Add ETHx as collateral to mint peUSD

Voting ended about 2 years agoSucceeded

Introduction

Stader is a non-custodial liquid staking platform with $140Mn+ TVL across 7 PoS blockchains (Ethereum, Polygon, Bnb, Hedera, Fantom...) with Ethereum being the latest to launch in early July.

ETHx, the Ethereum LST is designed to improve accessibility & support decentralization by allowing anyone to spin up a validator with just 4 ETH; the lowest in the industry & 80% lower than solo staking. This coupled with the unique multipool architecture of permissionless & permissioned node operators furthers decentralization without compromising scalability. Users can deposit any amount of ETH and receive proportionate ETHx, an ERC-20 C-token which represents staked ETH; that appreciates in value over time due to the staking rewards and is represented in the exchange rate Performance & Growth ETHx is currently at $73M TVL across 800+ validators (85% permissionless) spread over 175 Node Operators who bonded over $6M to cover for slashing / penalties. In terms of Liquidity Depth, ETHx is at $18M across Balancer (~~$8.5M), Curve (~~$5M), Pancakeswap (~$4.5M)...

Motivation

LSTs are the perfect use case for Lybra which is primarily built around rebase token yields and is quite evident from all the success the protocol has seen with the other LSTs. Listing ETHx on Lybra would unlock an extra layer of utility & yield for the holders who would love to use it across several strategies all over the DeFi ecosystem. From Lybra’s perspective, any new LST is a source of additional revenue and expands the ecosystem as a whole.

Incentives & Benefits to Lybra

Being an LST, Stader already has bribing mechanisms in place for popular DeFi hotspots like Curve, Balancer, Pendle etc. involving a mix & match of voting platforms depending on the vote concentration. Major focus for bribing has always been to maintain a healthy APR to keep the pool competitive and give it the room needed to grow

Bribes are typically posted to boost the APY by about 5% without factoring in the additional bribe market efficiency; which is entirely dependent on the bribing action in a particular round. So whatever efficiency the round ends up with gets stacked on top

We plan to follow a similar strategy on Lybra and provide opportunities for ETHx <> Lybra users to earn higher rewards

Security & Audits

While Stader might be new to Ethereum, it has built LSTs on 6 chains prior to this and security has always been paramount. Every Stader smart contract across every chain has been audited at least twice. The ETHx smart contract in particular has been triple audited by leading smart contract security partners Sigma Prime, Halborn & Code4rena; complete with Forta on-chain monitoring and a $1Mn bug bounty on Immunefi

Oracles & Price Feeds ETHx has an Oracle Node Operator Genesis Committee of 7 distinguished community members composed of top validators and esteemed Ethereum community members. You can learn more about the ETHx ONO committee here

Price feeds for ETH Chainlink ETHx Price Feed Redstone ETHx Adapter Redstone ETHx Price Feed

ETHx Fees 10% of the ETH staking rewards are collected as fees and half of it goes to the validators and the other half to the Stader DAO

Risks The introduction of ETHx provides an opportunity for diversification and broadening the collateral base while mitigating concentration risks. However, Stader does acknowledge the concerns around the potential risks associated with ETHx too. They can be broadly segmented into these buckets and are addressed as such

Security Stader’s commitment to security has already been detailed out and while there’s always a certain amount of risk when it comes to smart contracts, it’s always been managed to a large extent through audits, on-chain monitoring & bug bounties

Governance Stader’s governance is led by the Stader DAO - a wide variety of $SD holders who participate in key decisions pertaining to the protocol. Here are the Stader Governance Forum & Snapshot

Centralisation Stader is a non-custodial & decentralized liquid staking solution based on DAO governance. $SD is Stader’s native governance token. ETHx is based on the foundation of decentralizing Ethereum with permissionless node operators getting the majority of the TVL (currently at ~90%).

The ETHx contract upgrades are managed by Admin time-lock contract with a 6 on 9 Multi sig (2 Stader members and 7 external members) as the proposer. Composition of the committee can be found here You can learn more about how Stader envisions embracing the path of decentralization here

Redemptions & Liquidations ETHx, like all of Stader’s prior LSTs went live with redemptions enabled from Day 1. So, the ETH is not locked and can always be redeemed by unstaking & withdrawing on Stader Dapp anytime. Withdrawal requests are processed either from the deposit pool or by exiting validators.

Users can also swap their ETHx on DEXs for instant liquidity. The dynamic exchange rate can lead to occasional depegs, mostly short-lived courtesy of arbitrageurs. Any issues with price oracles during black swan events, while highly unlikely, can trigger wrongful liquidations.