Bao Finance Unleashes bETH: The Ultimate Power-Up for Your ETH Staking Game
Hey Dumplings! As the DeFi landscape buzzes with Ethereum 2.0 and Liquid Staking Derivatives (LSDs), we’ve been busy in the kitchen, cooking up something tasty. We’re thrilled to bring to the table bETH, a sushi roll of Ethereum-based LSDs, all packed into one delicious token.
This is part one of our two-part series, where we’ll venture into the compelling world of LSDs, pull back the curtain on our staked ETH basket bETH, and guide you on how to amp up your staked ETH positions with baoETH. Stay tuned!
What are LSDs?
LSDs are like power-ups for your staked ETH (or other tokens). They represent your staked positions, letting you earn staking rewards while keeping your assets liquid and ready for action in the DeFi universe. The superpower of LSD tokens is driving demand as it lets holders deposit them into various protocols to lend, use as collateral, provide liquidity, or trade, opening up a plethora of strategies for those seeking more from their staked ETH positions.
Introducing bETH
bETH is a basket of staked ETH tokens from leading liquid staking providers, starting with rETH and stETH from Rocketpool and Lido respectively and more to come in the future. Its goal will is to always include the safest, highest yielding and most liquid LSDs.
It’s easy to mint bETH tokens. Just deposit your ETH, which is then swapped for the underlying LSD tokens. In return, bETH tokens are zapped to your wallet, representing your share of the underlying assets.
You can redeem your bETH tokens anytime, anywhere, and buy or sell them on Balancer or your favorite aggregator.
Who’s in the Kitchen?
veBAO holders are the master chef in charge of the balance, composition, and security of the tokens deposited. They can vote to tweak the underlying assets at any time to take advantage of new market conditions. In return, they get a 0.5% streaming fee.
This fee structure aligns the interests of veBAO holders with bETH holders, as veBAO holders are incentivized to ensure the success and security of bETH. This establishes a robust system where the protectors of bETH are incentivized to optimize the value and security of bETH for all its holders.
bETH Features
bETH is packed with features. It’s a “set and forget” solution that lets you earn staking rewards on your ETH holdings with maximum safety and minimum effort!
Compounding yields: All yield earned from staking is compounded, increasing the underlying ETH each bETH token is worth over time.
Reduced smart contract and depeg risk: DeFi is still in its infancy — hacks, exploits, and other bugs are a risk. Spreading your ETH between different providers inside a basket that does not allow trading between the assets stops the problem of one exploit destroying the value of all your ETH.
Periodic rebalancing: Long-term bETH holders will benefit from the basket’s ability to switch between different providers. veBAO holders can vote to change and rebalance the bETH staked ETH positions with the market over time to ensure the most liquid, decentralized, highest-yield LSDs are used.
Set and forget: Once you have bETH in your wallet, you are done! No more complex DeFi interaction, costly contract interaction or exploits roaming in the Web3 space.
Promote Diversity and Decentralization: bETH is weighted using the marketcap of ETH LSD tokens but tips the scales in favor of smaller LSD tokens to help promote a more even market share between providers. Additionally, bETH has strict requirements for decentralization and liquidity.
What’s Next?
Stay tuned for our next article tomorrow where we will take you on a thrilling ride into the world of baoETH, our second new product. We’ll reveal how it can optimize your bETH returns and even let you spend while your earnings grow! At Bao Finance, we’re always cooking up fresh ways to make DeFi more accessible, capital efficient, and secure for everyone.
