Lido and Idle DAO Launch New Risk-Adjusted ETH 2.0 Staking Products

Lido, a multi-chain liquid staking solution, and Idle DAO, a decentralized organization that builds financial products for Web3, have partnered to launch a new DeFi primitive.

The recently launched stETH Perpetual Yield Tranches (PYTs) were designed to target the more risk-averse segment of the DeFi market, offering APRs ranging from 1.8% to 8%.

Idle DAO and Lido Bring Leveraged Yield and Deposit Protection to ETH 2.0

The Ethereum ecosystem has grown significantly in the last year and now has over 9 million ETH staked. With over 280,000 active validators on the network, the amount of ETH staked continues to grow steadily: ETH 2.0 currently has twenty times the amount of ETH staked than the amount required by the Ethereum Foundation at launch.

To further increase the amount of ETH staked and open up staking to a broader market, Lido has partnered with Idle DAO to introduce a new risk-adjusted staking opportunity: stETH Perpetual Yield Tiers.

In a press release shared with CryptoSlate, the companies said that these are the first ETH 2.0 products with a built-in protection mechanism. The growing interest institutional capital has shown in ETH 2.0 has revealed a need for safe and sustainable performance, and Lido’s partnership with Idle DAO was designed to answer that need.

Perpetual Yield Tranches is a DeFi product that segments yield and risk, allowing liquidity providers to get a larger share of the yield by taking on a higher percentage of risk. Liquidity providers looking for a more stable staking opportunity can hedge risk by depositing their assets in a built-in protected tranche.

Idle DAO Junior Tranches receive a higher proportion of the performance generated through Lido, but take on a higher financial risk. Senior tranches, on the other hand, receive a smaller portion of the return but carry less risk and are the first to be remedied in the event of a default.

The current stETH APR is approximately 1.8% on Senior Tranches and 8% on Junior Tranches. However, the Senior Tranches will see a much higher APR in the coming weeks, thanks to a new incentive program that the companies will launch.

The initial startup phase of the collaboration between Lido and Idle DAO will last 4 weeks. Every week, 10,000 LDO tokens will be distributed to users to stimulate the provision of liquidity in stETH senior tranches, raising their APR above 5%.

“This new DeFi primitive is flexible, with no lock-in period or epochs, and fully fungible, allowing it to be easily integrated into other structured products or protocols. Integrators now have the opportunity to offer different products to their end users based on their preferred risk level,” the companies told CryptoSlate.

“DeFi protocols that have integrated Lido as an underlying return source, current stETH holders and ETH owners interested in generating passive income can benefit from the built-in protection feature in senior tranches with incentivized APY, or deposit in junior tranches. to outperform Lido. ”

Posted in: Ethereum, DeFi