As Pendle has shown even the most simple LST yield product (just splitting the yield and the underlying token) can be really popular.
As successful as Pendle has been I don’t think it’s actually growing the space, merely facilitating more trading of the same existing ETH LSTs.
What Sanctum has shown is there’s a wide range of people who would like to participate in defi and crypto projects and an LST is a very popular way to do that (Pathfinders is a great example of a very non-trader community using defi tooling).
I’d like to propose a research group to investigate bringing two LST yield product extension ideas from other blockchains to Solana via Sanctum.
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Yield DCA: Hydration is a Polkadot parachain and they have a product called Yield DCA Hydration - An Ocean of Liquidity. It’s really simple: You deposit your DOT LST into a vault and select what token you’d like your yield to be DCA’d into. I think if the issues a highly skilled team such as Bonk have had with distributing BONK rewards to bonkSOL holders and I think this could be a way to make that process easier. And once you had this you could then easily drop other rewards on top (aka like farm incentives on an LP).
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Yield funding: MetaYield is a deprecated product from multichain LST provider Metapool on the Near blockchain Lossless Staking Rewards-based Web3 Crowdfunding with Meta Yield – Meta Pool. The premise was projects would put up their proposals and users could deposit their stNEAR to fund but only their staking rewards would be sent, they’d keep the underlying NEAR e.g., PembRock Finance Launches Fundraising Campaign Leveraging Meta Yield Kickstarter Platform | Meta Pool. It failed not because the mechanism wasn’t successful, but because the Near ecosystem has struggled for the kinds of early stage projects that would benefit most from this. Solana doesn’t seem to have that same problem. There’d be some work to figure out how to list projects, possibly a $CLOUD vote would be a good way to initially filter for legit/engaged teams, but this is what a research group would be tasked with. One initial thought I had was this might be a better token distribution mechanism for existing projects as well as brand new ones.
In both cases I think there should be a requirement to explore the potential ways to integrate $CLOUD into any of the possible product designs. I think there’s definitely some sort of $CLOUD staking + slashing that could help filter for legit projects.
I don’t have a good idea for what funding should be, I’d like to gather ideas in the comments. My initial thoughts was some sort of bounty system to collect good research and ideas into one place which would then be packaged up and presented back to the community and Sanctum team for further discussion.
Timeline wise I think 2 months should be enough, should the right people be involved, to collect and collate information. Maybe 3 months if you wanted to reach out to potential customers and gather their thoughts about what they’d use the products for as a validation of interest e.g., Drift’s use case for a dSOL DCA, CHONKY’s thoughts on distributing tokens via a yield funding platform etc…