Lido Finance is coming STRONG to the Arbitrum ecosystem!
They are committed to making Lido’s wstETH widely available throughout Arbitrum.
Let's explore wstETH’s use cases across the Arbitrum ecosystem🧵
@LidoFinance, @traderjoe_xyz & #LidoArbitrumAdventure
They are committed to making Lido’s wstETH widely available throughout Arbitrum.
Let's explore wstETH’s use cases across the Arbitrum ecosystem🧵
@LidoFinance, @traderjoe_xyz & #LidoArbitrumAdventure
In this thread, we'll cover👇
🟣What is Liquid Staking?
🔵What is @LidoFinance?
🟢Explained: stETH
🟠Explained: wstETH
Then, we will talk about 👇
🔴 Use cases of wstETH on Arbitrum
🟡 Potential use cases of wstETH on Arbitrum
Let's start😍
🟣What is Liquid Staking?
🔵What is @LidoFinance?
🟢Explained: stETH
🟠Explained: wstETH
Then, we will talk about 👇
🔴 Use cases of wstETH on Arbitrum
🟡 Potential use cases of wstETH on Arbitrum
Let's start😍
Before starting, just would love to inform you that a detailed and more comprehensive version of this thread can be found in this article that I wrote👇👇
medium.com/@123juliuscaes…
medium.com/@123juliuscaes…
🟣What is Liquid Staking?
Basically, liquid staking aims to make the staking activity liquid by tokenizing your staked token
Who is going to do that?
The answer is @LidoFinance 😍😍
Let’s cover @LidoFinance in a different chapter👇👇
Basically, liquid staking aims to make the staking activity liquid by tokenizing your staked token
Who is going to do that?
The answer is @LidoFinance 😍😍
Let’s cover @LidoFinance in a different chapter👇👇
🔵What is Lido Finance?
@LidoFinance aims to make staking on @ethereum easier and more accessible for the average user
They achieve this by addressing some of the challenges of the staking process
@LidoFinance aims to make staking on @ethereum easier and more accessible for the average user
They achieve this by addressing some of the challenges of the staking process
These challenges can be analyzed as:
1⃣Users have to lock their ETH for a period of time and staked ETH will be illiquid and non-transferable
2⃣Users can only stake multiples of 32 ETH, which makes participation difficult
1⃣Users have to lock their ETH for a period of time and staked ETH will be illiquid and non-transferable
2⃣Users can only stake multiples of 32 ETH, which makes participation difficult
.@LidoFinance's solution is to allow users to stake any amount of ETH and giving them a tokenized version of their staked assets at a 1:1 ratio in the form of stETH (staked ETH)
Thus, it makes staked ETH liquid and tradable with stETH
Thus, it makes staked ETH liquid and tradable with stETH
It allows users to participate in on-chain lending and earn additional yield within the different DeFi applications
Btw, users still continue to earn rewards from their staked ETH on @LidoFinance
Btw, users still continue to earn rewards from their staked ETH on @LidoFinance
🟢Explained: stETH
stETH is the tokenized version of staked ETH to make your staking process liquid
As stated, when you stake your ETH with Lido, you receive stETH tokens in return, which represent your initial deposit and staking rewards combined
stETH is the tokenized version of staked ETH to make your staking process liquid
As stated, when you stake your ETH with Lido, you receive stETH tokens in return, which represent your initial deposit and staking rewards combined
The balance of stETH tokens is increased every day with the current APR, which is called a "rebase"
You can use stETH tokens like regular ETH, allowing you to earn staking rewards while also benefiting from yields in DeFi products
You can use stETH tokens like regular ETH, allowing you to earn staking rewards while also benefiting from yields in DeFi products
🟠Explained: wstETH
wstETH is stETH wrapped into a DeFi-compatible token, designed for use in protocols that don't support rebasable tokens
It symbolizes the account's proportion of the stETH total supply
wstETH aims to allow for easier integration of stETH into DeFi protocols
wstETH is stETH wrapped into a DeFi-compatible token, designed for use in protocols that don't support rebasable tokens
It symbolizes the account's proportion of the stETH total supply
wstETH aims to allow for easier integration of stETH into DeFi protocols
As stated, stETH is a rebasable token. However, some protocols are not compatible with that such as Uniswap and 1inch
Thus, Lido created wrapped stETH, ''wstETH''
It uses a constant balance mechanism to reflect your earned staking rewards and keeps your balance of stETH fixed
Thus, Lido created wrapped stETH, ''wstETH''
It uses a constant balance mechanism to reflect your earned staking rewards and keeps your balance of stETH fixed
An example is required to understand the relationship between stETH and wstETH👇
For example, if you wrap 100 stETH to 99.87 wstETH, you can continue to earn rewards on your wstETH and when you unwrap your wstETH, you will receive 101 stETH
For example, if you wrap 100 stETH to 99.87 wstETH, you can continue to earn rewards on your wstETH and when you unwrap your wstETH, you will receive 101 stETH
Moreover, something needs to be highlighted🆘
@LidoFinance will only support wstETH for their initial deployment on L2 protocols for various reasons
a) simpler bridge contracts
b) ease of integration with both bridges and the DeFi space in general
@LidoFinance will only support wstETH for their initial deployment on L2 protocols for various reasons
a) simpler bridge contracts
b) ease of integration with both bridges and the DeFi space in general
🔴 Use cases of wstETH on @arbitrum
Across the Arbitrum ecosystem, there are several DeFi applications that wstETH is used
We will analyze them in four categories namely AMMs/DEXs, options, lending/CDP, and aggregators
Across the Arbitrum ecosystem, there are several DeFi applications that wstETH is used
We will analyze them in four categories namely AMMs/DEXs, options, lending/CDP, and aggregators
a) AMMs/DEXs
@traderjoe_xyz, @Balancer, @CurveFinance, @KyberNetwork, and @CamelotDEX have already integrated wstETH in their platform
I will analyze some of them to show how you can use wstETH on these platforms
@traderjoe_xyz, @Balancer, @CurveFinance, @KyberNetwork, and @CamelotDEX have already integrated wstETH in their platform
I will analyze some of them to show how you can use wstETH on these platforms
1/ @traderjoe_xyz
Users can swap wstETH with different pairs such as ETH, USDC, and WETH on Trader Joe while can become an LP on the wstETH / ETH pool
Liquidity Book will surely increase your profits!
Users can swap wstETH with different pairs such as ETH, USDC, and WETH on Trader Joe while can become an LP on the wstETH / ETH pool
Liquidity Book will surely increase your profits!
2/ @Balancer
It's possible to use Balancer on @arbitrum to easily swap between wstETH several coins like WETH, USDC, and LDO
Additionally, users can earn fees by becoming LP in several pools, including wstETH-WETH, wstETH-USDC, and wstETH-LDO
It's possible to use Balancer on @arbitrum to easily swap between wstETH several coins like WETH, USDC, and LDO
Additionally, users can earn fees by becoming LP in several pools, including wstETH-WETH, wstETH-USDC, and wstETH-LDO
3/ @CurveFinance
Lido users can use Curve on Arbitrum to quickly swap wstETH and ETH
On top of that, you can make money by depositing your assets and getting trading fees and more rewards, like the wstETH/ETH pool
Lido users can use Curve on Arbitrum to quickly swap wstETH and ETH
On top of that, you can make money by depositing your assets and getting trading fees and more rewards, like the wstETH/ETH pool
b) Options
There are several options protocols developed on @arbitrum
Two of the most important of them are @PremiaFinance and @dopex_io
While Premia has integrated with wstETH, Dopex’s integration will soon be completed
There are several options protocols developed on @arbitrum
Two of the most important of them are @PremiaFinance and @dopex_io
While Premia has integrated with wstETH, Dopex’s integration will soon be completed
1/ @PremiaFinance
On Arbitrum, users can trade wstETH call and put options on Premia with any asset
There are two types of pools for wstETH/DAI: a Call pool and a Put pool. If you want to take a long position in wstETH, you can buy Call options, and vice versa
On Arbitrum, users can trade wstETH call and put options on Premia with any asset
There are two types of pools for wstETH/DAI: a Call pool and a Put pool. If you want to take a long position in wstETH, you can buy Call options, and vice versa
c) Lending/CDP
As far as I can see, at this point, no lending protocol allows you to lend/borrow wstETH
However, @RDNTCapital is preparing to integrate wstETH. I suppose @AaveAave would also integrate it soon
As far as I can see, at this point, no lending protocol allows you to lend/borrow wstETH
However, @RDNTCapital is preparing to integrate wstETH. I suppose @AaveAave would also integrate it soon
d) Aggregators
As of my knowledge, there is only @beefy_finance_ as an aggregator on Arbitrum that integrates wstETH right now, however, I suppose YFI would integrate wstETH soon
As of my knowledge, there is only @beefy_finance_ as an aggregator on Arbitrum that integrates wstETH right now, however, I suppose YFI would integrate wstETH soon
1/ @beefy_finance_
Currently, on Arbitrum, there are four main pools including two of them with Lido boost
Users can use these vaults to increase their revenue via wstETH which is a great chance that needs to be used
Currently, on Arbitrum, there are four main pools including two of them with Lido boost
Users can use these vaults to increase their revenue via wstETH which is a great chance that needs to be used
🟡 Potential use cases of wstETH on @arbitrum
wstETH can be used in every area that stETH is used
However, there is an urgent need in some of the categories👇
1⃣Lending/Borrowing
2⃣Leveraged Staking
3⃣Aggregators
4⃣Derivatives
5⃣CDP
wstETH can be used in every area that stETH is used
However, there is an urgent need in some of the categories👇
1⃣Lending/Borrowing
2⃣Leveraged Staking
3⃣Aggregators
4⃣Derivatives
5⃣CDP
1⃣Lending/Borrowing
We need to have an opportunity on @arbitrum to lend/borrow wstETH
I think that it will increase liquidity in the general ecosystem while creating new opportunities for users. @AaveAave and @RDNTCapital can lead Arbitrum in this area
We need to have an opportunity on @arbitrum to lend/borrow wstETH
I think that it will increase liquidity in the general ecosystem while creating new opportunities for users. @AaveAave and @RDNTCapital can lead Arbitrum in this area
2⃣Leveraged Staking
Leveraged staking is a great investment tool that can provide sustainable high returns for investors
When there is enough wstETH liquidity in @arbitrum, leveraged staking tools can be developed so that users can benefit from high returns from their wstETH
Leveraged staking is a great investment tool that can provide sustainable high returns for investors
When there is enough wstETH liquidity in @arbitrum, leveraged staking tools can be developed so that users can benefit from high returns from their wstETH
3⃣Aggregators
There are not enough aggregators on Arbitrum that integrate wstETH
Aggregators can use stETH to increase the rewards for their users in their existing rewards farming strategies
These strategies can combine various protocols/initiatives to generate high rewards
There are not enough aggregators on Arbitrum that integrate wstETH
Aggregators can use stETH to increase the rewards for their users in their existing rewards farming strategies
These strategies can combine various protocols/initiatives to generate high rewards
4⃣Derivatives
Derivates are one of the most hyped and used platforms in the ecosystem
I am sure wstETH on Arbitrum can really make a huge boost to the Arbitrum ecosystem
Arbitrum is one of the centers of DeFi innovation in the ecosystem and we’ll see a wstETH derivative soon
Derivates are one of the most hyped and used platforms in the ecosystem
I am sure wstETH on Arbitrum can really make a huge boost to the Arbitrum ecosystem
Arbitrum is one of the centers of DeFi innovation in the ecosystem and we’ll see a wstETH derivative soon
5⃣CDP
Lastly, I think that we need a CDP, a protocol that mints its own stablecoin using collateralized lending
wstETH can be used as collateral to issue its own stablecoin on the Arbitrum ecosystem which can improve liquidity
Lastly, I think that we need a CDP, a protocol that mints its own stablecoin using collateralized lending
wstETH can be used as collateral to issue its own stablecoin on the Arbitrum ecosystem which can improve liquidity
In general, there are several use cases for wstETH on Arbitrum ranging from DEXs to options
However, more integration is required. The future of wstETH on L2 protocols is bright and we are lucky to witness this process
That's all for today, I hope you will like it😍😍
However, more integration is required. The future of wstETH on L2 protocols is bright and we are lucky to witness this process
That's all for today, I hope you will like it😍😍
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