What are SLOT Tokens?
SLOT Tokens are an ERC-20 token representing management rights over how a validator is operated. SLOT Tokens collect network fees such as gas fees, MEV rewards and other validator benefits. When a validator is staked 8 SLOT tokens are minted. 4 SLOT Tokens go to their Stakehouse Vault in the case of a slashing event and 4 SLOT Tokens go directly to the staker’s wallet. SLOT Tokens are slashable but are unbound to yield limits. As a Stakehouse grows, it will have a net positive network effect on yield opportunities for those holding SLOT Tokens. Using the below value propositions and DeFi Staking methods users can harness the power of SLOT Tokens to run a validator netting 4 ETH with each completed circle.
sETH = SLOT ETH
As dETH increases the value of SLOT increases. SLOT tokens will always remain at 8 tokens per validator. SLOT tokens require a unit of account to calculate their value in relation to dETH. sETH is used to track the increase of dETH in association with the SLOT tokens. Therefore sETH is the liquid representation of SLOT tokens.
Scenario: An increase of dETH results in an increase of sETH. Therefore, there is more sETH and the value of SLOT tokens has increased.
Once a user creates a KNOT they can mint mint 24 dETH tokens and 8 SLOT tokens. sETH is the unit of account for SLOT tokens.
When a user mints derivatives of their validator and the underlying staked ETH, the user holds 4 SLOT tokens in their wallet and 4 SLOT tokens in their Stakehouse Vault. They retain full ownership of all SLOT tokens. A Stakehouse Vault is used to enforce validator node management rights in a Stakehouse. Each Stakehouse has its own unique Vault.
Stakehouse SLOT Ownership
All SLOT tokens are under the custody of the user who minted the tokens. If a user decides to remove their validator from a Stakehouse registry, they will still receive the validator in full. All network revenue generated by the validator is awarded to the owner of SLOT tokens both in the vault and in their wallets.
SLOT Token Flow Inside a Stakehouse Vault
The tokens in a Stakehouse Vault are the first tokens at risk of leakage. All SLOT within a Stakehouse are affected by these events. When SLOT tokens are leaked from a Stakehouse Vault, users have the option to top up the validator for themselves or for somebody else.
If a user completely ignores their validator without setting up a node for an extended period of time it may cause a large amount of leakage. This could be the result of a rational actor using Stakehouse to accrue short term gains through DeFi staking, and are not interested in performing validator duties. The result could be another user topping up their validator for them, and acquiring SLOT tokens.
Value Propositions for SLOT Tokens
Network rewards and validator management rights are the base use case for SLOT Tokens. SLOT Token holders are able to syndicate with other stakers, and SLOT Tokens create value opportunities in other ways.
SLOT Token Trading Opportunities
SLOT Token value is determined by the amount of total dETH gained within the Stakehouse divided by 8 SLOT tokens per validator in the Stakehouse. The floor SLOT Token value is 3 ETH and is redeemable.
Users can view which Stakehouse’s are optimizing for certain outputs. In the scenario below Alice is looking to trade SLOT tokens. Alice decides to join a Stakehouse looking for the best Stakehouse with SLOT/dETH value position. Alice joins Stakehouse Beta, which in this senario has a 3.165 SLOT token to dETH poistion. Alice can then redeem or sell the 4 SLOT Tokens for 12.66 ETH (4 SLOT * 3.165). Then Alice sells her 24 dETH for 24 ETH.
Result: In this scenario Alice nets 4.66 ETH and retains management rights of her validator by the 4 SLOT in the collateralized pool. (4 SLOT * 3.165 + 24 dETH - 32 ETH) = 4.66 ETH
Stakehouse Growth Benefit SLOT Value
As a Stakehouse grows from participants joining or the total accrued amount of dETH increasing, these two growth events give positive SLOT Token value affects.
Example: StakeHouse “Gamma” starts with a 3200 ETH balance (dETH = 2400 and SLOT = 800). If in 1 year’s time dETH has increased by 6.25% (200 dETH), the new balances would be dETH = 2600 and SLOT = 800. The SLOT Token value would increase from 3 SLOT tokens (floor value of SLOT) per ETH to 3.12 SLOT tokens per ETH.
Example: Stakehouse “Delta” started with 100 members and has grown to 500 members in 1 year. In that time dETH grew at 6.25%. The total number of dETH in Stakehouse “Delta” grew from 3200 to 12000 + staking rewards (750 ETH) and SLOT Tokens from 800 to 4000. The SLOT token value in Stakehouse "Delta" went from 3 SLOT tokens (floor value of SLOT) per ETH to 3.18 SLOT tokens per ETH.
Slashed SLOT Tokens
When a validators' SLOT Tokens are slashed, these slashed SLOT tokens are available for purchase for 1 ETH in the slashed SLOT Token pool. Acquiring slashed SLOT tokens are then able to redeem SLOT for 3 ETH.
Skip the Validator Queue
Jump ahead of the validator queue to stake on ETH2 Becon Chain. Users are able to get access to validator rewards by purchasing SLOT Tokens from the slashed SLOT Token pool.