Every month, the Origin team publishes an update to our token holders and the broader community. We hope you enjoy our November 2023 edition.
DAO proposals, DeFi integrations, and a growing user base. November gave us a lot to be thankful for!
Welcome to Origin's November Token Holder Update! Last month, we saw major steps forward within Origin’s ecosystem, characterized by influential DAO proposals, significant traction for OGV, and an exciting upcoming listing with Eigenlayer.
The Origin DeFi DAO voted on several key upgrades, passing new proposals and executing two OGV buybacks. Following the OGV buyback proposal, these tokenomics upgrades caught the attention of Crypto Twitter, leading to a surge in OGV holders and heightened interest in OETH. Additionally, Origin Ether (OETH) set records with its highest-yielding day and expanded its reach through winning an integration with EigenLayer.
Origin Token (OGN) extended its utility with notable listings and integrations, increasing its accessibility worldwide. This expansion underscores our ongoing efforts to enhance OGN's utility and accessibility across platforms.
On the NFT front, Origin Story continues its alignment with industry leaders and innovators that redefine the potential of NFTs. Our partnership with key players like Pudgy Penguins and Roofstock OnChain exemplifies our drive to merge NFTs with real-world utility.
As we wrap up an eventful November, join us in this update as we delve into:
Upcoming rewards tokens, new governance proposals, and Crypto Twitter talking about OGV. Check it out!
Origin DeFi’s ecosystem continued to grow stronger in November. Continuing its progress, the Origin DeFi DAO passed new proposals for funds management, new yield strategies, and collateral reallocations. Also last month, OETH had its highest yield earning day, and Crypto Twitter caught wind of OGV. Let’s take a closer look at these developments below.
Origin DeFi Governance (OGV) gained new momentum in November. Following the successful OGV buyback proposal, over 45 ETH in fees has accrued to the Origin DeFi DAO. Crypto Twitter quickly picked up on our new value-accrual mechanism, as influencers published in-depth analyses on Origin DeFi’s ecosystem. Thanks to this increased exposure, OGV gained hundreds of new holders, and OETH became top-of-mind in the realm of LSTfi.
The smart contract responsible for OGV buybacks was upgraded last month, setting the groundwork for further automation and increased transparency. The contract hardcoded the 50/50 split between OGV buybacks and CVX accumulation, eliminating the need to rely on strategists. The contract also ensures that all DAO-owned CVX is vote-locked to further boost OETH yield.
The Origin DeFi DAO passed more proposals in November, including a funds management proposal that sets a framework for how OETH collateral is managed. The proposal enables more predictability for yield strategy and collateral allocations, and it lays the groundwork for further automation for yield optimization.
Origin Ether’s Balancer strategy has started collecting AURA and BAL rewards, which have accrued to the contract since deploying funds to the rETH/WETH pool in October. Paired with the profitable adjustment to the Curve AMO on November 19th, trailing 30-day yields on OETH have increased over 50 bps in November.
Origin Dollar has maintained a trailing 30-day APY of 4.85% in November, thanks to collateral reallocations that take advantage of heightened USDC rates on Morpho Aave. The MakerDAO DSR and Morpho make up the vast majority of strategy allocations, with USDC being the highest allocated stablecoin at 40%.
Origin Ether continues to expand to the hottest DeFi protocols, and OGN gets listed on new dapps.
On November 9th, EigenLayer announced that OETH won their listing competition. As such, OETH will be listed on the platform as a restaking asset. Enabling boosted rewards via restaking, EigenLayer has seen huge demand from DeFi users. EigenLayer’s total value locked sits at over 160,000 ETH, even as the protocol set caps for the amount of LSTs deposited into their smart contracts.
The upcoming EigenLayer integration is a huge win for Origin Ether. As demand for restaking continues to grow, these users will now have access to earn compounded rewards through Origin Ether restaking.
Those looking to leverage their OETH now have the opportunity to do so through Interest Protocol, a money market for interest-bearing assets. Users can deposit their OETH to take out loans in USDCi, allowing them to unlock liquidity while earning yield on OETH.
Similarly, OGN has broadened its presence through several integrations across DeFi. In recent weeks, OGN has been added to Koala Wallet, enhancing user experience by providing users the convenient ability to securely manage OGN within their app. Additionally, OGN has expanded its reach into the world of DeFi analytics with a De.Fi integration. De.Fi is a comprehensive portfolio tracker known for its suite of innovative and user-friendly tools.
Looking forward, Origin is dedicated to further advancing the accessibility and utility of OGN. We’re strategically focusing on key integrations to ensure that OGN is increasingly available across platforms, thereby strengthening its positioning in the broader digital asset landscape.
Our partners are rethinking the way NFTs are used; here’s what could be next for the industry.
November brought a refreshing surge of activity to the NFT market, which had experienced a period of relative quiet in the preceding months. In a recent discussion with TheNewsCrypto, Josh Fraser, co-founder of Origin, shared insightful perspectives on the future of the NFT space. He reaffirmed Origin's steadfast belief in the long-term potential of NFTs and expressed confidence in the market's resurgence.
However, he also noted that the nature of this revival might differ from the patterns observed in the previous bull market, suggesting a possible evolution in the way NFTs are perceived and utilized.
Origin Story has been working to innovate and adapt to the rapidly changing trends of the market as we approach the end of 2023. Our previous endeavors have spanned from assisting artists and celebrities in launching their NFTs, complete with extraordinary prizes that go beyond the digital, including real-life experiences and tangible items, to spearheading groundbreaking sales. Notable examples include the record-setting $2.3 million Macallan Whiskey Cask sale and the staggering $11.7 million auction for 3lau’s Ultraviolet Vinyl NFT drop.
Our collaborations extend to empowering creative visions for entities like Pudgy Penguins and 0N1 Force. Moreover, our partnership with Roofstock OnChain aims to disrupt the traditional real estate markets, valued at $11 trillion, by facilitating property sales through NFTs.
At Origin, we pride ourselves on being at the vanguard of advancing NFT technology. Our commitment to innovation and our ability to anticipate and lead market trends underscore our role in shaping the future of NFTs and their real-world applications.
Check out the latest yield opportunities, staking updates, and tokenomics data for Origin’s tokens.
OGN volume has increased alongside a broader market resurgence, and the number of token holders surpassed 45,500 in November. Additionally, OGN is available across more than 50 centralized and decentralized exchanges, including the most popular platforms like Coinbase, Binance, and Uniswap.
At Origin, our strategic focus is firmly set on cultivating long-term value. We prioritize sustainable growth and robust utility for OGN over fleeting speculative gains. This approach ensures that our developments are aligned with the enduring success and evolution of the Origin ecosystem.
OGV staking rates remain strong, with nearly 80% of the total supply staked. Stakers have accrued extra OGV rewards from buybacks, with current APYs ranging up to 27.6%. As a reminder, OGV buybacks and CVX purchases occur every two weeks; the last event happened on November 22nd. During the last buyback, 1.9 million OGV and 3,990 CVX were purchased using OToken performance fees.
OGV liquidity has improved on DEXs, and the OGV holder base grew significantly in November. It’s important to note that higher OGV values impact OETH yield, creating a flywheel effect. As OGV increases in value, Curve bribes become more impactful, which leads to higher OETH yield and more revenue generation for the Origin DeFi DAO. 3
November was a bustling month for the Origin community and team, marked by a series of engaging and insightful events.
Throughout the month, Origin actively participated in various Twitter Spaces, showcasing the depth and diversity of our initiatives. Notably, our BD Manager Peter Gray contributed his expertise in sessions with VaultCraft, DIA, and Koala Wallet, bringing valuable insights to the table. Simultaneously, our Senior Community Manager, Brighton To, delved into the nuances of community building by hosting TaskOn on Twitter Spaces during our campaign. This collaboration with TaskOn's platform successfully introduced new members to Origin across our online communities.
In a dynamic collaboration with Curvance, we provided our community members a unique opportunity to engage with our community rewards program in our Discord. By earning the 'explorer' role, members gain access to Curvance’s incentivized testnet.
Also last month, Origin’s co-founder Josh Fraser graced TheNewsCrypto’s podcast, discussing pivotal topics like digital ownership, liquid staking, and DeFi security. The insights shared there are available in a detailed transcript, offering our community a deeper understanding of these critical subjects.
Lastly, we launched a new Zealy sprint, active until mid-January. This initiative invites our community members to participate in tasks, accumulate points, and ascend the leaderboard. The top 20 participants will be rewarded with token prizes, with the top prize being $250 in Origin Ether, fostering a spirit of healthy competition and engagement.
As we close another eventful month, our commitment to fostering a vibrant, knowledgeable, and connected Origin community remains stronger than ever.
That’s all for November! We hope to see you back here in January for our December Token Holder Update, where we’ll cover Origin’s accomplishments in 2023. In the meantime, we invite you to join our Discord for real time updates and follow us on Twitter for major announcements.
If you’d like to read more about the developments mentioned in November’s Token Holder Update, we’ve compiled a list of some of our favorite content from November 2023 below:
Ethereum staking adoption has accelerated at a breakneck pace, with the network enjoying wide participation. However, the new consensus mechanism has given rise to new concerns. Specifically, the dominance of liquid staking platforms like Lido Finance has reignited debates around centralization.
At present, more than 30 million ETH is being staked to secure the blockchain. However, around 30% of this ETH has been staked via Lido’s staking pools. This means that should Lido break network rules, a third of all staked ETH could be at risk.
Protocols with high concentrations of staked ETH hold an undue influence over the network. Given that Ethereum slashes nodes that break network rules, teams that are misaligned or act in bad faith could compromise network integrity. Regardless of how projects are managed, single points of failure pose unnecessary risks to Ethereum’s long-term growth.
Distributed Validator Technology (DVT) is a novel mechanic designed to decentralize node management on Ethereum. With thoughtful implementation, DVT could fortify the blockchain and ensure that ETH remains decentralized as it continues to grow.
On a high level, DVT splits up responsibilities and ownership for entities running validator nodes. Currently, each validator node is managed by a single private key. This means that the key owner can make unilateral decisions, even if they are not in the best interests of the network.
DVT enables key sharing to distribute this ownership. Instead of relying on a single point of failure, validator private keys are split into roles responsible for different aspects of node management.
For example, a portion of the key could be delegated to a block proposer, who proposes new transaction blocks via the node. Other portions of the key could be held by managers who attest the validity of new blocks and manage distribution of rewards.
By splitting the key of a single validator according to roles, DVT reduces centralization while also promoting more effective node management. As more parties are involved in signing messages from a node, the risk of slashing penalties is far lower than storing the private key on a single point.
From a tech perspective, DVT solutions contain five fundamental components:
DVT also carries robust security in the form of Istanbul byzantine fault tolerance (BFT). This mechanic ensures that validators can stay active even if some operators go offline or attempt to act maliciously.
DVT carries significant benefits for all forms of ETH staking, from solo staking and institutional outfits to liquid staking pools.
Solo stakers can harness DVT to split their keys across remote nodes while their full private key remains offline. As a result, solo stakers can reduce their hardware costs and insulate themselves against potential exploits.
Staking service providers need to manage many validators for their users, who are typically institutional clients. With DVT, these platforms can add important failsafes to their operations. Additionally, distributing key management can reduce operational costs for providers while also lowering risk.
Due to current constraints, staking pool operators are responsible for managing thousands of validators for users. Lido, for instance, manages more than 9 million ETH staked across 288 thousand validator nodes.
DVT addresses this risk by splitting the private key and node management across more operators. As a result, operators only hold key shares rather than full private keys. This is how Origin Ether supports DVT through its liquid staking token, while earning SSV token incentives for OETH holders along the way.
While DVT holds many benefits, it’s important to be mindful of the potential risks the technology may pose.
Specifically, adding an additional component to ETH’s mechanics could make the network vulnerable to new attacks. This makes it especially important that DVT is implemented thoughtfully.
Additionally, DVT could increase operational costs and network latency as nodes are split between more parties.
These risks can be mitigated with careful and considered implementation. From a broader perspective, slight increases in costs and latency are small prices to pay for the enhanced security offered by DVT.
Ethereum is scaling to achieve an ambitious vision of becoming the world’s computer. The network’s long-term roadmap is geared towards bringing Ethereum’s utility to the mainstream, so that anyone can harness unique opportunities in DeFi, NFTs, and beyond.
To achieve these goals, the network needs an unshakeable foundation that protects users and keeps funds safe from potential attacks. At scale, single points of failure could put trillions of dollars at risk. Given that staking forms the backbone of the network, distributing validator keys is an important step toward minimizing these risks.
Ethereum’s sprawling community of builders is constantly working to make the network as robust as possible. In June, the network boasted nearly 6,000 daily active developers contributing to the chain’s growth. These innovators are actively exploring technologies like DVT to ensure that the network remains as secure as possible.
While more than 25% of ETH in circulation has been staked, this figure is set to increase in coming years. Many other proof-of-stake chains record over 40% of their supply staked.
Origin Ether (OETH) offers users a seamless gateway to stake ETH, built on an ethos of decentralization and best-in-class security. Implementing distributed validator technology, OETH improves on fault tolerance while offering holders enhanced yield.
Discover how OETH can help you stack ETH faster: originprotocol.eth.limo
Ethereum’s transition to a proof of stake (PoS) consensus mechanism has made the network far more inclusive. Under this design, anyone can stake ETH to help secure the blockchain while earning staking rewards for their efforts.
However, staking ETH directly to the smart contract carries a high barrier to entry. Users need to lock up 32 ETH to run a validator node. In addition, users need to maintain their nodes to avoid penalties. These technical and capital requirements make it difficult for most investors to participate in staking ETH.
Fortunately, liquid staking has emerged as a far more accessible alternative. In contrast to traditional staking, liquid staking allows users to earn rewards by depositing as little as 0.01 ETH.
Liquid staking was pioneered by Lido Finance, who launched the first liquid staking platform for ETH in December 2020.
With liquid staking, users can participate in ETH staking without needing to lock up funds or maintain their own nodes.
Here’s how the process of liquid staking works:
In practice, it’s even more simple than this. Most users will swap ETH for stETH or other LSTs on Uniswap, and they’ll start earning staking rewards right away. This approach makes ETH staking far more appealing for ordinary investors. Token holders are empowered to retain full control of their funds, while the low deposit threshold allows far more users to participate.
Lido’s dominance of ETH staking highlights the popularity of liquid staking mechanics. The protocol is now DeFi’s largest platform by total value locked (TVL), with more than $18B in TVL at the time of writing. Impressively, more than 30% of all ETH staked has been staked via Lido.
Also known as liquid staking derivatives, liquid staking tokens fall into three high-level categories.
Rebasing tokens have been adopted widely throughout the space. These tokens, like Lido’s stETH and Origin Ether’s OETH, have an elastic supply. This approach distributes token rewards to users in the form of additional tokens, while the value of each token remains static. This is especially important considering that LSTs generally strive to maintain a peg to Ethereum.
Rebasing tokens are by far the most popular design among liquid staking platforms.
In contrast to rebasing, non-rebasing tokens maintain a constant supply while the value of each token increases daily in proportion to staking rewards. This model is utilized by a number of platforms. Leading LST project Rocket Pool boasts a non-rebasing token in the form of rETH.
LST protocol Frax Finance is currently the only major liquid staking platform that uses a dual-token model. This design isolates users’ initial capital and accrued yield in the form of two LSTs.
For example, Frax stakers receive frxETH representing their deposited funds. Users can choose to stake frxETH to Frax’s sfrxETH vault, which allows stakers to earn yield in the form of sfrxETH.
This approach can offer more flexibility in DeFi by separating the capital token from the volatile, yield-bearing token. For example, Frax is able to incentivize its frxETH pools, which in turn boosts sfrxETH yield for holders.
However, dual-token models remain fairly niche due to their complexity.
Liquid staking’s growth has seen many protocols compete for users to stake ETH. As a result, there are many platforms that potential stakers can choose from. It’s important to consider factors like security and usability when deciding where to stake ETH. Additionally, staking rewards vary significantly depending on the platform used.
The DeFi platforms outlined below comprise some of DeFi’s most prominent liquid staking protocols.
Lido remains the most dominant platform for ETH staking, having popularized the benefits of liquid staking. The protocol uses a rebasing LST in the form of stETH, which maintains a peg to ETH. Lido users currently receive around 3% APYs on their staked ETH.
Founded in 2016, Rocket Pool has been building its liquid staking product for seven years. Rocket Pool stakers hold rETH, a non-rebasing LST. The platform is the second largest liquid staking protocol behind Lido, with more than 1 million ETH staked.
Rocket Pool’s mechanics have further broken down barriers to entry. In addition to regular LST staking, Rocket Pool allows users to run their own validator nodes by locking up 8 ETH to mini-pools. This threshold is far lower than the 32 ETH needed to run a node independently. Rocket Pool’s base APY currently sits at >2.8%, but is higher for mini-pool operators.
Origin Ether (OETH) is an enhanced liquid staking token from the team at Origin Protocol. The liquid staking protocol addresses a key issue in ETH staking: yield compression. As staking adoption increases, yields decrease. This is because the same pool of rewards is being split between a growing number of stakers.
OETH is fully collateralized by reserves of ETH, which is staked to Ethereum's beacon chain to receive staking rewards. ETH reserves can also be used in audited liquidity provision strategies, utilizing Origin's AMO. In doing so, OETH is able to deliver higher yield than traditional ETH staking, while maintaining a tight peg to ether's price.
Like other LSTs, OETH maintains an ETH peg and can be traded seamlessly – no lockups required.
For most investors, liquid staking is far more suitable than solo staking. The amount of technical knowledge and capital required for solo staking makes it far more appealing for institutions and individuals with a deep commitment to Ethereum’s long-term growth.
The key benefits of solo staking comprise autonomy and heightened rewards. By staking directly to the smart contract, solo stakers have full control over their nodes. In addition to staking rewards from transaction fees, validators also earn block rewards for proposing or verifying new blocks of transactions.
However, solo staking APYs vary between 3-5%, which LST protocols like OETH offer users without any of the hassle involved.
Additionally, failing to maintain a node or breaking network rules can result in your node being slashed from the network. These penalties have been implemented to protect network security. Thus, it’s vital to be confident in your technical abilities when deciding to solo stake.
While there are no guarantees when it comes to investing, liquid staking carries lower risk for users than many other options in DeFi. Given that users retain control of their capital with LSTs, stakers face little risk of losing funds.
That being said, it’s important to research platforms thoroughly before depositing any assets. Exploits are still commonplace in DeFi, and there’s no room for complacency.
OETH, for example, boasts a robust, battle-tested codebase. The protocol is open source, affording users maximum transparency. Additionally, OETH has been rigorously audited by the space’s most prominent security firms, including OpenZeppelin.
Dive into Origin's liquid staking ecosystem to see how OETH can help you stack ETH faster: originprotocol.eth.limo
What are liquid staking tokens?
Liquid staking tokens (LSTs) are tokens given to ETH stakers representing their staked capital and accrued yield.
Which liquid staking tokens are most popular?
Lido’s stETH is the largest LST in the space, with more than 30% of ETH staked via the platform. Origin Ether’s has also seen significant traction with over $150M in total value locked.
A good code review isn’t just a read-through of the code, plus some kind of unattainable genius. It’s about finding ways to repeatedly think through each aspect of the system, building a mental model of the code and then using that process to find stupid bugs, classic bugs, and deep bugs.
Good code review works from many different perspectives and switches repeatedly back and forth from high levels to the tiniest details.
I’ve been focused on smart contract security for three years now, and code reviews are a huge part of work. This is my system to get the most out them.
Internal Code reviews are still the most efficient way to find bugs. Ideally your unit tests and fork tests can do the easy work of making sure that the code “works”.
Contract security is a gradient, not a boolean. Fuzz testing, invariant testing, and formal proving are all fantastic layers that increase the odds that the code is correct, but the single biggest move up the security gradient comes from a good code review.
Correctness matters incredibly in smart contracts.
Most other industries don’t have tens or hundreds of millions of dollars instantly transferable to a person who finds and exploits a bug.
If you're flying an airplane: yes, the world is random and yes, there's a lot of airplanes, and yes, hardware failures are a problem. But it's not like there's 10,000 guys in Paris, Eastern Europe, North Korea, San Francisco, and the Canadian wilderness reading your source code, with cables plugged into your flight control system and aggressively changing the weather, the clocks, the airport layout, and beaming radiation at your plane in order to put your system into the specific state where the code makes a mistake. Smart contracts live in inherently adversarial environment.
And it’s not just the evil humans - there are all the automated systems lurking out in the dark forest, constantly poking at code, and ready to pounce at the sign of free money.
It is not enough that the code works. It's not enough that it works in the face of randomness. It has to work in the face of an adversarial enemy who is looking for a way to change the world around it to exploit it. The code has to be perfectly correct under all circumstances. Perfect code is hard for humans to get right on the first try.
The second reason that we do code reviews is that we want to keep our code simple.
In the long term, simplicity is the thing that will keep the bugs out and the development velocity up. Every bit of complexity left in the system is a time tax on every bit of future software development we do, and complexity adds risk to everything we build in the future.
Simplicity is not something that comes for free. It’s not something that is easy. You can't just wave a magic wand and make simplicity happen. It's something that takes time, it takes work, and takes some creativity. Simplicity is a multidimensional problem. Sometimes you have to make trade-offs between different approaches to simplicity.
Because simplicity is so hard, we want opinions, feedback, perfection, from multiple people on the team about the code. Simple is often the result of a collaborative process.
If this were a web2 company, nitpicking the tiniest line of code in ways that don’t change behavior would be an anti-social action. Here, in our solidity code, we want to be chasing as much perfection as each of us can possibly bring.
The third reason why we do code reviews is we want to share knowledge around the team.
We have a team of four smart contract devs. When the person who writes the code does a deep review, and then two more people also do a deep review, then three-quarters of our team now deeply understand this new code. When the team deeply understands the codebase, there’s a major difference in both team dynamics and the ability to write code that works with the rest of the system.
These code reviews also share coding techniques and security concerns across the team. And learning goes both ways. I can learn both from what I read in code reviews, and learn from what people find in code reviews on my code.
For example, last week I was reviewing some code and I saw the way the developer handled the need to get information down from a higher level in an inheritance hierarchy to lower base code. Later that week I used what I learned when looking at handling different kinds of Curve pools from strategies sharing the same base code.
A code review is not reading the code through once, commenting on what you see, and then calling it approved.
Let’s step back for a second and look what we we are trying to do. We are trying to find all the bugs. I like to think of bugs as being in three categories.
The core problem is how can you find the deep, subtle, tricky bugs. This often requires building a better mental model of the code in your head than even the person writing the system had. How do you get to that, particularly from a cold start?
The solution is to make repeated loops through the code. Many, many, many passes over the code each time looking for a different problem, and each time building up a clearer picture, a richer mental model of the code inside your head. It's really in the mental representation that you find the really hard bugs.
So the goal is:
The first thing I do is have a first-pass read-through. This is to get a feel for the overall structure of the code so that I can navigate it well on later passes.
Now I love paper for reviews. So I print code off, often removing code comments for the first read-through.
I then write down on my paper any questions I have, anything that looks bad or looks ugly, and ways I think the code might be broken. I’m often wrong about these things - I’m a bit of an optimist about things being broken.
After I finish my first read-through, I work back through my comments and verify that they actually are issues. I’ll go ahead and write the real ones into PR comments at this point. (Getting down to some detailed work here is another step in building my knowledge of the system.)
The rest of my process works off a checklist document of things to consider / check. The great thing is that this forces you to think about the system from different aspects. And when just reading code, it’s easy to forget to look for the things that aren’t there. Checklists help with seeing these issues of absence.
Our checklist is specific to our own codebase and style of code we want.
As you go through using the checklist, your knowledge of the system builds, stupid and classic bugs get spotted.
Some of the things in our own checklist are not actually things that must be true in order for the code to pass review. They're things that if they're not true then we need to examine very very carefully and beware of danger. For example, we have a checklist item for “does not use raw Ethereum” and almost all of our contracts do not. But if we have to use raw Ethereum, then we know that we need to pay particular attention to the possible dangers, and really, really think about what can go wrong with this.
Checklist are the best way to find the common bugs in your code.
Then next approach is thinking about the invariants in the system.
Invariants are things that must always be true for the system to be good. It’s a tremendously useful way of thinking about the system and then checking that it actually always works the way we're expecting it.
You can break them down into “things that must be true before this code runs”, “things that must be true after this code runs”, and “rules about the relationships of different state variables”.
So once I write these invariants down, then I go back through and check the code and verify that they do actually hold.
State invariants are particularly useful - some piece of state must always have a certain relationship to some other piece of state in order for the system to be good. For example, let's say that if you added up the balances of each account it should be equal to the total balance in the system. One good way of building state invariants is to walk through the list of non-config variables in your contract, and for each one, think how it should be related to each other non-config variable.
Invariant-based thinking is probably the most underrated secret weapon of code review and finding bugs.
The next step is to think about attacking the contracts.
Switching to thinking about your code from the point of view of an attacker is a powerful mental perspective shift - as a developer it’s to thinking about how the code will work, rather than what situations you can put it into to break it.
Rather than just “think about attacking the contracts,” the best way I’ve found to do this is to just start writing out attack ideas first without even seeing if they're valid or not. I just spam out things that might be able to go wrong, and their possible worst-case impact.
Then, after I’ve written down a bunch of attacks, I write out why each can't be done, again, all at once without checking the code. As the final step, I then go through and verify, in the code, that what I thought about what would block these attacks are true. The perspective switching from “attack” to “defense” to “attack” thinking, is useful, and in this step, like all other steps, I’m building up my mental model of the code.
Deployment code, configuration, required monitoring, and governance actions are as much of a part of the final system as the code is. Check that everything here is correct, including manually verifying that all addresses are correct.
Lastly, there’s a lot of value in a few minutes of sanity fork testing. It’s amazing what you find just playing with a system. Code is often written to pass the tests, but it may do wrong things when used with different numbers or order of operations than the tests. This also ensures that the deploy and governance action results in a working system.
I usually record the fork testing I do here, clean it up a bit, and then save it to use again later once the code has actually been deployed.
When the first draft of the code has been written, I like to do an informal first-pass review, that looks nothing like this entire process. This lets us make any design corrections before we build out the test suites, and really add the quality to the system.
So our real internal reviews happen after the code is written, and the owner of this set of code is happy with the code and tests. First, the owner does their own review, then tags-in the other two team members for their reviews.
The code owner themselves should always do the first review. They are currently the person who understands this code better than anyone in the entire universe, so by forcing some new perspectives, they’ve got a pretty good shot at finding a bug. Secondly, this lets the owner get some immediate feedback on how good their reviewing is, since if the owner doesn’t catch the bug, hopefully the other two reviewers will.
You want to do our full internal review process before sending the code to auditors. In this way, the external audit is a check on your internal process. If an auditor finds an important bug, then you need to go back and figure out how to change your internal review process so that this kind of bug does not slip through again.
The key to finding the hardest bugs is to look at the system from many different perspectives, and at many different levels. And use a checklist for the easy bugs!
The introduction of staking on Ethereum marked one of crypto’s most historic milestones. The network adopted proof-of-stake (PoS) in 2022, replacing the old proof-of-work (PoW) design.
Proof-of-stake forms the backbone of Ethereum 2.0. The consensus mechanism offers users a new way to participate in securing the network.
Staking removes the need to rely on energy intensive mining. Instead, users can stake ETH to the blockchain and earn rewards from transaction fees and new blocks. Validator nodes use these staked assets to confirm new transactions.
ETH staking has enjoyed incredible demand since launch. More than 29 million ETH is currently staked, representing nearly 25% of total supply.
Choosing how to stake your ETH can be a challenging decision. The sector’s tremendous growth has given rise to a thriving competitive landscape, leaving stakers spoilt for choice.
Staking ETH offers various rewards depending on the method and platform being used.
This staking yield is derived from three sources:
The bulk of ETH staking yield is generated by transaction fees. Meanwhile, block rewards are only distributed to validators who participate in a block’s confirmation.
Solo staking involves staking ETH tokens directly to the smart contract to run an Ethereum validator node. With solo staking, users earn yield from block rewards in addition to transaction fees.
However, this method carries a high barrier to entry.
Solo stakers need to lock up 32 ETH to set up a node. In addition, stakers need dedicated hardware to run the node. Nodes also need to be maintained and constantly monitored to avoid slashing penalties.
As a result, solo staking is mainly used by institutions and power users. These entities are generally committed to the network’s long-term success.
Liquid staking services emerged to democratize the staking process. In contrast to solo staking, users can deposit as little as 0.01 ETH to liquid staking platforms to earn yield.
These platforms deposit ETH to staking pools, which are then delegated to validators.
Participants receive liquid staking tokens (LSTs) representing their deposited capital and accrued yield. Importantly, LSTs maintain a peg to ETH, allowing them to be transacted freely in DeFi. As a result, users can participate in ETH staking without being forced to lock up their capital.
These benefits have generated major demand for liquid staking. LST pioneer Lido Finance is now DeFi’s largest protocol, with more than 8.9 million ETH staked via the platform. This accounts for nearly a third of the total amount of ETH staked at present.
The annual percentage yield (APY) offered to ETH stakers varies according to the number of users and network activity. Rewards rates also vary between protocols as platforms use unique mechanics for staking.
In general, ETH staking APYs range from 3% to 5%.
However, yield has dropped significantly with rising adoption. This is because the same pool of rewards is being split between increasing numbers of validators.
At the time of writing, ETH’s real rewards rate sits under 4% after adjusting for inflation. Solo stakers running their own nodes may also receive additional yield from block rewards.
The budding sector of LSTfi has emerged to address the issue of yield compression. Platforms like Origin Ether (OETH) offer users an opportunity to compound their returns through multiple streams of rewards. Such platforms harness bespoke strategies across blue-chip DeFi protocols to generate consistent yield for users.
Launched in May 2023, Origin Ether is designed to enhance liquid staking yield.
Users can mint OETH by depositing ETH collateral on the OETH dapp. OETH maintains a tight peg to ETH, meaning that stakers can transact OETH widely throughout DeFi. Thus, stakers can earn rewards without having to lock up their capital.
Aside from staking rewards, the protocol’s ETH reserves are put to work through cutting edge strategies that harness DeFi’s most robust protocols. These yield generating strategies include a Curve AMO, which earns yield by providing liquidity through Curve and Convex.
OETH’s conquest of LSTfi aims to mitigate yield compression by targeting higher APYs and offering LST holders a robust platform to compound their returns.
Launched in late 2020, Lido has been instrumental in shaping the ETH staking landscape. Lido was the first platform to offer ETH liquid staking, carving out a fresh sector of innovation. Users who stake through Lido receive an LST in the form of Lido staked-Ether (stETH).
Lido’s market dominance highlights the demand for liquid staking on the Ethereum network. The protocol is now the largest in DeFi, with more than $21B in total value locked.
Stakers on Lido currently receive around 2.8% APY on their capital.
Rocket Pool built on Lido’s liquid staking design to make staking even more accessible. Rocket Pool’s unique mechanics allow anyone to run a validator node by staking only 8 ETH to a mini-pool. This threshold is far more attainable than the 32 ETH needed to run a node independently.
Rocketpool currently offers users ETH staking APYs of ~2.6%. If you stake via a mini-pool with 8 ETH or more, you can receive heightened rewards.
Frax Finance’s liquid staking product is informed by the team’s vast expertise in developing innovative stablecoins. In contrast to Lido and Rocketpool, Frax’s ETH staking mechanics use two ETH-pegged tokens – frxETH and sfrxETH.
Users who deposit ETH to Frax receive frxETH representing their capital. Then, users can choose to stake frxETH via the sfrxETH vault. Accrued staking yield is distributed to frxETH stakers in the form of sfrxETH.
This two-pronged approach is designed to broaden LST utility. By isolating staked capital (frxETH) and the LST (sfrxETH), stakers are empowered to use their holdings in DeFi with greater flexibility.
Frax’s ETH staking platform delivers APYs of ~3% at the time of writing.
As ETH staking gains further momentum, it’s likely that raw staking rewards will continue to decrease. For context, under 25% of ETH is currently securing the network. While substantial, this figure pales in comparison to other proof-of-stake blockchains, which regularly see more than 40% of tokens staked.
With this demand in mind, LSTfi protocols like OETH become even more important.
Depositing ETH to Origin Ether offers higher staking APYs than solo staking or pure liquid staking. At the same time, stakers retain full control of their capital, drastically lowering barriers to entry.
As with any investment, staking Ethereum carries risks. New stakers should be careful when choosing to solo stake, given the complexity and resources required.
However, the rise of liquid staking and LSTfi has greatly broadened access to staking while also minimizing risks for participants. Using a liquid staking protocol allows you to earn a steady stream of passive yield without being forced to surrender your capital or figure out how to maintain a validator node.
Investors should conduct extensive research before committing to a staking platform. In the rapidly shifting landscape of DeFi, first class security is essential.
OETH, for example, is built with an unwavering emphasis on transparency and security. The protocol boasts an open-source codebase, allowing anyone to monitor how funds are being managed. Additionally, OETH has been audited by industry leading firms including OpenZeppelin, and AI security firm Narya.
Discover how Origin Ether can help you stack ETH faster: app.originprotocol.com
Origin Ether (OETH) offers higher staking yields than other methods thanks to its unique strategies. OETH places a strong emphasis on security and usability, allowing users to earn rewards with greater peace of mind.
ETH staking rewards are primarily generated by transaction fees on the Ethereum network. Validator nodes also earn block rewards for helping to confirm new transaction blocks. LSTfi protocols like OETH boost these rewards by deploying reserves to blue-chip protocols like Curve.
Demand for Ethereum staking has grown in popularity since the network switched to a proof of stake (PoS) system. With PoS, anyone can help secure the network by staking ETH to earn staking rewards. While running your own validator requires 32 ETH, many users choose liquid staking tokens (LSTs) for easier participation.
In 2023, staking gained more interest from institutions after Ethereum's Shapella upgrade allowed withdrawals. To make staking easier, various services are now tailored for institutional clients, allowing them to stake ETH without needing to manage complex systems.
Custodial staking services provide an easy way for institutions to stake ETH and earn rewards. These platforms handle everything, from managing funds to generating yield.
However, using custodians for institutional ETH staking comes with risks. Users may not have full insight into how their funds are managed, and if a service fails, there's a risk of losing deposited assets. Ethereum also "slashes" validators that break network rules, so it's important to choose reliable custodians.
Coinbase is a well-known name in crypto, offering a range of custodial services. Institutions can stake ETH using Coinbase Cloud, with an estimated 2.36% rewards rate. Coinbase charges a 10% fee for using their public validators. For dedicated validators, firms pay a subscription fee. While Coinbase is trusted, it doesn’t offer slashing coverage, which means if a node fails, stakers could lose funds.
Anchorage Digital, the first federally chartered crypto bank, offers compliant ETH staking for institutions. Users can stake batches of 32 ETH and earn rewards from block confirmations.
Anchorage focuses on institutional assets, making it appealing to large firms. However, firms should be aware of the platform’s management fees.
Fireblocks, launched in 2019, provides staking for ETH along with other crypto services.
Unlike other digital asset staking solutions, Fireblocks gives users full control over their private keys, meaning they have more oversight over their investments. This "direct" custody feature reduces counterparty risk, making it a popular choice for institutions.
Another option for institutional investors is to stake ETH using liquid staking protocols. With liquid staking for institutions, they put ETH into staking pools and receive a Liquid Staking Token (LST) in return. This token represents their original ETH and any rewards earned from staking. LSTs are linked to the value of ETH and can be used in other Ethereum based projects.
This lets institutions earn rewards while still being able to use their ETH. One popular platform, Lido Finance, manages over 30% of all staked ETH. But as more people stake ETH, the rewards are shared among more stakers, reducing the overall yield.
Origin Ether (OETH) solves this issue by offering higher yields. Currently, OETH offers a 4.34% trailing 14-day yield.
Users can deposit ETH and receive OETH, a highly efficient LST. OETH earns staking rewards from Ethereum and extra yield from providing liquidity on Curve and Convex. These rewards go straight to the user's wallet. The platform is safe, with its code audited by experts like OpenZeppelin, making OETH a strong choice for institutions looking to stake ETH securely.
Institutions can also opt to stake ETH directly via the smart contract. In doing so, firms can earn increased rewards on Ethereum’s proof of stake blockchain without relying on third parties.
However, this is a highly complex undertaking. Firms would need to set up and manage their own validator nodes, requiring substantial technical resources and a large amount of ETH. Considering that the network slashes nodes that break rules or face downtime, expert maintenance is critical for successful staking.
Furthermore, self-staked ETH is locked in the smart contract. This means that access to capital is limited, as the withdrawal process can take substantial time to execute.
Origin Ether empowers institutional stakers to earn outsized ETH rewards on the Ethereum network without the red tape of solo-staking or the risks of custody. OETH’s veteran team of innovators is dedicated to meeting the needs of institutional clients and asset managers.
Contact [email protected] or send us a message on Discord to get in touch.
Every month, the Origin team publishes an update to our token holders and the broader community. We hope you enjoy our October 2023 edition.
New strategies fuel OGV and OUSD, Pudgy Toys selling at Walmart, and the OETH dapp gets a facelift. Buckle up as we unfold advancements made by the team in October.
Welcome to Origin’s monthly Token Holder Update! October was a month of momentum for Origin Protocol, highlighted by protocol upgrades and enthusiasm around OGV following some exciting adjustments to Origin DeFi's tokenomics.
We also launched an OETH balance sheet on the OETH analytics page, a move towards greater transparency in showcasing the protocol's solvency. The Origin Ether dapp also saw a refresh, including a dedicated history tab to track earnings and swap history.
On the yield frontier, Origin Dollar's 30-day trailing APYs saw a 90 basis point rise month-over-month, thanks to a rebalance in OUSD collateral, optimizing yields from USDC and DAI strategies.
As for Origin Story, new integrations for OGN have expanded the way holders can interact with our token. Our NFT partners have expanded their reach, with Pudgy Toys now sold in Walmart and other retail locations.
This month's update will take you through:
Join us as we unfold the advancements made across Origin Protocol in October, laying a robust foundation as we venture into the months ahead.
Excitement brewed around OGV in October, as new upgrades were passed through Origin DeFi governance to improve the protocol’s tokenomics. OGV buybacks were increased, now using fees from both OETH as well as OUSD. Due to the large circulating supply of OETH, buybacks are roughly 3 times larger than when they were solely funded by Origin Dollar’s performance fee.
These tokenomics upgrades didn’t go unnoticed. Origin DeFi Governance is getting attention on Twitter, highlighting the impact of OETH on OGV. Emperor Osmo, a key opinion leader in liquid staking, published an in-depth thread on Origin DeFi. The thread explains Origin Ether’s place in the LSTFi market, and how OGV plays a crucial role within our ecosystem.
Also in October, Origin added an OETH balance sheet to the OETH analytics page. The balance sheet breaks down the protocol's solvency, highlighting collateral allocations, funds held in yield strategies, and total assets vs total liabilities.
In regards to Origin Dollar, 30-day trailing APYs increased by 90 basis points month-over-month. OUSD collateral was rebalanced in October, helping increase yield from USDC and DAI-denominated strategies. As of writing, OUSD primarily earns yield through Morpho Aave, Morpho Compound, and the MakerDAO DSR.
The Origin Ether dapp was overhauled in October, adding new OETH swap routes plus dedicated redemption and history tabs. The history tab shows lifetime earnings, yield events, and swap history through the OETH dapp. For users looking to redeem OETH directly for its collateral, the dapp’s redemption tab supports direct redemptions.
Lastly, Origin Ether’s allocation to the Aura/Balancer strategy was fully deployed last month. The rETH/WETH pool earns from both rETH liquid staking rewards and Balancer trading fees, making it a compelling option for stacking multiple yield sources. There is now over $14 million of OETH collateral earning yield through Aura, which boosts yield on Balancer LP positions in a similar way to Convex on Curve.
Last month, Origin DeFi achieved new integrations for OETH leverage, cross-chain swaps, and asset management. Origin Ether is now a supported collateral type on Interest Protocol, enabling users to leverage their positions by posting OETH as collateral.
Helping bring new liquidity to Origin, all of our tokens are now supported on Jumper Exchange. Powered by LI.FI, Jumper is a multi-chain DEX that supports 18 chains and 35 DEXs. Thanks to the integration, users can swap from Base, Optimism, Polygon, Arbitrum, and 14 other chains to gain access to OGN, OGV and Origin’s OTokens.
Lastly, several wallets integrated OGN, OUSD, OGV, and OETH in October. Argent, Tangem, and Arculus now support Origin’s tokens and rebasing functions. For a full list of ecosystem integrations, visit our OETH and OUSD ecosystem pages.
In October, Origin Story and our partners advanced our efforts to make a significant impact on the rapidly developing NFT scene. Looking back over the year, we're excited to spotlight Origin’s unwavering dedication to innovation and forward momentum through some of our standout achievements, including:
These accomplishments provide a mere glimpse into the vast potential of NFTs and Origin's unique capacity to make meaningful contributions to the sector. As interest in real-world utility for NFTs increases, we’re excited to see what the future holds for non-fungible tokens and the infrastructure necessary to solve real world problems.
Stay tuned for more updates as we venture into November.
Check out the latest yield opportunities, staking updates, and tokenomics data for Origin’s tokens.
The fourth season of OGN staking is well underway and heading towards its conclusion set for this upcoming Saturday, November 3rd, 2023. As a quick reminder, this season featured boosted rewards for stakers, thanks to a grant of 500,000 OGN provided by the Origin Foundation. It's also important to note that staking for Season 4 is now closed, and no additional tokens can be staked.
As of the latest count, OGN has a circulating supply of 502,728,259 tokens. Season 4 is set to conclude with an impressive 69.4 million OGN staked, a clear testament to the confidence in the protocol's potential and the dedication of holders.
Origin DeFi Governance ended the month on a high note, with the first buyback of OGV with OETH fees completed on October 25th. During the first week of October, Origin DeFi Governance underwent its fourth inflation reduction, cutting emissions from 33.2M OGV per month to 16.8M per month.
This scheduled inflation reduction aims to limit the supply of OGV. As OTokens add increasing value for OGV stakers, emissions will continue to be replaced by protocol revenue. The next inflation reduction is scheduled for September 2024, with the final reduction happening in May 2026.
Also in October, Origin Ether hit an all-time high circulating supply of 34,200+ ETH. As shown by the OETH analytics page, protocol-owned OETH from our AMO strategy has been reduced. This is due to Origin’s diversification away from Curve, as more yield is now generated from Aura/Balancer and frxETH.
The month of October commenced with a dynamic Twitter Spaces event hosted by our Community Managers, Moises Sosa and Ricardo Quintero. This gathering allowed us to further strengthen our bonds with Origin’s Spanish community, underscoring our steadfast commitment to global expansion.
In the following weeks, Origin DeFi orchestrated an enlightening Twitter Spaces session featuring notable voices such as Sushi, Boba, Popcorn, and others. The discussion revolved around the challenges and opportunities of building in a bear market. Furthermore, Peter Gray from Origin joined DIA to contribute to their liquid staking dialogues season finale, shedding light on Origin Ether and its role in the DeFi landscape.
In our ongoing quest to reward and empower our community, we introduced the revamped Origin community rewards program powered by Wonder. And in a more recent development, we're excited to announce the inauguration of our brand-new Origin Merch Store. Community members can now engage in various tasks within the Origin Discord to earn points, which can then be exchanged for Origin swag.
As we persistently cultivate communities to extend Origin's global footprint, we’re in active pursuit of exceptional individuals to join our team as Community Managers. Currently, we have opportunities available for individuals to join us as Community Managers for the Vietnam and Dubai regions. This endeavor underscores our unwavering dedication to nurturing an expansive and inclusive Origin community on a global scale.
That’s all for October! We had a lot of important announcements drop last month –– if you’re a token holder, it may be worth diving deeper into some of our recent updates. For your convenience, we’ve dropped some of our favorite blog posts from October below. See you next month for November’s Token Holder Update!
Created by Vitalik Buterin, the Ethereum network is crypto’s most dominant smart contract platform. The network’s transition to proof-of-stake has ushered in a new era for the network.
Proof-of-stake allows anyone to participate in securing the network by staking 32 ETH. This ETH is staked to validators, which confirm new transactions.
Liquid staking services have since emerged to lower the staking barrier and encourage broader participation. With liquid staking, investors can deposit as little as 0.01 ETH to earn staking rewards. Liquid staking protocols issue liquid staking tokens (LSTs) to users, representing their staked capital and accrued rewards.
As a result, more than 25% of ETH’s total supply has been staked to the network. This figure is set to grow as demand continues to rise. Impressively, more than 10 million Ethereum has been staked since April 2023 alone.
Restaking has been introduced to broaden staking utility by allowing dapps and other networks to utilize this pool of staked assets.
Restaking involves the reuse of staked ETH across multiple networks simultaneously. More than $50B in ETH is currently securing the Ethereum network, making it highly resilient.
However, this is not the case with other protocols. Allowing novel projects to harness ETH’s pool of staked assets empowers builders to innovate faster on more secure foundations.
By extending ETH’s pool of assets, new protocols can benefit from enhanced crypto economic security without needing to launch their own validation services. Furthermore, this design enhances capital efficiency by allowing ETH stakers to use their assets in new ways that compound staking rewards.
For instance, validators can sell pooled security to protocols via restaking. Conversely, protocols can buy pooled security to bolster their products. This approach empowers other protocols to harness Ethereum’s security while delivering increased rewards for restakers.
Restaking on Ethereum is conducted via a series of smart contracts.
First, users deposit their already staked ETH via a restaking platform, such as EigenLayer. Aside from ETH, users can deposit LSTs and LP positions. Restaking platforms act as a bridge between Ethereum and other protocols.
Once restaked, this ETH takes on a dual role. The assets continue to secure Ethereum’s mainnet. At the same time, these assets can also extend their security to other protocols. Users that restake ETH can choose which protocols to secure, giving optionality of rewards to users.
Restakers receive rewards in exchange for providing their ETH to multiple networks. These rewards are largely derived from a share of protocol fees across participating projects. Importantly, these rewards are higher than the norm as restakers incur elevated risk by extending their ETH to multiple networks.
EigenLayer has pioneered Ethereum restaking since launching in June 2023. The platform has done tremendous work to cultivate a decentralized trust network that harnesses the power of ETH’s security backbone.
EigenLayer’s restaking suite has seen impressive adoption across the Ethereum ecosystem. The protocol boasts more than $8 billion in total value locked, illustrating the growing demand for restaking products.
Users can choose from a number of methods when restaking assets via EigenLayer:
Native restaking allows users to restake ETH directly on EigenLayer. This approach carries reduced risks for users.
LST restaking empowers liquid staking token holders to restake their LSTs. EigenLayer currently supports many of the space’s most popular LSTs – stETH, rETH, OETH, and others. Note that at the time of writing, LST deposits on EigenLayer have been paused.
It’s important to be mindful of the systemic risks that come with restaking. Specifically, restaking increases the risk of slashing. Slashing is used to protect network security by forfeiting staked assets that violate network rules. Restaking amplifies this risk as the same assets are staked across multiple networks with their own sets of rules.
Restaking can be a highly rewarding exercise. The following steps outline all the key info needed to begin your restaking journey.
A Web3 software wallet allows you to interact with protocols across DeFi. Metamask is the most widely used Web3 wallet in crypto, boasting millions of active users. Install Metamask as either a Chrome extension or mobile app by visiting the download page and following the prompts.
Once your wallet has been created, you can deposit assets to the ERC-20 address listed at the top of the home screen. If you’ve already staked ETH, simply deposit the LST you received. Alternatively, you can buy LSTs like OETH on decentralized exchanges.
Next, visit app.eigenlayer.xyz to begin the restaking process. The portal displays an overview of assets on EigenLayer, as well as your active positions.
Connect your wallet by selecting the button at the top right of the page.
Select the asset you would like to restake from the list provided. Currently, only native ETH staking deposits are enabled. While it is possible to restake ETH directly, this method is best suited for validators running their own nodes.
Choose your preferred liquid staking token and input the desired restaking amount.
Once you're happy with the asset and amount you’d like to restake, confirm the deposit on the page. Follow the prompts in your wallet to confirm the transaction.
You can monitor and withdraw your assets at any time by visiting the app portal.
While restaking offers many clear benefits, reusing the same pool of assets across multiple networks carries additional risks. Restakers can be at higher risk of slashing due to increased exposure. Additionally, users may face less liquidity, as it takes 7 days to withdraw restaked ETH to become liquid. For instant liquidity, users may choose to swap into a liquid restaking token (LRT), such as primeETH.
However, protocols like EigenLayer are constantly innovating their products to minimize these risks for users. By conducting thorough research, users can also mitigate their risk while enjoying restaking rewards.
What Is EigenLayer?
EigenLayer is a restaking platform that allows other protocols to harness the power and security of Ethereum staking.
Is Restaking Ethereum Safe?
Restaking carries higher risks than traditional ETH staking. This is because the same pool of staked assets is being used across multiple networks. However, using an established protocol like EigenLayer can reduce these risks while offering a safe and robust restaking experience.
How Does Restaking Ethereum Work?
Restaking connects protocols with Ethereum’s large capital base of staked assets. Users who hold ETH or liquid staking tokens (LSTs) can supply these assets to other protocols to bootstrap their network security. In return, restakers receive additional rewards from their holdings.
DeFi protocols are constantly innovating to offer users more dynamic instruments. Pendle Finance is a decentralized finance (DeFi) project pioneering yield tokenization on Ethereum, enabling users to trade yield and earn fixed yield on their assets.
More recently, Pendle Finance, launched by co-founder TN Lee, has gained billions of dollars in deposits from its liquid restaking (LRT) products. Users are able to tokenize yield on LRTs, earning them staking yield and EigenLayer points along the way. It can be a powerful way to earn extra yield while holding onto ownership of the underlying asset.
The platform’s Pendle Trade product allows users to take full advantage of its unique offering, while Pendle Earn offers users a more beginner-friendly UI.
Pendle is a dynamic Automated Market Maker (AMM) with a focus on yield bearing assets. Pendle assets function like bonds, carrying their own maturity dates. The novel protocol wraps underlying assets for use on the platform. For instance, OETH is converted to SY-OETH, but is still a token representing OETH.
This allows Pendle to split the asset into a principal token (PT) and yield bearing token (YT). Users can mint PT and YT by depositing any supported yield generating asset to the platform.
PT (principal tokens) can be bought at a discount to its backing collateral, allowing users to lock in future yields that are otherwise volatile. At maturity, PT can be redeemed for the full underlying token. This design empowers users to earn fixed yield by holding an asset’s PT and avoid disadvantages like time decaying yield.
Conversely, the Yield Token (YT) accrues yield generated by the underlying asset until maturity. After this point, the YT holds no value. As a result, users who believe that an asset’s yield will increase can bet on this by holding its YT on Pendle.
Users can interact with Pendle by connecting a Web3 wallet to the platform.
Pendle’s supported assets, interest rates, and other key metrics can be viewed by navigating to the Markets tab. Selecting a market allows you to mint or redeem underlying assets for PT and YT. Users can also swap between these tokens and the underlying assets.
In addition to holding PT and YT, users can also supply assets to Pendle’s liquidity pools to earn passive returns. Pendle’s liquidity pools pair principal tokens with their underlying assets, such as SY-OETH and PT-OETH.
As principal tokens reach parity with underlying assets upon maturity, Pendle’s pools pose minimal risk of impermanent loss. This means that users can harness Pendle pools to earn rewards from liquidity provision with far less risk than many other protocols.
Pendle’s native utility token, PENDLE, forms the backbone of the yield trading protocol. Users who provide liquidity to PENDLE earn incentives in addition to a share of trading fees.
Users can lock up PENDLE via the smart contract for up to two years. In exchange, holders receive vote-escrowed PENDLE (vePENDLE) which carries voting and economic power. vePENDLE holders govern the platform by voting on protocol decisions. At the same time, vePENDLE holders earn rewards from 3% of all yield accrued by YT on the platform.
Furthermore, holding vePENDLE boosts rewards and PENDLE incentives earned from liquidity provision by up to 250%. This novel design promotes decentralization while rewarding the Pendle community’s most loyal participants.
Pendle staking flow
Pendle is a robust platform with significant backing from industry leaders such as Binance.
The platform has been rigorously audited by six of crypto’s most respected firms to ensure its security. Additionally, all of Pendle’s smart contracts are open source. This means that anyone can monitor the codebase and flag potential issues.
That being said, there are more prevalent smart contract risks when using Pendle than simply staking ETH through a liquid staking token such as Lido or Origin. When it comes to asset safety, be sure to do your own research before deciding whether a protocol is up to your safety standards.
Pendle’s product suite offers DeFi users brand new ways to trade and leverage yield. The protocol’s introduction of standardized yield tokens creates novel opportunities for traders.
Additionally, supporters of yield bearing assets like OETH can further compound their returns with Pendle. Users can also take advantage of the platform’s native token to boost rewards.
Check out Pendle’s Super OETH market to discover how you can capitalize on Origin's Super OETH token on Base with Pendle.
