unshETH is celebrating the launch of our v2 product and expansion to BNB Chain.
unshETH v2 is a major technological upgrade that paves the way for unshETH to be a brand new DeFi primitive. As the first omnichain diversified index of staked ETH, unshETH expands the Ethereum staking ecosystem and lets users access deep liquidity from anywhere. With our launch on BNB Chain, users can now use assets like Binance-pegged ETH, USDT, and BNB to directly mint a diversified index of staked ETH in a single transaction, powered by our integrations with ecosystem partners LayerZero and Stargate. In addition, we have converted unshETH and USH into omnichain fungible tokens (OFTs) that can be seamlessly bridged with no fee between Mainnet ETH and BNB chain.
Why has unshETH expanded to BNB Chain?
In short, the decision to launch on BNB Chain was driven by the size of its user base - they currently have ~1.3M daily active users (DAU). With the launch of unshETH v2 on BNB Chain, over $1 billion of unstaked ETH and millions of users will be integrated into the Ethereum ecosystem.
At unshETH, we are committed to providing the best staked ETH yield to users, and in order to achieve this, we must have access to the largest possible user base.
Our team’s vision is to make unshETH universally accessible for staked ETH, available on every chain and protocol. The launch of v2 on BNB Chain is a significant step forward towards achieving that goal.
What does v2 bring unshETH users?
The launch of unshETH v2 is expected to significantly expand the functionality of unshETH while simultaneously boosting decentralization, yield, and security. unshETH v2 is a diversified, liquid staked ETH index product that operates omnichain, providing isolated risk baskets. It also enables governance to set target weights and risk caps for each LSD in the unshETH index, as well as a fee switch. From a security standpoint, it provides multisig and timelocks for all functions critical to user funds. Moreover, It is modular, enabling the first post-Shanghai LSDfi product called vdAMM.
The vdAMM product is designed to convert unshETH into an AMM pool, thereby unlocking access to deep liquidity in unshETH for swapping between different LSDs and ETH, with the fees accruing to unshETH holders. This innovative feature represents an additional source of real yield for unshETH holders.
By simply holding unshETH on BNB Chain, users can earn ETH staking yield and vdAMM swap fees with ease. In addition, they can earn extra USH incentives by staking USH or staking unshETH, and providing USH & BNB Chain liquidity, which enables them to earn USH rewards.
While building v2, our goal was to maintain unshETH’s LSD backing on ETH Mainnet, while also enabling cross-chain composability. As a result, users can now acquire unshETH on BNB chain by either bridging previously minted ETH from ETH Mainnet, or by directly minting it on BNB Chain. To accomplish this, we have implemented a unique two-way cross-chain bridge with a simple user interface, making it easy for users to engage with the unshETH ecosystem.
From the user’s perspective, it will appear as though they minted unshETH natively on BNB Chain with their ETH, USDT, or BNB assets. In the background, the smart contracts are doing the following:
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Converting the user’s asset on BNB Chain to USDT, which is the primary liquid bridgeable asset, using a DEX on BNB Chain.
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Transferring the USDT from BNB Chain to ETH Mainnet using the Stargate Bridge.
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Using the USDT asset to buy or mint an LSD on Mainnet ETH.
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Depositing that LSD into the unshETH vault to mint unshETH tokens.
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Transferring the unshETH token, which is now an OFT powered by LayerZero, from ETH Mainnet to the user’s address on BNB Chain.
This ensures that all a user had to do was deposit their BNB, USDT, or ETH on BNB Chain and the two-way bridge would handle the transfer of the user’s respective asset to ETH Mainnet, and the minted unshETH back to BNB Chain.. All of this happens in one transaction. We are the first protocol to do this at scale.
Product Updates with the arrival of v2
To bootstrap liquidity for unshETH on both ETH and BNB Chain, we have launched a 7M USH (~$3.5M at current prices) incentive program for the next month. The incentives are from unclaimed airdrops during unshETH v1’s first phase of growth. Of these incentives, 80% are allocated for ETH Mainnet and 20% for BNB Chain. We have reduced the new USH emissions rate by 60-70% compared to the previous 60-day liquidity bootstrapping period for unshETH v1.
To improve the user experience for those new to the ETH staking and LSD ecosystem starting from unstaked ETH, we have introduced a new smart router that decides:
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Which LSD to deposit into unshETH based on which LSD is furthest from its target weight in the unshETH basket
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Whether to buy that LSD on a DEX, or mint it directly by depositing ETH, based on which results in the most amount of unshETH minted for the end user.
Now users don’t need to worry about which LSD to deposit into unshETH, or even whether to mint or buy it. Even in the case of BNB users executing a cross chain unshETH mint, the smart router picks which path to take up-front and passes along the necessary pathId and slippage parameters in an encoded message using LayerZero messaging technology. This ensures BNB Chain users get the same optimized user experience as ETH Mainnet users.
Our unshETH v2 has undergone a thorough audit by Certik. The full report is available here. The ownership of unshETH has been renounced, ensuring that only the LSD vault contracts on ETH Mainnet have the ability to mint new unshETH tokens in accordance with the smart contract logic. This more effectively removes a key centralization risk to the project. Furthermore, users will not be required to perform any manual migrations in the future. In the case of a protocol upgrade, the vault contract can seamlessly transfer all assets and minter ability to a new vault contract, with a successful multisig + timelocked proposal.
As a security measure, deposits made into unshETH v2 are currently locked for withdrawals into underlying LSD assets until approximately 1 week after the network-level Shanghai upgrade. unshETH v2 withdrawals will be available after April 20th, 2023.
Our next two roadmap items are scheduled to launch in the coming weeks:
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Launching vdAMM - This feature will enable users to easily swap between LSDs in the vault and will accrue fees to unshETH holders.
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Launching vdUSH and governance - We will be revamping the USH and USH liquidity token staking model into a locked staking system that earns vdUSH, which will be the primary governance token. This token will enable unshETH holders to set risk parameters for the unshETH index, directing incentives to pools and new chains, and earn boosted USH and partner incentives emissions.
Partnerships with LayerZero and Stargate
As part of our ongoing mission to provide easy and accessible staking solutions to users on all chains and protocols, we began investigating various options by conducting technical due diligence with all the major bridge and cross-chain messaging protocols) to connect our native tokens and stable coins to BNB Chain. After careful consideration, we decided to work with LayerZero and Stargate.
In addition to being user-friendly, LayerZero offers a perfect balance of speed, simplicity, and liquidity. They provided their expertise and support to our dev team to ensure our bridges function seamlessly and securely for our users.
Our partnership with Stargate enables us to facilitate minting of our omnichain staked ETH index product, unshETH. This integration will allow users to easily transfer assets from BNB Chain to ETH Mainnet, opening up access to a broad range of users.
We anticipate that the benefits derived from these partnerships will be apparent not only to our own team but also to our users on BNB Chain and any additional chains we launch in the future.
Conclusion
We understand the far-reaching implications of our work as defining the future of a powerful technology. Our vision for unshETH is to become the universal standard for staked ETH. We want to make staking accessible to the largest number of users, therefore, making unshETH usable on every chain and protocol is key to achieving that aim. This launch, in collaboration with our new partners, is a quantum leap towards achieving that goal.
About unshETH
unshETH is a novel DeFi primitive that aims to promote validator decentralization by fostering competition among Liquid Staking Derivatives (LSDs) in order to deliver optimal yields for users. The platform functions as a diversified index for staked ETH, allowing users to mint and redeem unshETH tokens by depositing supported LSDs, such as wstETH, cbETH, rETH, and sfrxETH. By being an omnichain token, unshETH can be easily transferred across chains like ETH Mainnet and BNB chain, significantly expanding its user base. The platform is also equipped with a governance token called USH, which enables locked stakers to have a say in index composition, fee structures, multichain expansion, and partner incentives. As a result, unshETH serves as a multifaceted DeFi solution that provides staking ETH yield and swap fees (post vdAMM launch) through a single, accessible ERC-20 token.
To learn more about unshETH and stay up to date with the protocol you can check us out on our official website, Twitter, Discord, and Dune Analytics.
About LayerZero
LayerZero is the leading blockchain messaging protocol. LayerZero's advanced messaging infrastructure seamlessly connects over 30 blockchains and facilitates transparent and secure cross-chain messaging from one easy-to-use interface. Developers building on LayerZero can create interoperable, omnichain dApps, which will lead to the establishment of a unified digital asset ecosystem. You can learn more about LayerZero here.
About Stargate
Stargate is a fully composable liquidity transport protocol that lives at the heart of Omnichain DeFi. Users & dApps can transfer native assets cross-chain while accessing the protocol’s unified liquidity pools with instant guaranteed finality. You can learn more about Stargate here.