Geode Finance

Geode as a Marketplace

We learned about the global standard that Geode provides to create a trustless marketplace between Staking Pools and Node Operators.
Now, lets take a look at the underlying mechanism to see how this marketplace operates.

The Game

Geode effectively makes use of Game Theory and Race Conditions while optimizing the user experience for stakers and profitability for Node Operators.

It is easier to understand when we interpret Geode as a game when it comes to the interactions between multiple parties.
Every party has unique roles and responsibilities towards other parties. All players try to improve their understanding and sustainably optimize their approach to make as much profit as possible. There is nothing wrong about stating that.
While the market is secured by the Geode Governance, it is expected to regulate itself with healthy competition.

The Player Types

Every Player has a unique ID.
TYPE of a player defines the functionalities that is needed to control and maintain the given ID.
Every party can be maintained easily by a chosen Maintainer.


Stakers choose which Staking Pool to use.
They consider the benefits of holding a LSD, that is maintained by a protocol.
They also consider the health of the staking derivative as it is important for them to exit from a staking pool without loosing any money to the arbitrager.
80% - 100% of the staking rewards.
Gas cost

Staking Pools

Fees up to 10% of the staking rewards.
Operational expenses such as:
  • maintainer's salary
  • additional incentives.
Dynamic and Static Staking Pools, or Planets (TYPE 5) and Comets (TYPE 6), are where the "loot" enters the system.
Objectively, every Staking Pool tries to get as much funds as possible. To achieve that, Maintainers can do 3 things:
  1. 1.
    Adjust your fees competitively. Changing your fee is effective after 24hrs!
  2. 2.
    Create new use cases for given derivative.
  3. 3.
    Choosing better Node Operators to increase given APR, or artificially increase it with extra rewards.
  4. 4.
    Maintain the Derivative's health by incentivising Withdrawal Pool liquidity, or creating Race Conditions between Node Operators with mechanisms like "withdrawal boosts". This also requires pool to operate with many Node Operators, incentivising the decentralization.
A simple contract and a governance token can simply automatize this process for given staking pool if its desired.
"Better operator" may not always mean better yields. It can mean the fastest response time or some other variable that stakers care about such as decentralization.
A Staking Pool can operate as a Node Operator for itself. In such case, it can also be the only Node Operator of itself.

Node Operators

  • Fees up to 10% of the staking rewards.
  • withdrawal boosts
Operational expenses such as:
  • maintainer's salary
  • gas cost
  • infrastructure costs
Node Operators try to host as many validators as possible. However, there is not a formula on how to achieve this and there can be many different strategies for it.
Different conditions may require different approaches.
For example, It may be feasible for a Node Operator to propose longer validator periods with smaller fees if the demand is low.
However, shorter validator periods with more fees can also attract smaller pools as pool size is not enough to aggregate withdrawals fast enough.
Operators can set their fees to zero as they can make profits purely with withdrawalBoost's.
Also, Pools can refuse to stake with "crowded" Operators even their fees are zero.
Node Operators can adjust 2 variables:
  1. 1.
    Validator Period: Expected time period between the proposal of a validator, to the exit of it. Min: 3 months, Max: 5 years. However, a validator can be exited any time.
  2. 2.
    Fees: Lower fees can be attractive. Changing your fee is effective after 3 days!

Rules and Insights

  • Geode Governance can adjust some in-game parameters, but they are limited with other parameters and updating most these limitations requires the approval of the Senate.
  • Senate is chosen by the Staking Pool Controllers. Although, this can be changed in the future.
  • Pools have maintainers that manage the Node Operator allowances, acting like every possible Validator is "1" balance.

Withdrawal Boost +

  • Pools can use withdrawalBoost in case of a depeg to incentivise validator withdrawals to defend their derivative. However, this also means sacrificing some of the (arbitrage) yield coming from the DWP.
    • Operatores compete to exit their validators to re-peg to acquire as much boost as possible.
  • Validators should be created and exited by the rules written in here. Otherwise, operators can be temporarily or permanently left out of the market.