Introduction

Stader's ETHx launch aimed to decentralize Ethereum by making node operation and ETH staking more accessible. It significantly reduced the capital needed for validators, enabling operations with just 4 ETH and 0.4 ETH worth of SD tokens.

Dedicated to continual enhancement and striving to deliver the best services to our SD Holders and Node Operators, we are now introducing the SD Utility Pool. SD Utility Pool is a crucial milestone in ETHx's evolution enabling SD holders to delegate their SD to node operators to spin ETHx nodes with ETH-only exposure.

Detailed conversations with two of our key stakeholder groups revealed the following insights.

1. SD holders: SD holders want to participate beyond governance and seek enhanced utility and rewards from SD
2. Node operators: ETHx node operators want to scale participation but struggle to hold a big governance token position given their treasury management guardrails. They’d like to receive delegation support from current SD holders

The SD Utility Pool unifies two of our key stakeholders in a model that lends itself to both. SD holders can delegate their SD to the Utility Pool and earn rewards. Node operators can then source the SD required for setting up an ETHx validator from the Utility Pool for a nominal utilization fee. Our thesis is that as ETHx scales, more node operators will join the permissionless set, fuelling the demand for SD even further and contributing to its growth.

Here’s a simple flywheel visualizing this.