Staking Yield

Coming in Q1 2024

The introduction of the Beacon chain in Ethereum in December 2020 marked a significant milestone by offering staking rewards to validators. However, this came with a requirement of a substantial 32 ETH minimum stake. This high threshold led to the development of pooled staking and the creation of Liquid Staking Derivatives (LSDs), providing more accessible options for participation in staking activities.

According to Coingecko, by August 2023, LSD protocols accounted for 43.7% of the total 26.4 million ETH staked. Post-Shapella, LSD staking surged, causing long entry queues while exit queues remained minimal. The top 8 LSDs yielded an average of 4.4% APY since January 2022, with Frax leading. However, yields are expected to decrease as more ETH is staked.

Rumi Finance and its Strategy Provider Partners are working on using this ETH LSD primitive for our investment strategies and structured products. Some of the products we are working on include:

  • Leveraged Staked ETH: using our Lending Module Prime and Money Markets such as AAVE and Compound, we are arbitraging the difference between the staking yield and the ETH borrowin rate. On one click, users will be able to loop staked ETH and enjoy higher yields

  • Principal protected Staked ETH: This strategy uses the staking yield from ETH and invest it on different option strategies to enhance the yield, while the ETH principal is protected

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