Wen Fixed-Rate ETH 2.0 Staking?

Accessing Capital Efficient Fixed Yields on Tempus

[DISCLAIMER: This article refers to certain concepts/definitions that are no longer used within Tempus and is therefore outdated. Please refer to docs.tempus.finance for the most up to date information on Tempus.]

Tempus allows users to optimize their existing exposure to variable ETH2.0 staking yield, which includes the ability to get a fixed yield. But how can you access fixed yields on Tempus and what is the source of this fixed yield?

Deposit

1. Users deposit their ETH (or deposit stETH) into a contract with a certain Maturity Date.
2. Tempus then splits the deposited stETH into Capital and Yield tokens.
3. Tempus swaps all Yields for Capitals, and the user ends up holding only Capitals.

These steps are wrapped as a single transaction for convenience.

Capitals are zero-coupon bonds that mature to a known principal amount (fully backed by currently deposited ETH), and Yields are zero-coupon bonds that mature to an unknown amount of yield. The exchange rate between Capitals and Yields represent the market implied future yield. By swapping Yields for Capitals, users are re-allocating the risk of interest rate fluctuations between each other by exchanging their future unknown Yield for someone else’s Capital.

Redemption

Redemption on Maturity

Users can hold Capital until Maturity at which point the Capital is unlocked and 1:1 redeemable for the underlying stETH.

On Maturity, users can redeem the Capital for stETH, or straight to ETH via Curve or via Lido (in the future). For example, the holder of 105 Capital would receive 105 stETH.

The redemption steps are also wrapped in a single transaction for ease of use and convenience.

Early Redemption

Fixed rate yield farmers (holders of Capitals) are never locked into their position. We allow them to swap part of their Capital tokens, in order to again end up with an equal number of Capital and Yield tokens, and take their money out of the pool. I will cover this in more detail in future posts.

What’s next?

Tempus has received a grant from the Lido Ecosystem Grant Organisation (LEGO) to integrate stETH with Tempus and we have recently closed our seed round. The Tempus team is pushing towards a testnet launch in early September. Follow Tempus on Twitter and join our Discord for updates!

Disclaimer

The information provided in this article is provided for informational purposes only and does not constitute, and should not be construed as, investment advice, or a recommendation to buy, sell, or otherwise transact in any investment, including any products or services, or an invitation, offer, or solicitation to engage in any investment activity. You alone are responsible for determining whether any investment, investment strategy, or related transaction is appropriate for you based on your personal investment objectives, financial circumstances, and risk tolerance. In addition, nothing in this article shall, or is intended to, constitute financial, legal, accounting, or tax advice. We recommend that you seek independent advice if you are in any doubt.