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🚀 SDT
🔏 veSDT token

🗳️ veSDT: Unlocking SDT's utility

A master governance token that boosts your positions accross many protocols

🌐 veSDT concept and mechanism

veSDT, or voting-escrowed SDT, is a non-transferable token that represents SDT locked for a certain amount of time. When users lock their SDT into veSDT, they unlock the utility of SDT.

The veSDT contract (opens in a new tab) is a fork of Curve Finance's veCRV contract. Therefore, here are the key considerations to keep in mind regarding veSDT's functioning:

  • Users can lock their SDT for up to 4 years: When locking SDT, users receive an amount of veSDT which is proportionate to the lock duration and the amount of SDT locked. 1 SDT locked for four years gives 1 veSDT.

  • Lineraly decreasing veSDT balance: At every point in time, users' veSDT balance is computed with the following formula:

Remaining lock duration×SDT locked/4 years\text{{Remaining lock duration}} \times \text{{SDT locked}} / \text{{4 years}}

  • Non-transferable Tokens: veSDT tokens are non-transferable by design. Once an address owns veSDT, it cannot transfer or sell them in any way.

  • Single Lock per Address: Each address can only have a single lock duration. This means that a single address cannot lock certain SDT tokens for 2 years, then another set of SDT tokens for 3 years, etc. Users that already have veSDT can only increase their lock amount and/or extend their lock duration.

  • Smart contracts cannot lock: To be authorised to lock SDT, smart contracts need to be whitelisted in the smartWalletWhitelist contract (opens in a new tab). This is notably the case for Safe multisigs. To be whitelisted, they need to go through a governance proposal. Example of governance proposal for whitelisting a smart contract to lock SDT available here (opens in a new tab).

  • Change in veSDT balance need to be checkpointed to be taken into account: When a user changes their veSDT balance by either increasing their lock amount or their lock duration, this change doesn't automatically take effect on Stake DAO products, which are ruled by Liquidity Gauge contracts. For the new veSDT balance to be taken into account by a Liquidity Gauge, the user needs to also interact with the gauge with an on-chain transaction: deposit, withdraw, claim_rewards, or simply user_checkpoint. When the user needs to update its veSDT balance for a certain product, a button Update boost will appear in the boost section of the user interface for this product.

🛠️ Utility

veSDT has many use cases, and is both a utility and a governance token:

  • Stake DAO governance is decided by veSDT votes. To publish a governance proposal, users need veSDT and it's also the only way to vote on governance proposals;

  • SDT inflation allocation is decided by veSDT gauge votes: veSDT holders vote on-chain via gauge controller contracts to allocate the weekly emissions sent to Stake DAO products;

  • Boosted SDT rewards SDT rewards coming from inflation are sent to Stake DAO users at various rates depending on their veSDT position. Users who own the veSDT amount to reach the maximum reward boost benefit from SDT rewards up to 2.5x better than users without any veSDT;

  • Meta-governance voting power boost: This is a key utility for veSDT, bringing a lot of value to SDT. It is described more in depth in the following section.

🚀Deep dive in meta-governance vote boosting

Users of Stake DAO liquid lockers (sdTKN) can vote on the governance and gauge votes of the underlying protocol. This voting power is boosted thanks to veSDT. The formula for the calculation of the user's voting power is the following:

vu=v×βu∑usersβuv_u = \frac{{v \times \beta_u}}{{\sum_{\text{{users}}} \beta_u}} βu=min⁡(0.4×bu+0.6×Bs×(wu/W),bu)\beta_u = \min(0.4 \times b_u + 0.6 \times {B_s \times (w_u/W)}, {{b_u}})

Where:

  • vuv_u : user's voting power
  • bub_u : user's balance of staked sdToken
  • βu\beta_u : user's adjusted balance of staked sdToken
  • BsB_s : total balance of staked sdToken
  • wuw_u : user's veSDT balance
  • W : total veSDT supply
  • V : total Liquid Locker voting power

Let's take a concrete example (with illustrative figures):

Let's consider two users, Bob and Alice, who both stake 4 CRV in the Curve Liquid Locker. They each receive 4 sdCRV in return. However, their veSDT holdings differ. Bob has no veSDT, while Alice has 1 veSDT.

Here's how their voting power and annual returns compare:

Bob's Scenario: Bob's voting power is equivalent to 2.4 veCRV, which corresponds to the voting power of 4 CRV locked for 2.4 years. By using sdCRV, Bob managed to match the position of his CRV locked for 2.4 years, while maintaining a liquid position. Thanks to these 2.4 veCRV votes, he receives vote incentives that provide him with a 15% APR on his 4 CRV.

Alice's Scenario: Alice, on the other hand, has a voting power of 6 veCRV due to her 1 veSDT. This increased voting power allows her to receive vote incentives that provide her with an APR of 37.5% on her CRV.

In this example, Alice's 1 veSDT gave her an incremental vote of 3.6 veCRV and an additional annualised revenue of 0.9 CRV. This demonstrates the CRV vote backing of veSDT and the value that SDT utility brings. Moreover, Alice can also boost her positions in other lockers with the same veSDT, as the veSDT boost is not product-specific.

To better understand the value of the vote backing of SDT, you can use this calculator: SDT Vote Backing Calculator (opens in a new tab)

How to unlock the vote boosting utility of veSDT if I don't use the lockers?

Users who have a veSDT exposure exceeding their boosting needs accross Stake DAO products can easily sell this boosting power to users of the lockers who do not have enough veSDT to boost their positions. It is an easy way to monetize veSDT utility. veSDT boost can notably be sold using the following tools:

🚀 SDT🏦 Votemarket