Metis Introduces Governance Proposal for Liquid Staking Tokens (LST) Push to pair more liquid staking providers with sequencer nodes will lead to a more decentralized network and stronger economic security
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June 13, 2024 03:00 PM Eastern Daylight Time
Metis, the first Ethereum Layer 2 to decentralize its sequencer, has finalized a governance proposal intended to accelerate the growth of Liquid Staking Tokens (LST) and LST-focused products on Metis, leveraging the $4.6M Metis Ecosystem Development Fund.
The proposal, approved today through Community Ecosystem Governance, enables Metis to continue pushing the boundaries of the Ethereum Layer 2 ecosystem. By further decentralizing the network, Metis is fostering community-driven growth while ensuring robust governance and economic security.
The term “LST” comes from the tokens’ inherent liquidity, which allows users to stake their assets and receive a receipt token that can be used on other protocols. Users are able to maintain capital flexibility while they earn rewards on their staked assets. Anyone can navigate the Metis DeFi landscape with LSTs to find additional yield while their tokens are staked accruing value.
With the approved LST Governance Proposal, Metis establishes a process for pairing node operators with LST protocols, opening the door for all users to stake their tokens. A limited number of LST applicants will win the right to be paired with a decentralized sequencer node, which allows liquid staking to a pool of 20,000 to 100,000 METIS tokens per node. Onboarding will occur in progressive stages.
Phase 1, the Alpha launch of the Decentralized Sequencer, was completed in March when Metis opened 4 sequencer nodes to ensure smooth transitions and network stability for Metis LST protocols.
Phase 2, completed in April, introduced multiple transactions within a block to enhance Metis' network throughput, private transaction pool for the sequencer nodes to facilitate a fixed confirmation time of 2 seconds, and sequencer mining, which allows Metis to properly align incentives across all network participants. In addition, Artemis Finance and Enki Protocol became the first two LST protocols for the Alpha Phase.
Phase 3, the Main launch, will be completed this month, during which Metis Foundation will facilitate the opening of additional sequencer nodes to be paired with LST protocols. A community governance process will occur whereby the passed proposals that receive the most METIS votes and quorum will have the opportunity to be paired with the sequencer node.
In Stage 1 of this process, all potential LST protocols will submit their proposals on a Metis Governance Forum to be voted on by the community. Next, in Stage 2, the sequencer node provider will choose a qualified LST protocol that passed the voting and submit a Metis Governance Forum announcement to explain their decision to the community.
The next phase will consider subsequent LST protocol applications should the sequencer nodes onboarding community choose to open external access to newly added nodes, in which case the steps in Stage 2 mentioned above will be repeated at the time of onboarding.
The LST protocol will be proposed using the Metis Governance Forum. Voting will take place on Snapshot using the LST Protocol Proposal suffix, and only the top vote-getting LST protocols will be eligible for pairing with a sequencer node. There’s a quorum requirement of 20,000 METIS tokens and 500 or more wallet addresses participating. Eighty percent or more approval is required for passage.
About Metis
Metis is an EVM-Equivalent Ethereum Layer-2 network focused on bridging the gap between Web2 and Web3. Metis provides users with a decentralized and scalable easy-to-use network secured by Ethereum. Metis became the first Ethereum rollup to decentralize its sequencer with the launch of Decentralized Sequencer, which enhances network security, provides network ownership to node operators and allows more revenue earning opportunities for users.
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