BeethovenX

Proposal

The Beets DAO treasury holdings may be used to continuously increase the self-stake for the Beets Sonic validator (ID 44), allowing for more delegations to the validator to be set up.

We’re aiming to limit the delegation to the Beets validator to 10% of the overall underlying S deposited to stS. MDs would be given the allowance to increase the self-staked amount of the Beets validator to sufficiently allow up to 10% of the delegations.

Motivation

With the passing of BIP-67, the DAO approved to start a Beets validator for Fantom and to self-stake 100’000 FTM from DAO’s treasury. With the passing of BIP-72, the self-stake amount was increased by another 100’000 FTM. With the passing of BIP-75, the self-stake amount was increased by another 100’000 FTM to a total of 300’000 FTM. With the passing of BIP-84, the self-stake amount was increased by another 200’000 S to a total of 500’000 S due to the minimum self-stake for Sonic. As a reminder, a validator earns additional rewards based on delegated $S and can only receive 15 times the self-stake amount as delegations.

As the Beets validator has already the maximum amount delegated through stS (7’500’000 S), an increased self-stake will allow for further delegations. As the validator is running at fixed costs, increased delegations also increase the profitability of the validator.

We propose to continually increase the self-stake to allow for more delegations from deposits into Beets Staked Sonic (stS). The self-limiting to 10% ensures a continued adequate degree of decentralization for Beets Staked Sonic (stS).

Specification

The BIP will approve treasury assets to be used to continuously increase the self-stake for the Beets Sonic validator, self-limiting the validator to a 10% share of the total assets in Beets Staked Sonic (stS).

This is done in adherence with the treasury risk framework, while also ensuring appropriate funds still remain to provide protocol-owned liquidity to bootstrap possible new pools as well as to support the secondary market peg of Beets Staked Sonic (stS) (as per BIP-87).

Impacts / Risk Assessment

This BIP would approve to increase the self-stake amount to our validator, which has been running without experiencing issues, both back on Fantom and also since its launch on Sonic.

An increased self-stake also means an increased amount of assets at stake for validator operations. However, Beets has experience in running the validator infrastructure, both on Fantom and now on Sonic. In the history of Fantom and Sonic, there have only been two slashing events (on validators not powered by Beets) and one of them has been refunded by the foundation because it was a misconfiguration on the validator. This shows that slashing events are not impossible, but unlikely to happen.