Voluntary Exit and Redeemability (Rage Quit)

Permissionless protocols must have a built-in system that will ensure a "right to exit" for its users - something commonly referred to as a Rage Quit. The Stakehouse protocol facilitates anytime exit through its Rage Quit adapter. A KNOT’s lifecycle status will become EXITED in the Stakehouse registry and its liquidity position permanently removed. Users who wish to leave stakehouse can exercise their right to exit anytime, 24/7 starting on day 0. The underlying validator can still continue its staking operation unhindered on the Consensus layer as long as it holds its validation rights. The Rage Quit option is vital in a black swan event where every KNOT could enforce a coordinated response for a global settlement of Stakehouse protocol liquidity removal in aggregate. This could be done by independently removing KNOTs without any intermediary. Any Rage Quit execution results in the termination of the optimistic UTXO attached to the KNOT. Meaning that Stakehouse protocol derivatives can never be minted again. A KNOT that has Rage Quit and is no longer validating, will be able to apply to withdraw the ETH attached to a validator on the Consensus layer. Thus, Rage Quit is a fundamental requirement to exercise redemption rights over the staked asset.

In order to kick off a Rage Quit, a protocol user must report the latest balance of a KNOT and burn all its tokens including the sETH, dETH, SLOT, and savETH. Should a KNOT have less than the full 8 SLOT tokens due to protocol slashing, the protocol will enforce an ETH top-up and queue flush for the KNOT. This will restore the full SLOT balance, which will satisfy the redemption conditions prior to the exit. The minimum top-up is set by the Ethereum Deposit Contract at 1 ETH; All ETH that is added to the KNOT’s validator will be collected by the Rage Quit function.

If a user holds all of the derivative tokens associated with a KNOT, then that user can Rage Quit by themselves using the rageQuitKnot function. If the KNOT’s assets are split between different users, rage quitting is enabled through multiPartyRageQuit. This requires additional coordination to aggregate the signature of all stakeholders of the KNOT. Once all signatures are verified and the tokens are burned, an address designated by the stakeholders is assigned for withdrawing the entire balance of the KNOT validator. This can happen when withdrawals are enabled post-merge. In all cases, after a Rage Quit has been performed, the same validator is prohibited from reentering the Stakehouse registry under the same credentials. All of its history remains on the Consensus layer and execution layer forever.