Swap one half (1/2) of rETH for WETH

Summary

Use the new swap capability of the OETH vault to convert 2,500 rETH to WETH, which would then be allocated to the Convex AMO strategy.

Background

A recent proposal led to our initial swap of 900 rETH to WETH. Since the proposal was created, three additional deposits of 1,000 rETH each have occurred resulting in a current balance of 5,014.818 rETH in the vault. This position is earning an APR of 3.32% while the Convex AMO strategy is earning an estimated 12.79% on 14,599.409 ETH.

Recommendation

This proposal would result in a reduction of our rETH position by close to half, bringing the weight in line with our frxETH position. It would also increase our position in the Convex AMO strategy to nearly 75% of the deposited collateral. This reallocation makes sense based on the current yield spread between the two strategies. As the AMO allocation grows, there may be diminishing returns from additional deposits depending on what other LPs do and how Convex votes evolve.

Separately, a new Flux strategy will soon be launched for OUSD. This will allow for additional CRV and CVX emissions to be redirected from the OUSD pool to the OETH pool, which will make the proposed reallocation that much more profitable.

Analysis*

Active strategies

Name	Allocation	Exposure	APR
Convex AMO (ETH)	$27,354,620	62.53%	12.79%
Lido (stETH)	$1,376,358	3.15%	3.90%
Rocket Pool (rETH)	$9,396,164	21.48%	3.32%
Frax staking (frxETH)	$5,384,580	12.31%	5.12%
Morpho Aave (WETH)	$193,895	0.44%	2.15%

Swap

(2,500 rETH out)

Option	Token in	ETH cost	Break-even	APY impact
A	frxETH	-0.168	1.3 days	+21bp
B	stETH	-2.024	47.3 days	+8bp
C	WETH	-0.488	2.3 days	+38bp

* DYOR plz: see OETH yield model

Reminder

As mentioned previously, we like Rocket Pool and look forward to developing other strategies that generate more competitive yield using rETH in safe and sustainable protocols. Until those strategies are ready, it makes sense to prioritize a higher APY, particularly when it can be generated by holding more ETH and fewer LSTs.