wstETH+ is a yield bearing ETH derivative token that increases in value relative to ETH.
Polygon Contract Address: 0x275d5F9ECD1759395F0F43253904b47319b57b59.
Value appreciation of wstETH+ occurs via two separate layers that combine together to multiply yield.
1. The first yield producing layer: Ethereum Network Staking produces about 3% yield a year and is managed by the Lido Protocol and DAO.
ETH used to purchase wstETH is staked by Lido to secure the Ethereum Network. ETH tokens gained from staking rewards are then used to back the value of wstETH, which steadily increases the value of wstETH over time compared to ETH.
Learn more about wstETH at Lido.fi.
2. The second yield producing layer: Deflationary Token Wrapper + Compounded Fees from burned liquidity pools has historically produced about 20% yield per year and is managed by the StarSeeds Protocol and DAO via the wstETH+ token.
wstETH+ is a deflationary token with a 0.1% burn on transfer & a 0.02% tax-on-transfer. As wstETH+ tokens are traded by users and also by arbitrage trading bots, the circulating supply of wstETH+ decreases, meanwhile, the amount of wstETH backing the wstETH+ increases due to permanently auto-compounding wstETH/wstETH+ liquidity pools.
The actual yield produced by this layer of mechanisms varies widely based on arbitrage trade volume caused by fluctuations in the value of ETH and other tokens that are paired to wstETH+ as well as trade volume from users.
Unlike wstETH, which has near-zero price impact related to trade volume, wstETH+’s value does fluctuate slightly as it is traded.
Due to the curve-style stableswap algorithms used in wstETH+ liquidity pools, wstETH+ price impact from trade volume is reduced by about 90% compared to standard V2 LPs. As a result, wstETH+ is more volatile then ETH or wstETH.
wstETH’s higher volatility generates additional arbitrage trade volume for tokens paired to wstETH+.
The combination of increased trade volume and higher yield makes wstETH+ a better choice for many long-term liquidity providers.
wstETH+ Logic, Contracts and Security.
wstETH+ token deployed via DodoX token factory. View DodoX Security Audits here.
Maximum supply of 100 wstETH+.
After being deployed to the Polygon chain, 100% of wstETH+ tokens were deposited into single sided and pegged DodoX liquidity pools. 100% of LP receipt tokens generated from initial wstETH+ liquidity were burned.
By depositing 100% of wstETH+ into ETH based liquidity pools and then burning the generated LP Tokens, StarSeeds Protocol has programatically secured all wstETH+ in circulation with a equivalent amount of ETH.
wstETH+ gained from wstETH+’s 0.02% tax-on-transfer fee is paired with other yield bearing tokens in autocompounding liquidity pools in order to increase wstETH+’s arbitrage based trade volume, which automatically appreciates the value of wstETH+ over time.
List of initially deployed wstETH+ liquidity pools:
These 11 liquidity pools are configured to increase the depth of wstETH+ liquidity in stages as the value of wstETH+ appreciates compared to wstETH.
Increased market depth corresponds to a decrease in price impact from trading, making wstETH+ less volatile as its value increases perportionate to wstETH.
wstETH+ Risks and Disadvantages.
wstETH+ relies on the security of Ethereum, Polygon, wstETH, and DodoX token and liquidity pool factory contracts. Contract failure or exploitation of underlying blockchains or contracts can result in loss, including total loss, for wstETH+ holders.
The possibility of contract failure or exploitation has been mitigated as much as reasonably possible, with numerous audits and bug bounty programs for each of the underlying blockchains and contracts that wstETH+ relies upon.
wstETH+ holds one major disadvantage compared to ETH/wstETH due to wstETH+’s volatility. Which can create temporary drawdown for users. As such holding wstETH for short to medium durations can result in some amount of loss or decreased gain compared to holding WETH/wstETH for the same duration of time.
Based on data from ETH-SS, a deflationary yield producing token wrapper for WETH, a minimum holding period of 6 months will drastically reduce the chance of drawdown for wstETH+ holders.
Polygon Contract Address: 0x275d5F9ECD1759395F0F43253904b47319b57b59.