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Announcing $SDL Token Unlock and $veSDL: Vote-Escrowed SDL

Announcing $SDL Token Unlock and $veSDL: Vote-Escrowed SDL

Bandits rejoice! The long awaited moment is here:

$SDL is now tradable! 💸🤠🚀

It's been a rocky few months and we're all going through a lot right now, so the fact that the unlock and $veSDL is here is even more vital. It is the start of a new chapter, where we begin the climb from bear-bottom, by continuing to ship features and to invest in/grow our community.

What you need to know about the unlock:

  1. The primary (i.e. incentivized) liquidity pool for trading SDL is SDL/ETH on SushiSwap.
  2. You can now lock SDL into veSDL at saddle.exchange/#/veSDL in order to give you 60% of all trading fees, reward boosts on any deposits you may have in Saddle pools, and voting powers for which pool gets rewards + all governance proposals.
  3. 36.5% of the first week’s SDL reward emissions will be going to the SDL/ETH gauge – about 400k SDL. The remaining 63.5% of first week's emissions are allocated pro-rata to each Saddle Mainnet pool based on pool TVL. (Pools on alt L1s and L2s will continue to emit rewards via MiniChef and will be added to the gauge system at a later date).
  4. The gauge started to reward SDL emissions on 06/22/2022 at 8PM EST.
  5. Future week’s emissions to be determined by veSDL vote. First vote (for Week 2) will start the following day on 06/24/2022.

What and Why veSDL?

With the long-awaited unlock of the SDL token comes Step 1 in our tokenomics roadmap: the implementation of “vote escrow” tokenomics.

What does vote escrow tokenomics enable SDL holders to do?

To answer this question, we first need to zoom out. Saddle provides swaps – specifically, swaps between pegged assets such as stablecoins and wrapped Bitcoin. In order to facilitate swaps, Saddle first needs to incentivize users to deposit their liquidity (in other words, their tokens) in Saddle, thereby becoming “liquidity providers” (LPs).

Up until now, Saddle has incentivized LPs by offering SDL tokens (and occasionally, other partners’ tokens) as a reward for their deposited liquidity. But there’s a problem: token emission rates for these incentives are fixed!

What if market conditions change?

What if SDL means’s price action makes the APR unsustainably high, or too low to be attractive?

What if SDL holders feel more comfortable LPing for, say, our D4 pool instead of our alETH pool – but the alETH pool has higher SDL emissions?

veSDL solves all of this.

Instead of holders making a tradeoff between fixed, potentially higher SDL emissions, and being LPs for tokens they like more, vote escrow tokenomics allows SDL holders to lock their SDL for a period of time for veSDL, or “vote escrowed” SDL. The longer they lock, the higher the veSDL:SDL exchange rate to incentivize long-term community participation. Once users have veSDL they can vote in weekly gauge weight voting.

A user is presented with the option to lock up SDL for a period of time, and then vote in weekly gauge weigh votes. Users can also claim trading fees in the form of SDL/WETH LP tokens.

The weekly gauge weight vote determines how Saddle’s weekly SDL emissions get distributed in the following week. As outlined in SIP-24, 30M tokens of the SDL supply will be emitted over the first 6 months post token unlock. That means 30M SDL / 6 months = 1.25m SDL will be emitted in liquidity mining incentives per week. After 6 months, a new Saddle Improvement Proposal will go to governance to change the weekly emissions rate to a tapering schedule.

This means that SDL users will be able to lock up their SDL for veSDL, vote in weekly gauge votes to determine where SDL incentives get emitted the following week, and collectively choose how attractive each pool is for the broader DeFi community. That’s community-driven market efficiency!

In addition to this, when users lock up SDL, they also receive personal SDL emission boosts for the pools they’re personally LPs for.

Finally, recall that Saddle collects a 0.04% trading fee on most trades. 60% of these trading fees go to LPs, while the other 40% goes to Saddle’s treasury in the form of “admin fees''. With vote escrow, these admin fees will instead be used to purchase SDL and WETH on the open market, deposited into a liquidity pool, and then paid out to veSDL holders. This provides organic buy pressure on SDL while also giving utility-backed WETH coins back to the community.

We’re thrilled to move Saddle forward with this efficient, community-driven, and ultimately grounded first step in our tokenomics roadmap.

Thank you all for your support. We're committed to delivering long-term value and are well-prepared to ride out the bear market and re-emerge as a top AMM! LFGGG 🚀🚀🚀

Join the next chapter of Saddle by hopping in our community Discord and following Saddle on Twitter.


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