Proposal 003 - Blend Fee Structure (5L8LUTqYz)

This is the third proposal submitted by the Staker Operations team (Ops) based on STKR token holder feedback. The primary purpose of this proposal is to implement a fee structure for the BLND token. The fee structure is based on BLND’s unique advantages and competitor comparables.

Proposal Items:

  1. Ops team, in conjunction with STKR token holder feedback, is proposing a 0% AUM fee, a 0% fee for price appreciation, and a 20% fee on generated rewards or ‘0/0/20’.
  2. BLND investors may redeem their position to StakerDAO on a quarterly basis for a 2% fee.
  3. Assets must trade for at least 5 months in public markets before being considered for inclusion into the basket.

Background:
ITEM 1: The proposed ‘0/0/20’ fee structure is based on 4 reasons: ease of use, reduced research needs, potentially tax advantaged nature, and competitive environment.

  1. Ease of use: The inspiration behind Blend was to create the easiest way to go long the best PoS protocols. All it requires is an individual or institution to buy and custody BLND, an ERC-20 token, in order to have exposure to the industry. In addition, selling Blend will be as easy as redeeming with Staker on a quarterly basis or potentially at a later date, on an exchange. Follow this link for a detailed write up of how Blend works.

  2. Reduced research needs: Investors will no longer need to research existing or launching PoS networks as well as select which validators to delegate to. Blend investors can be assured that the STKR token holders and the Staker Council are aligned with them in providing the best possible product. This is because the growth of AUM ultimately drives value back into STKR. The Council is comprised of leading crypto investors and operators, including Olaf Carlson-Wee at Polychain, Jonas Lamis at StakerDAO, Spencer Noon at DTC Capital, Luke Youngblood at Coinbase Custody, and Shaishav Todi at Lemniscap.

  3. Potentially tax advantaged: For investors that live in a jurisdiction that taxes generated rewards, Blend is potentially a tax advantaged product. Blend does not distribute rewards, but instead, uses rewards to buyback Blend in a monthly tender offer model. Please consult with your tax advisor.

  4. Competitive environment: The proposed fee is in line with competitive offerings from both non-crypto and crypto-native related products.

ITEM 2: Investors have the option to exit their BLND position by redeeming directly with StakerDAO. Investors may choose to do so for any reason including if their investment strategy and perspective related to PoS has changed or if BLND is trading significantly below NAV and the investor wishes to exit at that time. Redemption will occur on a quarterly basis, will require a time based notification and lock of redeeming tokens, and will incur a 2% fee.

ITEM 3: After analyzing the performance of PoS tokens at launch, STKR token holders believe PoS assets should trade for 5 months before being considered for inclusion into the basket. This is similar to index funds in traditional markets that require one year of trading before inclusion.

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Thanks for submitting this Christian.

I’m not sure if this is possible to implement, but one idea is to have a tiered fee schedule for BLND to incentivize early liquidity. For example:

  • 0% for the first $1M of BLND
  • 5% for the next $5M of BLND
  • 10% for the next $14M of BLND
  • 20% after $20M of BLND has been purchased

Thanks for the idea @DmitriyB. The challenge here is that individuals never receive distribution of rewards from their BLND holdings. Instead the rewards are used to repurchase and burn BLND. So it wouldn’t be possible to to make some BLND “more valuable” or more discounted than other BLND through this kind of mechanism.

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