PowerPool should launch and manage $LSTETH, a diversified PowerBasket containing ~10 LSTs to spread LSP contract/multi-sig risk broadly w/auto harvesting of peg arbitrage gains & farming of extrinsic yields, including cross-staking yields. Opportunistic floating weights with max caps (~25%) to protect decentralisation of Ethereum validators. The PowerBasket NAV would include a liquid ETH Safety Fund to smooth investor mints & redemption queues in conjunction with on-going LST basket peg arbitrage operations. In Phase 2, Safety Fund will also re-insure any uncovered incidents of LST slashing. Fee stream (0.5%?) to be divided between PowerAgent job fees (gas+Keeper fees) estimated at (~0.2%), and the PowerPool Treasury (~0.3%) increasing with TVL. PowerPool DAO will manage white/gray/black lists periodically classifying 25+ candidate existing or planned ETH LSTs, and manage basket max caps and Safety Fund size allocation parameters.
Post Shanghai, ETH staking & LST TVL will grow explosively…a $LSTETH PowerBasket like this is potentially easily a $200+ million TVL product. $LSTETH can be launched across several chains where there is a lot of yield starved ETH, such as BNB Chain and Arbitrum L2.
Together with PowerAgent v2, in addition to $LSTETH on some chains, PowerPool should also eventually deploy many similar diversified $LSTxxx baskets with automated peg arbitrage, opportunistic rebalancing and harvesting of extrinsic/re-staking yield on each new EVM POS chain. In order to maximise extrinsic yield, it may be possible to also launch a sub-basket, $LRTETH, which would hold a diversified set of whitelisted LRTs, and accept direct investment of LSTs as well as manage a pool of LSTs for the $LSTETH basket. These PowerBaskets will demonstrate a wide range of PowerAgent capabilities, such as DCA with ZAP to save gas on mainnet. Launching a series of PowerBaskets will also ensurea steady ‘base load’ of jobs/fees to nurture more, smaller Keeper nodes on each chain. Someday, PowerPool could also launch a ‘blended’ pool-of-pool ‘flagship’ basket token like $PWRPOOL representing an actively-managed, diversified mix of L1 & L2 EVM POS $LSTxxx baskets, a ‘basket of baskets’ regularly re-balanced by TVL…providing a very broadly diversified, multi POS chain PowerBasket real yield token that will be attractive to a wide range of institutions and small retail savers.
Marketing Claims: Better balance of Risk, Return, Liquidity and Composability (vs investing in a single LST)
+More block reward exposure
+Arbitrage gains in NAV (Safety Fund)
+lower LSP average fee compression-(<10%?)
+extrinsic yield farming
(-) lower socialised gas costs
+(cross staking - Eigenlayer LRTs subbasket $LRTETH)
Spreads LSP smart contract risk
(Re-)insured, reduced slashing risk (DVT)
Improved Liquidity: Near-instant ETH match/withdrawal up to maximum daily limit. Both the underlying Ethereum and the LSP protocols have staking entry/exit queues which can be ‘buffered’ by the $LSTETH basket. Peg arbitrage will keep positions for the basket in many queues, and mints/redemptions can be met from the best available match for/source of ETH, because flexible weights allow the composition of the basket to vary opportunistically, subject to max caps on leading LSTs.
More Composability: The proliferation of LSTs will fragment LST liquidity, which will impede individual LSTs from achieving broad composability. The superior risk/yield profile and ETH mint/redemption buffering should make the $LSTETH PowerBasket token ‘pristine’ collateral in ETH terms, and a popular composability option, likely accepted as collateral for minting over-collaterized stablecoins like $LUSD and other Liquity-fork stablecoins.
Passively-managed LST ‘indexes’ can spread smart contract risk on underlying tokens, but w/o offsetting their wrapper risk/fees. However, actively-managed, automated, 10+ LST PowerBaskets like $LSTETH add continuous peg arbitrage yield and optimised, automated, gas-efficient farming of underlying LSTs w/cross staking of underlying and near-instant (ZAP-optimised) ETH mints/redemptions. → Higher yield, lower risk, faster liquidity and more composability on ETH passive income compared with picking just 1 (out of ~25) LSTs and trying to farming it yourself.
Shorter Twitter blurb:
Diversified LST basket to spread contract/multi-sig risk
Internal Safety Fund speeds mints/redeems and adds slashing coverage
Safety Fund automates LST peg arbitrage, increasing NAV/yield
Auto optimised farming of extrinsic/cross staking yield (& gas) on underlying LSTs
$LSTETH basket token=better collateral than single LST
Longer Twitter blurb:
$LSTETH diversified 10+ LST ‘basket’ w/auto-harvesting of intrinsic/peg arbitrage/extrinsic/cross staking yields. More blocks exposure=more rewards/MEV. More (DVT enabled) NOs->less slashing risk. Instant mint/redeem, leading LSTs max capped, rebalances skewed->small DVT networks->+decentralisation. Pledge/hedgeable=(composable). Active max ETH real yield. Just buy LST basket token and forget. Pristine collateral for borrowing & stables minting
This is a very short synopsis of $LSTETH. For a much more detailed overview of the opportunity and go-to-market planning, and suggestions for how all DAO members can contribute, please see the Project Wiki: