Staked ETH2 as Collateral?

What are the thoughts on implementing staked ETH2.0 as a collateral type. I see a few previous posts that didn’t get much traction (STAKE https://forum.makerdao.com/t/stake-mip6-collateral-onboarding-application/5551 and rETH https://forum.makerdao.com/t/reth-mip6-collateral-application/6881).

Eventually Coinbase and other platforms are going to have ERC20 tokens representing staked ETH2.0, in addition to solutions like Rocket Pool. I have a bunch of eth staked on various validators that I would love to use as collateral. The risk seems relatively the same against normal ETH.

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RETH, rocket pool staked ETH has been green lit, waiting for it to be widely available before implementation.

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@gaucho

Lido Finance’s stETH was greenlit, I believe, so we should expect to see it up for an executive in relatively short order (fingers crossed).

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I haven’t researched the various solutions, but I’d say onboarding this (conceptually) should be at the top of the priority list.

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Check out this thread by Ethereum Jesus of the illiquidity of Lido Staked ETH (stETH)

“ If you are running just 1 ETH2 validator you currently have an APR of 6.6%. If you use Lido it’s 5.4%. Lido takes a whopping 18.19% cut, on top of ALL block proposal rewards.” :chipmunk:

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Seems a bit early to say there won’t be a liquid market for staked eth tokens once the network actually launches and you can actually unstake your staked eth. Right now there is uncertainty of timing, process, etc, and people aren’t looking into it. The economic return for the holder part is irrelevant to this discussion, unless you think it has an effect on the security analysis.

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stETH is being evaluated as we speak. Probably posting collateral evaluation and proposed risk parameters in the coming week.

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I’m a little late, but I was going to recommend this stake right away :confused:

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I think that tweet thread is misleading in some important ways.

First, I think Lido actually takes a 10% cut, leaving 90% of all staking income to holders of stETH. The lower yield cited is because new deposits take a long time to come online, and that is socialized. The upside, though, is you start earning immediately upon deposit. If you want to run your own node you also need to wait a long time for it to come online, and earn nothing during that time.

Regarding liquidity, the Curve stETH pool has 1.7 Billion dollars of liquidity and is trading very close to parity. Right now you can sell 10,000 stETH for 9990.25 ETH. Not sure why anyone would all that “illiquid”.

Edit: Add citations below.

Staking rewards fee 10%

Lido’s APR is currently lower than Ethereum’s APR due to the activation queue for ETH validators as well as Lido’s staking rewards fee. Lido’s APR will grow as the rate of active stakers on Lido becomes higher, but will not exceed Ethereum’s APR. With Lido, you receive staking rewards within 24 hours of your deposit being made, without waiting for validator activation.

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I wonder if that 10% cut could/will be distributed to LDO holders in the future.

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This fee is split between node operators, the DAO, and an insurance fund

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