unshETH

Market Making

unshETH aims to further validator decentralization by creating a marketplace for staked ETH liquidity in which liquid staking protocols can compete for dominance through incentive mechanisms.

Risk Rating
Watch Out
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
unshETH aims to improve validator decentralization on Ethereum by using incentive engineering and liquid staking derivatives. By simply holding unshETH, users can earn ETH price appreciation, ETH staking yield, and mint/redeem fees.
What we like less
unshETH is still a new and experimental project that has not been tested extensively. There are also centralization concerns as the protocol is controlled by a 2/3 multisig.
What it means for you
unshETH offers you an opportunity shape the future of Ethereum while earning rewards. You can use unshETH to deposit your LSDs, stake them with different validators, earn USH tokens, and participate in novel LSDfi primitives such as validator decentralization mining and validator dominance options.
Information
Exploit/Hacks
None
Info
  • Website
  • Token: USH
  • Tags: Market Making
Key Metrics
  • TVL: $3M (Rank #179)
  • TVL Ranking by Market Making: #0
  • Blockchain: Ethereum
  • Chain TVL
    • Ethereum: $3.01M
Risk Assessment
Watch Out
Protocol Code Quality
  • Code reviewed by at least one experienced auditor
  • Anonymous team reduces transparency
  • No documented protocol hacks since launch
Protocol Maturity
  • Latest protocol version launched in 2023; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 10% by total value locked reduces risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
  • No timelock exists or no information documented, which mean a malicious actor could approve upgrades without any delay
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • This protocol is susceptible to risks related to yield optimizers which deploy custom strategies to automatically manage user funds
Things to know about unshETH

How unshETH works

unshETH is a protocol that uses liquid staking derivatives (LSDs) to improve validator decentralization on Ethereum. LSDs are tokens that represent staked ETH and allow users to access the liquidity and composability of their staked assets. unshETH allows users to deposit their LSDs from different providers: Lido, Rocket Pool, Coinbase, and Frax Ether, while earning underlying staking yield, swap fees, and USH token rewards. Users can also withdraw their LSDs at any time. USH tokens are governance tokens that can also be staked for more rewards. unshETH also introduces innovative LSDfi primitives, such as validator decentralization mining and validator dominance options, that use incentive engineering to distribute capital and yield across the LSD ecosystem in a way that promotes validator decentralization.

How does the vdAMM work

The vdAMM (virtual decentralized automated market maker) enables seamless swaps between LSD-LSD and LSD-ETH pairs by pooling all LSD liquidity via unshETH. The vdAMM charges a base fee plus a dynamic fee based on whether swaps bring the unshETH basket closer to the governance decided target weights. The target weights are determined by the unshETH community and can be adjusted over time through governance proposals. The vdAMM fees accrue to unshETH holders, who can claim them by withdrawing their LSDs from the protocol, as well as unlock another source of real yield. The vdAMM also rewards users with locked/staked vdUSH tokens, which are omnichain dual-token locked governance staking tokens. The vdAMM aims to increase the liquidity and efficiency of the LSD ecosystem and promote validator decentralization by incentivizing users to swap between different LSDs.

How do withdrawals work

Users can burn their unshETH at any time and receive a proportional amount of each LSD backing unshETH. the vdAMM also keeps 5% of the target unshETH basket as WETH to facilitate direct withdrawals into ETH without relying on external DEX liquidity or blockchain level withdrawal queues. Please note there is an additional instant redemption fee of 20bps to swap WETH from the vault as it is a more scarce asset.

unshETH Pools
unshETH ETH Staking
4.5%
Yield
$415K
TVL
Risk
D
Protocol
unshETH
Chain
Ethereum