Building a decentralizated network is one of the strategic priorities for The Graph. As participation in LSTfi increases, it’s crucial to develop and implement a decentralized approach from the onset.

LST/LSD: Liquid staking tokens (formerly Liquid staking Derivatives) have gained traction according to recent open data on Dune. You can find the LSDFi dashboard under the name: " LSDFi :droplet: (Lybra Finance, Pendle, Unsheth and More!)"

There must be a mechanism to decentralize delegation amongst all indexers and not silo stake to large indexers. Any GRT holder, holding as little as 1, can stake to any GRT indexers through Tenderize v2, delivering lower barriers to entry for indexing and decentralizing the stake at a delegation level.

Tenderize V2 Launch and Incentives Offered

Tenderize is allocating 3% of our governance token, WAGYU, total supply to allocate to indexer partners or GRT whales interested in delegating through Tenderize v2.

Our launch TVL target is $5M GRT, if this number is hit, those staking GRT through Tenderize v2 can expect another 10-20% in WAGYU on top of the native ±10% GRT staking yield.

The 20-30% APR on top of native GRT staking yield is generated from:

  1. grant worth of 10% of staked value for indexers and 5% for whales.

  2. 10-20% from airdrop.

  3. 10% each year from staking incentives.

ROI calculator

If you want to project your ROI into the future when staking in our protocol on launch day, we have created a calculator to help showcase expected rewards. You can find it here.

Key Benefits to GRT Indexers

  1. Indexer Grant & Increased Yield: Participating Indexers can benefit from a grant equal to 10% of the initial stake which half is used to boost your Indexers yield for delegators
  2. Liquid Stake: Indexers can bypass the unstaking window of their tTokens by swapping to unstaked GRT at any time via TenderSwap.
  3. Visibility & Stake Increase: Participants will gain exposure through our go-to-market materials and have the chance to accept community delegations on launch day, effectively increasing their stake.
  4. Upside exposure: Thanks to the airdrop, staking yield and Indexer grant, users participating in Tenderize v2 launch enjoy the upside benefits of WAGYU while simultaneously decentralizing the Graph Network.

Technical Architecture for decentralized LST infrastructure

Tenderize v2 is a fully decentralized and permissionless version of Tenderize v1. It possesses a robust, secure, and efficient technical backbone, inheriting core modules from Tenderize v1. The latter was launched in May 2022 with $1M worth of liquid staked MATIC, GRT, and LPT across Ethereum L1 and Arbitrum.

How the decentralized LST infrastructure works

  1. Tenderizer: Decentralizes LST tokens to the core
  2. TenderSwap DEX: Makes LST tokens liquid

Decentralizing LST tokens to the core

Any indexer can self-delegate through Tenderize v2 - minting a LST representing their stake. This is called a tToken. Users can delegate stake to any indexer.

Making LST tokens liquid
Once the tTokens (LST) are minted the holder has two options;

  1. A GRT holder can either unstake by waiting 26-52 days for the unstaking period
  2. Or use TenderSwap DEX for instant liquidity swapping your tGRT tokens for GRT.

TenderSwap is an application-specific decentralized exchange (DEX) tailored for liquid staking. It provides liquidity to tTokens (LSTs) through a shared liquidity pool model, as illustrated below.

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imgonline-com-ua-twotoone-fLK89nmuoW3598×1010 320 KB

Launch & Participation

In anticipation of this major release, we will be rolling out our official testnet this summer, providing an early glimpse into the Tenderize v2 protocol and its functionalities. All launch partners can interact with the code, testnet and review audits before joining the cohort.

Conclusion

Our proposed incentive program presents a golden opportunity for indexers to garner significant benefits while playing a critical role in decentralization of GRT liquid staking. We aim to make underlying networks resilient and robust. The more indexers use Tenderize V2, the more resilient and sustainable the The Graph network will be.

We invite The Graph indexers to join our mission in amplifying the decentralization of GRT liquid staking. To apply click here, or you can directly reach out to us on Telegram: @nvergauwen or @AlecShaw.

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