Stake DAO Annual Report — 2021

Data-driven highlights from Stake DAO’s performance last year

8 min readJan 31, 2022

Since launching approximately one year ago, Stake DAO has become one of the leading DeFi platforms in the space, shipping 15+ best-in-class strategies, creating from scratch an options derivatives vertical in collaboration with Opyn, launching the market’s first financial NFT gamification mechanic, and offering staking-as-a-service on a wide range of blockchains.

This report is a concise and data-focused look at the performance across all key metrics, laying the context for this year’s goals and ambitions. Enjoy!

Agenda

TL;DR (Introduction + 2022 Roadmap)
Total Value Locked
P&L
Sanctuary/ Palace
Treasury
Trading & Wallets analysis
Platform traffic analysis
Yields
Roadmap for 2022

Data Source

The data used in this Annual Report is taken from internal analysis, on-chain data, as well as from external sources such as The Block, Token Terminal, and Dune Analytics.

Highlights

TVL as of 31th Dec 2021 across the Platform exceeded $830M, marking a 100%+ increase in just the last quarter from $400M;
Cumulative Protocol Earnings nearly at $9M
SDT Implied Price/Earnings ratio of 3.62, Market Cap/TVL ratio of 0.13

Immediate objectives

The grand vision — to create a decentralised exchange where anyone can buy, trade and grow their digital assets in a completely decentralized manner — is starting to take shape. 2022 will be a year of great changes and further improvements:

Release of a new product range, Liquid Lockers, in Q1 to Q2 2022, which will allow Stake DAO to scale on many chains and beyond Curve to many protocols
Implementation of new tokenomics to position the DAO for accelerated growth
Release new strategies powered by Stake DAO NFTs
Development of the Options vertical with the objective of tripling TVL by the end of Q1 2022

Quantifying the successes of Q4 2021

Three objectives were announced for Q4:

Develop the Options Strategy vertical by launching a BTC and USD strategy. This has been successfully achieved with a 30x increase in TVL, now exceeding $60m TVL
Continue the liquidity acquisition program with Olympus. We have reached $1m of liquidity and have now paused the Olympus pro bonds as we are satisfied with this result. We will keep acquiring our liquidity by using our performance fees, as voted by SDT holders.
Develop a new architecture. This has been the main focus of the quarter. We are slightly late on schedule but will target to release a new product during Q1 2022.

TVL doubled during Q4, mainly driven by Strategy TVL, which exceeded all our expectations. Revenues also boomed during this period, with nearly $5m revenues generated over Q4; more than the first three quarters combined.

Total Value Locked

Stake DAO Total Value Locked (TVL) has increased steadily to over $830M, doubling over the course of last Quarter.

The increase in total TVL has been driven by several factors, outlined below.

Passive Strategies

An increase in deposits in existing strategies over the last months. In particular, the Passive Frax Strategy increased from $30M in September to over $90M by the end of December.
The multi-chain agnostic vision has become more concrete with the deployment of a Passive USD Strategy on Avalanche, which now accounts for more than $100M in TVL.

Options Strategies

Stake DAO was among the first players to understand retail’s growing interest in the derivatives market. This trend will likely continue in 2022 due to the great innovation in DeFi Derivatives financial engineering.

Stake DAO is among the top-5 players in the DeFi options market, totaling more than $60M across the three options strategies below.

The Ethereum Covered Call Strategy reached $26M in TVL, marking a 11x increase from October to December
The Bitcoin Covered Call Strategy reached $20M in TVL, marking a 63x increase from October to December
The Ethereum Put Selling Strategy reached $16.3M just two months after launch

A combination of factors enable Stake DAO to have the best performance in the market for Option derivative products and attract an increasing amount of users:

Optimal strike selection
Efficient auction mechanism ensuring a fair risk/reward
Working collateral, generating additional revenues
Limited fees (only 0.5% withdrawal fee, equivalent to staying between one and three weeks in the strategy)
Incentives paid in SDT and FXS to generate additional yield
Overall performance is ~3x higher than competition

Protocol staking

Avalanche validators received many delegations, leading to a steep increase in TVL from Staking-as-a-Service.
Introduction of new Validators also drove higher TVL toward the SaaS vertical. Newly introduced Harmony validators account for 3% of the entire TVL: $2.8M in Retail Validator and $14.3M in Foundation Validator.
Favorable market conditions have increased the $ amount staked in Validators.

P&L

Stake DAO’s protocol revenues have risen steadily in the last year, driven by both Staking-as-a-Service and Strategies growth. In the last quarter the platform managed to exceed the $1M/ month mark in revenues.

Costs have also increased alongside the DAO’s operations. The main costs items can be found below:

Gas Costs: These are accounted under the Strategies Vertical. They hugely increased due the acceleration in smart contract activities, new contracts deployed and increased Ethereum gas costs
Devops costs and taxes: These are recorded under the Protocols vertical and take into consideration all the costs linked to running and maintaining validators and servers. Costs have been increasing due to the introduction of a new validator, an adjustment to Avalanche validator requirements, and the preparation of new validators.
Core Contributor Rewards: since August, the DAO has compensated the team with a total amount of c.27k sdam3CRV LP tokens monthly to reward the efforts of 20 to 30 contributors.
Other costs: refer to OpenSea fees charged when selling NFTs.

Net Earnings have also exceeded the $1M/month mark, representing on average around 90% net margin.

The steep increase in revenues has been reflected in a complementary growth in cumulative earnings, which have now reached $8.6M. The one-month rolling average of annualized revenues stood at $17.1m in December.

Sanctuary/ Palace

TVL in our Governance Vault has been steadily increasing during this period, reaching 9M SDT locked as of December 30, accounting for $18.1M.
The Palace has also displayed strong growth highlighting users’ interest in accumulating Points to mint new NFTs.

As of Dec 31st, SDT locked in the Sanctuary represented 39% of total Circulating Supply, and has accounted for around 30%+ since inception, highlighting the fact that SDT holders are generally bullish on SDT and would rather look for a limited APY in the Sanctuary than suffer the potential impermanent losses while providing liquidity on DEXes. It also highlights the attractiveness of the Palace, bringing a significant additional APY in addition to that of the Sanctuary.

With the release of Liquid Lockers, the current governance structure will shift to a veTOKEN model mechanic, eliminating the need of the Sanctuary. xSDT will be replaced by veSDT whose holders will be eligible for boosted rewards and for governance decision making (deciding the inflation and reward allocation between different strategies).

Treasury

The Stake DAO Treasury has been growing steadily and sustainably since inception, due to the increased cumulative earnings from Strategies, Staking-as-a-service, and NFT proceeds.

The Treasury is divided into three main wallets:

Multisig: 0xF930EBBd05eF8b25B1797b9b2109DDC9B0d43063
Treasury: 0x9D75C85f864Ab9149E23F27C35addaE09B9B909C
Deployer: 0xb36a0671B3D49587236d7833B01E79798175875f

And is composed of different assets with the following breakdown, for a total DAO value of over $25M:

Assets in wallet: $1,283,214
Deposits: $3,548,438
Debt: $1,535,965
Other Assets (LPs and sd tokens): 4,276,079
Locked Assets (locked CRV): 17,853,909

* Other assets: Mainly LP tokens coming from performance/ withdrawal fees

In 2022, unused assets will be put to work to generate additional yield and produce a strong feedback loop.

SDT Performance

Yield

Stake DAO’s mission has always been to offer the most competitive APYs on the market for a certain level of risk. Each one of Stake DAO’s strategies has achieved a significantly better APY than all competitor strategies for similar risk profiles.

Stake DAO has introduced a number of tools that allow the user to track his/her performance in the simplest, and most intuitive way possible. Moreover, the platform has made significant advances in multi-chain and cross-chain capabilities, and users can now benefit from Stake DAO products across several chains.

Concerning the newly introduced Options Strategies, Stake DAO is also providing the best APYs in the entire market. Options Strategies will go multi-chain this quarter, Q1 2022.

Platform Traffic & Community Overview

Q4 saw a steep increase in the number of new user daily views, highlighted by the number of new community members we speak to every day. This is a highly encouraging sign for the progress of the DAO.

Over the past quarter there was an organic increase in engagement in social networks with an increase in community activity.

Q1 2022 Roadmap

The roadmap for Q1 2022 is focused on a few key pillars:

Release Liquid Lockers
Release new veSDT tokenomics
Release of new strategies powered by Stark and Pondergeist NFTs
Go cross-chain on options and launch governance token vaults to triple our TVL. New chains: Avalanche, Polygon, Solana. Governance token vaults: AAVE, UNI, SUSHI, LINK
Move our liquidity towards Curve

2021 was a year of tremendous achievement, but it has to be said it was really spent laying a solid foundation for the grand vision of Stake DAO. Herd, we look forward to your support and participation in continuing to open up the full potential of DeFi on (and between) every chain!