UWP 03: ETHx [Stader]

Summary

This uWP is for the whitelisting of ETHx token into the unshETH Index. It includes relevant information on the ETHx token, proposed parameters for Index weight and a discussion of the benefits of the unshETH Protocol

Abstract

Stader is a non-custodial liquid staking platform with $130Mn+ TVL across 7 PoS blockchains (Ethereum, Polygon, BNB, Hedera, Fantom…) with Ethereum being the latest to launch on the 10th of July and is already at ~25Mn+ TVL & a $20M+ liquidity depth across Balancer, Curve and Wombat in just the first month, and we’re just getting started.

Motivation Statement

With this proposal, Stader wants to show its commitment and alignment with unshETH protocol and community. We are looking forward to being part of unshETH further development and adoption in the ecosystem, as well as contributing to its decentralization and adoption.

Risk and Liquidity

The introduction of ETHx provides an opportunity for diversification & broadening the base while mitigating concentration risks. However, we do acknowledge the concerns around the potential risks associated with a newer protocol. They can be broadly segmented into three buckets and are addressed as such

1. Security Given ETHx is a relatively new token, there might be concerns around security. While we might be new to Ethereum, we have built LSTs on 6 chains prior to this and security has always been paramount for Stader. All our smart contracts across every chain have been audited at least twice. The ETHx smart contract in particular has been triple audited by leading smart contract security partners Sigma Prime, Halborn and Code4rena

We also have an open Bug Bounty program in Immunefi, with a bounty up to $1M (https://immunefi.com/bounty/staderforeth/).

2. Governance Stader’s governance is led by the Stader DAO - a wide variety of $SD holders who have a say in key decisions pertaining to the protocol. You can find the Stader Governance Forum here.

For ETHx, we have the Oracle Node Operator Genesis Committee of distinguished community members. You can learn more about the ETHx ONO committee here

3. Centralization 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 decentralization with permissionless node operators getting majority of the ETHx TVL as demand scales. To achieve this, we aimed to start with an initial allocation to the permissionless pool of 70%, and currently it’s sitting at ~96%, as per https://dune.com/stader_labs/ethx-general-metrics).

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.

You can learn more about how Stader envisions embracing the path of decentralization here

Regarding Liquidity, ETHx currently has over $20M+ in liquidity across LPs in Balancer, Curve and Wombat.

ETHx also has been supporting native withdrawals within our smart contracts since day 0.

On the revenue front, Stader takes a 10% cut on staking rewards. 5% goes to the validators & 5% goes to Stader DAO.

Links

Website: https://www.staderlabs.com/

ETHx Dapp: https://www.staderlabs.com/eth/stake/

ETHx Contract: https://etherscan.io/token/0xA35b1B31Ce002FBF2058D22F30f95D405200A15b#tokenInfo

Docs: https://staderlabs.gitbook.io/ethereum/

Github: https://github.com/stader-labs/ethx/tree/mainnet_V0

Audits: https://staderlabs.gitbook.io/ethereum/ethx-security/audit-reports

Curve LP: https://curve.fi/#/ethereum/pools/factory-v2-319/deposit

Balancer LP: https://app.balancer.fi/#/ethereum/pool/0x37b18b10ce5635a84834b26095a0ae5639dcb7520000000000000000000005cb

Wombat LP: https://app.wombat.exchange/pool?chain=ethereum

Twitter: https://twitter.com/staderlabs

Telegram: @staderlabs

Discord: https://discord.com/invite/xJURAhSmav

Blog:

Initial Target Weight

Following the Target weight calculations guidelines, we propose an Initial weight of 10% for ETHx.

• unshETH current TVL is 7,250 ETH, so 10% of it would be 725 ETH
• ETHx current TVL is 15,000 ETH, so the proposed 10% Initial weight of 725 ETH is <5% of ETHx Marketcap. If this 725 ETHx had to be swapped back to ETH in a single transaction, currently this would incur in a -0.025% price impact through our deepest LP in Balancer

Maximum Weight

We propose a 13% Maximum weight for ETHx, 30% above the target weight.

That would mean 942 ETH, still below 10% of ETHx TVL, as well as negligible price impact, below 0.1%.

Incentives for vdUSH Stakers

Stader proposes to commit ~2% of the targeted TVL to incentives over a 6-month span which amounts to ~$5,000 per month. These incentives will be split between vdUSH locker incentives for index parameter alterations (specifically weightage) & incentives for unshETH depositors. We hope to unlock this exciting DeFi use case for our users while boosting ETHx liquidity

For: Approve this UWP and empower the unshETH Core Team to undertake the necessary changes to the unshETH Protocol parameters.

Against: Do not approve this UWP. No changes made.