StakeWise Staked ETH

StakeWise Staked ETH, also known as osETH, is a liquid staking token that allows users to utilize their staked Ethereum (ETH) in decentralized finance (DeFi) applications. The token was introduced as part of StakeWise V3, a platform designed to facilitate Ethereum staking in a permissionless and non-custodial manner.

osETH is an overcollateralized staked ETH token that accrues staking rewards when held. It is backed by a decentralized network of staking Vaults created by individuals and organizations using StakeWise smart contracts. This ensures that osETH holders can redeem their tokens for the underlying ETH at any time, providing liquidity and value in DeFi applications.

The token's exchange rate starts at 1 ETH per osETH and increases as more staking rewards are earned. This increase in redemption value reflects the accrual of rewards, making osETH a repricing token. The rate of increase is reflected in the osETH APY, which is always quoted net of the StakeWise DAO fees.

osETH has several key features, including in-built slashing protection, which ensures that osETH holders are protected against the risk of poor performance, slashing, and general failure of permissionless nodes. This protection is achieved through an excess backing of staked ETH that covers for shortfalls in performance and absorbs slashing losses.

Users can mint osETH against any Ethereum node, including solo stakers and decentralized autonomous organizations (DAOs), which helps maintain decentralization and prevents centralization of Ethereum. The minting process involves converting ETH into osETH, which can then be used in DeFi applications. The maximum amount of osETH that can be minted is set at 90% of the value of the user's ETH stake in the Vault, ensuring that the profitability of the stake remains intact.

osETH is listed on several exchanges and has a market capitalization that ranks it among the top cryptocurrencies. The token's price and market data are tracked by various platforms, including Coinpaprika and Forbes.

StakeWise Staked ETH, also known as osETH, is a liquid staking token that allows users to stake their Ethereum (ETH) while maintaining access to decentralized finance (DeFi) applications. Here's how it works:

• Overcollateralization: osETH is backed by excess staked ETH, which ensures that users are protected from slashing risks and poor node performance. This excess collateralization absorbs any potential losses, ensuring that osETH holders are not affected by the performance of individual nodes.

• Minting and Burning: osETH can be minted against any Ethereum node, making it permissionless and non-custodial. Users can mint osETH tokens against their staked ETH in Vaults, which are isolated staking pools connected to Ethereum nodes. osETH can be burned to redeem the underlying staked ETH.

• Staking Rewards: osETH accrues staking rewards when held, reflecting the rewards earned by the staked ETH backing the token. The rewards are reflected in the osETH exchange rate, which increases as more staking rewards are earned.

• Slashing Protection: osETH has in-built slashing protection, meaning that users who mint osETH are not directly exposed to the slashing risk of the nodes they stake with. This protection ensures that users are not affected by the performance or slashing of any nodes except the ones they directly stake with.

• Redemption: osETH can be redeemed for ETH at the underlying exchange rate, which is determined by StakeWise Oracles based on the performance of Vaults and the outstanding supply of osETH. Redemption is instant if there is enough unbonded ETH in the protocol.

• APY Formula: The annual percentage yield (APY) of osETH is calculated as a weighted average of the net APY from Vaults with fees less than or equal to 15% and at least one registered validator. This ensures that users benefit from the performance of multiple Vaults.

• Staking Fee: The StakeWise DAO charges a 5% fee on the rewards accumulated by osETH, which is applied to the user's osETH balance. This fee is charged in osETH, meaning that the user's balance constantly increases proportionally to the fee.

• Solo Stakers: osETH allows solo stakers to mint tokens against their own nodes, providing access to DeFi opportunities while maintaining a non-custodial setup. Solo stakers can set up private vaults, mint osETH, and even earn additional revenue by hosting validators for other stakers.

• DeFi Users: osETH integrates slashing protection and ensures that staked capital is not co-mingled across funds, offering a less-risky, diverse marketplace for users to mint osETH and use it in DeFi applications.

• Institutions and Exchanges: osETH enables institutions and exchanges to create private vaults, allowing exclusive collaboration with chosen operators and staking clients. Vault tokens from staking represent staked ETH, offering institutions the flexibility to enable liquidity and utility within their ecosystem.

• Commercial Node Operators: Operators can establish vaults to accept delegations, allowing depositors to tokenize their staked ETH into osETH. Operators can choose to keep vaults private or public, showcasing strong performance and enhancing their vault score by taking risk-reducing measures.

• Decentralization: osETH promotes decentralization by allowing users to stake ETH however they like, including solo staking, and enabling access to DeFi applications without centralization risks.

• Flexibility: osETH provides users with the flexibility to stake ETH while maintaining liquidity and utility, making it a versatile tool for both individual stakers and institutions.

• Security: osETH's in-built slashing protection and excess collateralization ensure that users are protected from slashing risks and poor node performance, making it a secure option for staking ETH.

StakeWise Staked ETH (osETH) offers several strengths:

1. Liquid Staking Token: osETH is a liquid staking token that allows users to stake ETH and maintain liquidity, enabling participation in various DeFi activities while still earning staking rewards.

2. Slashing Protection: osETH has an excess backing of staked ETH to protect holders against slashing risks associated with poor node performance, ensuring that users are not affected by the failures of other nodes.

3. Overcollateralization: osETH minting always requires excess backing to protect osETH holders from bad performance and slashing risks. This means that stakers in Vaults can mint osETH for up to 90% of the value of their ETH stake, using their stake in the Vault as backing for the osETH token.

4. Decentralized and Permissionless: osETH can be minted against any Ethereum node, making access to liquid staking permissionless and non-custodial. This allows users to stake ETH however they like, including solo staking, and be able to farm, borrow, and restake staked ETH in DeFi.

5. Accrues Staking Rewards: osETH accrues ETH staking rewards when held, capturing the rewards earned by the staked ETH that backs the token. This makes osETH a repricing token, with its exchange rate increasing as more staking rewards are earned.

6. Flexibility and Control: StakeWise V3 offers a staking marketplace where users can choose their own node operators, enhancing staking profits, reducing risks, and enjoying the flexibility of staking solo or in pools while keeping assets liquid.

7. Security and Reliability: StakeWise V3 includes top-tier security standards, ensuring that users can stake with confidence knowing their assets are well-protected.

8. Easy to Use: The intuitive interface of StakeWise V3 and its streamlined processes make staking simple and accessible, regardless of the user's experience level.

9. 24/7 Assistance: StakeWise offers round-the-clock support, ensuring a smooth and uninterrupted staking journey.

10. Wide Adoption: StakeWise is trusted by over 5,000 users, indicating a strong and established presence in the Ethereum staking ecosystem.

StakeWise Staked ETH (osETH) carries several risks:

1. Slashing Risk: osETH holders are exposed to the slashing risk of the Vaults in which they staked ETH. However, excess collateralization ensures that other osETH holders are not affected by this risk.

2. Performance Risk: osETH is designed to protect against poor performance, slashing, and general failure of permissionless nodes. It achieves this through excess backing of staked ETH, which absorbs slashing losses and covers performance shortfalls.

3. Centralization Risk: While StakeWise V3 aims to reduce centralization, some critics argue that the service is not fully non-custodial due to the role of the PoolEscrow contract, which can be seen as a custodian. This raises concerns about potential bugs in the contract that could lead to losses for users.

4. Dependence on Validators: The performance of osETH is tied to the performance of validators. If validators underperform or fail, it can negatively impact the value and rewards of osETH.

5. DAO Fees: The StakeWise DAO charges a 5% fee on rewards accumulated by osETH, which can reduce the overall yield for users.

6. Redemption Risks: While osETH can be redeemed for ETH, the process may not always be instantaneous. If there is not enough unbonded ETH in the protocol, the protocol will need to exit validators to withdraw sufficient ETH, which can lead to delays.

These risks highlight the importance of understanding the mechanics and potential vulnerabilities of StakeWise Staked ETH (osETH) before using the service.

• Development Team: The development team behind StakeWise, responsible for creating the StakeWise DAO and the osETH token, holds 217,000,000 $SWISE tokens, which are vested over 42 months with a 6-month cliff.