unshETH - The Index Fund of Staked ETH

LSDfi is one of the top narratives in crypto right now. Today we’ll be exploring @unsheth_xyz and how this protocol allows users to diversify their $ETH staking yield.

Validators

Since the beginning of the beacon chain, the number of validators has been up only even with Shapella behind us. Today nearly 16% of ALL $ETH is staked and shows no signs of slowing down.

Validator Distribution

For users, $unshETH is effectively an index fund of major LSDs. Rather than having to do deep research on each individual LSD, one can simply choose $unshETH to diversify their LSD exposure.

LSD Support

Anyone can mint $unshETH with a supported LSD. Current LSDs Supported:

$wstETH - @LidoFinance

$cbETH - @coinbase

$rETH - @Rocket_Pool

$sfrxETH - @fraxfinance

Take note of the target weight of each of the LSDs.

Yield Sources

Rather than just staking yield, the yield underlying $unshETH comes from various sources:

✅ $ETH Staking Yield

✅ Swap Fees

✅ Mint/Redeem Fees If desired, users may put $unshETH to use in DeFi farms to further increase yield.

Governance Power

The governance token of the protocol is $USH and is primarily used as an incentive layer. Staked $USH, AKA $vdUSH, possesses the power to govern:

✅ Protocol Composition

✅ Direction of Incentives

✅ Fee Parameters & Fee Switch

Governance Token

To mint $vdUSH, the protocol chose the Balancer approach where users must lock an LP for 1 month - 1 year.

Voting power decays linearly from the time that the lock is created. To increase voting power, users may either lock more assets or increase lock time.

Audits

As of right now, the protocol has undergone two audits from @CertiK and has an ongoing audit from @0xPaladinSec. You can find the Certik audit here.

The Certik audit is concerning, but the newer audit should provide comfort once completed. Every major LSD has certain tradeoffs in regards to fees and solvency, so an index fund of LSDs may not be the best choice for every user. Choose which works best for YOU.

Conclusion

As the LSD market continues to grow, $unshETH provides users the much needed index fund of $ETH LSDs enabling simple diversification. For deeper information about the protocol, you can look at their Dune dashboard.

Having attracted over $40M TVL in the middle of a bear, the team has clearly demonstrated the need for their product.