gETH: GND Protocol’s Approach to LSDFi

GND Protocol
5 min readJun 21, 2023

The Shanghai — Capella Upgrade (Commonly known as Shapella) has paved the way for a groundbreaking development in the world of decentralized finance and Liquid Staking Derivatives. With such great potential to LSDfi Tokens, we are introducing gETH and sgETH, collectively known as staked gETH, a transformative solution set to redefine real yield in the LSDfi ecosystem.

In this article, we will explore the concept behind gETH, its minting and redeeming processes, the innovative LSD Automated Market Maker (AMM), gETH’s utility, and the carefully designed revenue model supporting the GND Protocol’s very own liquid staking — gETH — model.

1. Core Functions:

a. GND’s ETH Liquid Staking Derivative:

GND Protocol’s gETH is a derivative of LSD tokens. gETH will be minted through using several LSDs and ETH derivatives as collaterals.

b. Diversified High Yields:

gETH offers unparalleled real yield potential by utilizing a diverse set of yield-bearing ETHs and LSDs assets.

gETH will signify a paradigm shift, unlocking new avenues for substantial Total Value Locked growth for GND Protocol and the GMD Ecosystem.

c. Liquidity Hub

By employing a high-liquidity pool of LSDs, we will also enable non-gETH holders to swap between LSD products. For example, with GND’s gETH, you can swap between wsthETH into any other available LSD product or just ETH at a simple click of a button.

2. Minting and Redeeming:

gETH will support the following tokens as collaterals:

  • wstETH
  • rETH
  • gmdETH
  • sfrxETH
  • WETH and ETH
  • and more potential LSDs can be considered as we continue to expand gETH

gETH can be minted and redeemed into and out of any of the afore-mentioned underlying collateral backing it.

Minting and Redeeming Fees

  • Minting and redeeming incurs a dynamic fee ranging from 0 to 35 bps (0–0.35%) depending on the target weight vs current weight of the collateral.
  • The dynamic fees will come into play to make sure the collateral ratio is correctly weighted according to their market cap and prevalence. If a collateral is too heavily weighted, the minting fees will be higher than those of under-weighted collaterals, and vice-versa.

3. Utilities and Yield-Earning Mechanisms:

The intrinsic value of gETH will be equal to 1 ETH, while sgETH value will increase in comparison to ETH (ie. 1 sgETH = 1.25425 ETH)

To earn yield, gETH holders can:

  • Stake their gETH and receive sgETH to earn a part of the LSD yield (similar to frxETH and sfrxETH, where gETH value is pegged to 1 ETH, while sgETH value will be yield-bearing. For example, after 1 year of 10% APR, sgETH will be worth 1.1 ETH)
  • Farm gETH LP pairs, which will be incentivized with xGND and GND on GND protocol.
  • Collateralize to mint yield-bearing stablecoins on partnered Liquity forks

4. Oracles and Cross-Chain Interoperability

a. Oracles for minting/redeeming

  • Arbitrum Pricefeeds: Chainlink for wstETH and rETH, contract variable for gmdETH, and LayerZero-based oracle for sfrxETH
  • ETH Pricefeed: directly from native contracts

b. Cross-chain minting and bridging

Using layer zero tech, we will enable users to mint directly on Ethereum to receive gETH on Arbitrum and vice-versa

As ease of use has been one of the unique selling points of projects on GMD Ecosystem, we will strive to make gETH as accessible to commercial users as possible.

As such, ETH minting will be made easy with a contract that works on Ethereum mainnet, using Layer 0 to instantly bridge gETH to Arbitrum in your wallet. This function is also available for LSD holders on Arbitrum too.

5. gETH Revenue Model

a. AMM swap fees

We will be taking a competitive fee for providing enabling users to also be able to swap between LSDs products or into ETH by utilizing gETH’s pool.

b. Minting/Redeeming fees

The up-to-0.35% fees users pay during minting and redeeming will be accrued by GND Protocol

c. Bridge Fees

A 0.2% Cross-Chain minting fees will also be accrued by GND Protocol

d. Univ3 Swap Fees

By hosting gETH pairs on our farms, GND Protocol will earn a proportion of the fees generated by UniV3. The other proportion will go to sgETH stakers.

e. LSD Appreciation

50% of the wstETH LSDs appreciation will go to GND Protocol, and the other half will go to sgETH stakers.

f. Liquity Forks and Lending Protocol Partnerships

GND Protocol partners with Liquity forks like Lybra Finance, enabling LSD holders to borrow stablecoins against their gETH holdings without the risk of liquidation.

GND will also partner with liquidation-free lending protocols like Ghast Protocol to enable utmost capital efficiency.

This maximizes capital efficiency, allowing users to earn from UniV3 pairs while utilizing their LSD for stablecoin borrowing and other purposes.

6. Core Benefits of gETH

For GND Protocol:

  1. Increased Total Value Locked (TVL): gETH enables ecosystem investors to generate real yield, attracting higher TVL and fostering protocol growth.
  2. Revenue Injection: Through the gETH ecosystem, the protocol receives trading fees, boosting revenue streams with minimal costs.

For Institutional and Professional Users:

  1. Enhanced Yield: gETH offers greater yield potential compared to pure stETH by offering a diverse set of high-yield ETH and LSD products accross ETH and Arbitrum
  2. Low Risk Exposure through Diversification: By carefully picking and choosing high-yield LSD products that offer high levels of security to use as collateral for gETH, we are also allowing institutional and professional users to optimize their returns while still maintaining low risk exposure.

For Retail Users:

  1. Gas Fee Efficiency: Commercial users can avoid using stETH on ETH, which often incurs high gas fees. gETH provides an alternative with lower gas costs.
  2. User-Friendly Experience: The ease of use associated with gETH simplifies the process for commercial users, making it more accessible and convenient.
  3. High Yield Generation: By utilizing gETH, commercial users can access the benefits of real yield generation, maximizing their potential earnings.

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