# Simple Summary
Launch new Earn vault with wstETH as main asset. It will follow the Harvest strategy as the other similar Harvest vaults on the Earn program.
# Abstract
The proposal targets to launch an specific vault using wstETH as main asset. The wstETH token is the wrapped version of staked ETH on the Lido platform. It is the largest Liquid Staked Token (LST) with a market capitalization of 30,300 M $ in TVL.
# Motivation
The motivation to start a new vault with the wstETH is to provide users with a simpler alternative to the assets already listed. As the main LST in the market, wstETH offers a more liquidity depth, an easier unwrapping path versus the more recently launched Liquid Rataking Tokens (LRT) available on the Earn vaults and a more battle tested experience.
As the wstETH is already accepted as collateral in the Derive platform, integration should have no technical challenges.
# Specification
- wstETH Harvest: See Harvest Strategy | Derive Help Center for reference.
- Management fees: 10% of the weekly collected premiums
- Launch incentives: 2,000 DRV points distributed proportionally to the vault depositors on the launch date. 2 DRV points points weekly per wstETH deposited into the vault once the vault is launched for a period of 4 weeks.
- Minimum total deposit to launch the vault: 200 wstETH
- Maximum total deposits (hardcap): 2,000 wstETH
# Rationale
Offer a more variety of assets to users. Include the largest LST as an alternative in the vaults.
Increase the Options trading volume and fee generation for the protocol.
1 Like
Edited: Changed Launch incentives.
Launch incentives: 2,000 DRV points distributed proportionally to the vault depositors on the launch date. 2 DRV points points weekly per wstETH deposited into the vault once the vault is launched for a period of 4 weeks.
Nice suggestion, the LRT covered call and covered call spread vaults are indeed doing well and in hind sight have really benefited the depositors.
One thing I will say as someone who contributes to the launch of the vaults, it does take some effort to launch new ones - taking away focus from some ongoing things the core contributors are working on (namely a basis vault and possible capital efficiency upgrades).
That being said, if there is big demand it’s definitely worth going for. Is there a way we can get some sort of soft commit? I think if we have a commit of >$10m for a vault that may be enough to deprioritize other efforts.
Hi Josh, thanks for your feedback.
Surprised about the >$10m commitment when none of the other vaults have that amount. Even for some of them took weeks/months to launch after opened because didn’t reach a minimum viable amount and some are on production with little more than 100k $ value.
My proposal is based on a vault whose mechanics are already in use and with an asset that is already accepted as collateral. I don’t see many technical challenges to launch it.
The only differences are that it includes a Management fee (it will provide direct revenue to the protocol when launched) and Launch incentives (that are calculated offchain).
About commitments, what I can say is that the minimum target for the vault is 200 wstETH (¬250 ETH) and it will be reached the first week it opens. My thoughts are that will not take too long for it to reach the hardcap of 2,000 wstETH.
= Why a hardcap?:
1) Makes users to deposit quicker to avoid being left out.
2) Won’t make too big the call auctions on Fridays. Will not impact too much MM or the price vaults get on it.
The $10m cap is based on previous experience - where we spent several weeks launching vaults that ended up not attracting TVL. That’s why we’ve realized it’s best to get some soft commitments before trying to launch a vault.
I agree that technically there is no design work required, however it does take around a week of 2x engineers’ time to deploy the contracts, run / monitor the executor, and ensure there’s spot liquidity for wstETH.
Not a huge amount of time, but I do find the core contributors being spread super thin across the upcoming basis vault (which btw will also be required to have soft commits before launching it), capital efficiency contract upgrades, 10x trading system overhaul and Derive Pro.