Unique Selling Points

Deep Liquidity, Peg Stability, Optimum Yield and Native ETH Restaking

Minimum Supply and Liquidity Ratio

Most LSTs and stablecoin protocols have two ways of generating liquidity: emitting tokens to incentivize mercenary liquidity, or bribe payments for greater native DEX emissions being directed to your pool. The first results in dilution for any token holders who are not also liquidity providers - damaging the composability due to inflationary pressures. The second, while less dilutive to the token holdings, dilutes revenue. restETH solves this. Via our Algorithmic Collateral Management (ACM) system, whenever someone deposits into Rest and mints restETH, 90% of their deposited assets get restaked on EigenLayer automatically, and the other 10% goes into liquidity. This mechanism exists for two purposes:

1. The assets create a “soft peg” between liquidity and restETH circulating supply; at $25M TVL, the protocol-controlled liquidity would be $2.5M. With a lesser dependency on emissions or bribes compared to competitors, we’ll be able to have stronger liquidity: most LSTs have much less favorable supply to liquidity ratios.

2. We can use these assets to execute arbitrage. Since the liquidity is generated by minting restETH, those assets are controlled by the ACM, in a similar way to protocols managing their own protocol owned liquidity. That means that whenever the restETH peg deviates from fair value, the ACM rebalances the peg using a combination of buybacks from liquidity assets in another pool, or minting and selling tokens before burning an equal quantity from the liquidity position.

Thanks to the minimum supply/liquidity ratio maintained by the ACM, and the active peg-defending arbitrage, restETH should maintain a more consistent price relative to its competitors. These features make restETH the LST best suited for DeFi.

Superior Yield Generation

Backtested over a year of volatility on several different LSTs, we’ve approximated an additional 4% APR can be generated on ETH staked with Rest Finance, with that yield being generated by our constant peg protection. We’ve identified an average frequency of 9 price deviations of greater than 1% per week, on both the upside and downside and on liquidity pools greater than $2.5M in buy-side liquidity.

As the liquidity on stable pairs is concentrated, the great deal of buy side liquidity means there’s a great deal of room to sell overpriced tokens and generate a profit. On the downside, sell-side liquidity isn’t always balanced with buy-side—for some LST examples, the sell-side liquidity far exceeded the buy-side, and for others, the opposite. Thanks to the ACM, restETH pools should be relatively even on both buy-side and sell-side, creating profitable opportunities on both ends. This is explained with greater detail in the whitepaper.

Increased Restaking Capacity

While EigenLayer themselves throttle demand for restaking various LSTs, they do not do so for natively staked ETH. As of today, restETH will be the only Liquid Restaked Token (LRT) that facilitates the staking of native ether. We’ve partnered with a widely distributed set of validator companies to mitigate centralization and slashing risks for the protocol. With EigenLayer caps often filling rapidly, many other protocols have focused exclusively on building “queue systems” without tackling the more difficult implementation of native restaking.