# SD Delegation

<figure><img src="/files/9lpWWmnb2nwLBgiEoGic" alt=""><figcaption></figcaption></figure>

SD Delegation allows SD token holders to delegate their tokens to the SD Utility pool, supporting the operations of ETHx nodes. By delegating their tokens, the Delegators earn delegation fees and contribute to the utility and liquidity of the SD token.

### **Rewards Accrual**

There are three types of rewards for SD delegators:

1. **Base rewards** &#x20;

   * Base rewards are generated from the utilization fee paid by Stader ETHx Permissionless Node Operators. These rewards are calculated as the product of the Utilization Rate and the Utilization Percentage. Currently, the utilization rate is set at 10%.
   * The fees collected from node operators are added back to the Utility Pool, increasing its liquidity. Consequently, the SD holdings of delegators in the pool grow.&#x20;
   * For delegators: *My Holdings = Delegated SD + Fee Earned for delegation*.

2. **Boosted rewards from ETHx Permissioned Node Operators**

   * SD delegators receive boosted rewards from ETHx Permissioned Node Operators in return for providing slashing insurance coverage.&#x20;
   * These rewards are distributed based on the amount of SD delegated, meaning more delegation results in more rewards. Boosted rewards are automatically sent to the delegator's wallet upon any claim of their withdrawn SD.
   * **Note:** In the event of a slashing incident involving a Stader ETHx Permissioned Validator, the Node Operator is responsible for covering losses up to a maximum of 4 ETH per validator. Any additional losses above 4 ETH per validator will be covered by the SD Utility Pool's deposit. This means that if the slashing penalty is 4 ETH or less per validator, the Node Operator will bear the entire loss. However, if the slashing penalty exceeds 4 ETH per validator, the Node Operator will cover 4 ETH, and any amount above that will be covered by the SD Utility Pool.

3. **Boosted rewards from the Stader treasury**
   * Stader DAO provides SD rewards from the treasury to SD delegators as delegation incentives. These rewards are distributed based on the amount of SD delegated, meaning more delegation results in more rewards. Boosted rewards are automatically sent to the delegator's wallet upon any claim of their withdrawn SD.
   * **Note:** After the initial boost phase, delegators will solely receive rewards from the utilization fees paid by Stader ETHx Permissionless Node Operators (Base rewards) and boosted rewards from Stader ETHx Permissioned Node Operators. There will be no rewards coming from the Stader DAO treasury.

<br>


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://stader.gitbook.io/stader/sd-utility-pool/sd-delegation.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.