SECTION 1: APPLICANT INFORMATION
Applicant Name:
unshETH Core Team
Project Name:
unshETH
Project Description
The unshETH protocol is a novel DeFi primitive that promotes validator decentralization by fostering competition among ETH liquid staking protocols with the aim of bringing the best ETH staking experience to millions of users. The unshETH Ether token represents a diversified liquid staked ETH basket that earns both Ethereum staking rewards and swap fees generated by the unshETH vdAMM, all wrapped in a single ERC-20 token. This innovative token/protocol design unlocks the highest “real yield” opportunity for DeFi users. unshETH’s native real yield that users earn simply by holding the token is:
unshETH Real Yield APR = ETH Staking APR + Swap Fee APR + Mint/Redeem Fee APR
unshETH Ether is also an Omnichain token that can be transferred seamlessly across ETH Mainnet, BNB Chain, and Arbitrum via LayerZero. This means that just by holding unshETH, on Arbitrum or any other chain, a user will experience higher yields than natively staking or holding standard Ethereum liquid staking tokens.
The successful launch of the unshETH protocol, and expansion across multiple networks, has been beneficial not only to users but also to liquid staking protocols themselves. By participating/collaborating with unshETH LSD protocols are able to tap into the most incentive-efficient method of acquiring “sticky” TVL and capital-efficient on-chain liquidity currently available in Defi.
Team Members and Qualifications:
Alta1r - Founder
Wagmi - Protocol Lead
Medusa - BD Lead
Project Links:
Contact Information
TG:
EIP_Medusa, littlefishwagmi, EIP_Alta1r
Twitter:
@ wagmi33, @ medusa459, @ EIP_Alta1r
Email:
wagmi@unsheth.xyz, medusa@unsheth.xyz, alta1r@unsheth.xyz
Do You Acknowledge That Your Team Will Be Subject to a KYC Requirement?:
Yes
SECTION 2: GRANT INFORMATION
Detail the requested grant size, provide an overview of the budget breakdown, specify the funding and contract addresses, and describe any matching funds if relevant.
Requested Grant Size:
375,000 ARB
Grant Breakdown:
This grant will be used to enhance the unshETH protocol’s existing incentive programs on the Arbitrum network. To date $300,000 worth of USH tokens have been allocated for incentives on Arbitrum, to good effect. The ARB tokens requested now will be allocated to the most highly effective current incentive programs, such as farm rewards for single sided unshETH, pool rewards on Arbitrum DEXs’ for liquidity for unshETH-ETH, as well to new high-value liquidity pool rewards and new collaborative incentive programs with partner protocols to encourage adoption of unshETH and advance the nascent LSDfi ecosystem on Arbitrum. The unshETH protocol will allocate an additional 1,000,000 USH tokens for use as incentives on Arbitrum, to be distributed alongside the ARB token grant.
The proposed incentive program can be broken down into three categories:
- Incentives distributed via the unshETH protocol dAPP
- Incentives directed to single-sided unshETH dAPP farm. When first launched on Arbitrum, unshETH quickly gained $3m staked ETH tvl bridged into Arbitrum via incentivizing this farm. This TVL has remained “sticky” and is now the protocol’s most incentive-efficient program. It is believed that dual ARB and USH incentives will result in $5-10M in interest-bearing ETH tvl being bridged into the Arbitrum ecosystem and deposited here.
- Incentives directed to unshETH dAPP farms for other unshETH protocol offerings. Including reshETH, vdUSH, and future deployments.
- Incentives distributed via DEX protocols for liquidity mining
- Incentives directed to unshETH-ETH liquidity providers. It is believed that dual ARB and USH incentives will result in $3M in liquidity across this pair being made available to traders on Arbitrum (removing the need to pay high gas fees to bridge from mainnet) and enable the next round of unshETH token integrations into partner protocols which require on-chain liquidity.
- Incentivizes directed to a net-new unshETH-ARB liquidity pool. Part of unshETH’s commitment to supporting the Arbitrum ecosystem.
- Incentives directed to various net-new unshETH-[gov_token] pools in collaboration with ecosystem partner protocols to establish unshETH as a performant base layer asset for liquidity on Arbitrum.
- Incentives distributed via current and future non-dex partner protocols dAPPs
- These incentives will enable increased unshETH-based Defi utility on Arbitrum.
- Incentivizes directed to lending protocols (borrow against unshETH collateral, lend unshETH).
- Incentivizes directed to perpetuals and other derivatives protocols (open leverage positions with unshETH collateral):
| Distribution Method | Total ARB | Total USH | Split |
|---|---|---|---|
| Incentives distributed via the unshETH protocol dAPP | 125,000 | 333,333 | 1/3 |
| Incentives distributed via DEX protocols for liquidity mining | 125,000 | 333,333 | 1/3 |
| Incentives distributed via current and future non-dex partner protocols dAPPs | 125,000 | 333,333 | 1/3 |
Funding Address:
Funding Address Characteristics:
2/3 Multisig
Contract Addresses:
TBD
SECTION 3: GRANT OBJECTIVES AND EXECUTION
Objectives:
- Grow unshETH on Arbitrum using our existing liquidity incentive programs
- Bring new LSTs that haven’t launched on Arbitrum on to the network
- Unlock the next cohort of Arbitrum ecosystem protocol integrations via increased liquidity and availability
- Embrace the use of unshETH as a core DeFi primitive across the Arbitrum ecosystem, replacing non-yield bearing ETH
Key Performance Indicators (KPIs):
| KPI | Success |
|---|---|
| Increased unshETH ETH tokens bridged and circulating on Arbitrum | >$10M total unshETH ETH value bridged to Arbitrum |
| Increased unshETH-paired liquidity on Arbitrum dexes | >$3M total unshETH-paired liquidity on Arbitrum |
| Onboard new LSTs to Arbitrum | Onboard 1 New LST to Arbitrum. This will be measured by adding one or more new LST to the unshETH basket |
| Integrations with Partner Protocols on the Arbitrum Network | Partner with 4+ lending protocols on Arbitrum to use unshETH as a collateral and borrow asset. |
| Accelerate the next stage of LSDfi innovation on the Arbitrum Network | Assist GTM strategy and execution of 3 net-new LSDfi protocols to the Arbitrum Ecosystem, integrating or building on unshETH protocol infrastructure/assets |
How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?:
- Bringing LSTs to Arbitrum
unshETH has played a pivotal role in bringing Liquidity Staking Tokens (LSTs) to the Arbitrum Ecosystem. Starting in Q2 2023, unshETH successfully facilitated the integration of Swell’s swETH and Ankr’s ankrETH into the Arbitrum ecosystem, allowing millions of users to access these assets for the first time. Building upon these achievements, unshETH is poised to launch Stader’s ETHx on the platform just two months after its launch. This deployment, scheduled in the upcoming weeks, will make ETHx readily available to Arbitrums vast user base, extending its reach to millions of Arbitrum users.
Update 10/4: It has been exciting to see that since unshETH published this proposal there has been a notable increase in bridging and usage of unshETH ETH on Arbitrum. Over the past week the TVL of unshETH on Arbitrum has increased by over $1 million, hitting an all-time high, and the percentage of all unshETH ETH being held on Arbitrum has also hit an all-time high.
- Growing the Arbitrum User Base
unshETH is dedicated to harnessing the incentives available to us in the most effective manner, with the goal of expanding the user base within the Arbitrum ecosystem. Since the launch of unshETH on Arbitrum, the protocol successfully accrued over $1 million in on-chain liquidity over a span of four months. While this initial liquidity growth showed promise, it eventually reached a point of stagnation due to diminishing rewards. However, it is worth noting that once users have experienced the remarkable power and efficiency of the Arbitrum ecosystem, they have been inclined to remain within it rather than returning to Ethereum or bridging to other networks.
We hold a strong belief that by offering additional incentives, we can not only bolster the liquidity of unshETH but also attract more users and foster sustained sticky liquidity within the Arbitrum ecosystem.
Additionally, unshETH has been a proponent of driving community engagement within the Arbitrum ecosystem. A list of our twitter spaces and events with Arbitrum ecosystem partners is listed below:
Twitter Spaces - Our Spaces with Arbitrum Received over 1,500 live listeners
- Arbitrum Happy Hour
- unshETH x Arbitrum Happy Hour
- Arbitrum Happy Hour with unshETH
- Arbitrum Happy Hour
Events - Our in person events brought Arbitrum enthusiasts together across the globe
- unshETH Sponsors ETH Waterloo
- ETHCC Paris w Vertex
- Happy Hour in NYC with Savvy
For more information on these Spaces and IRL events see additional links here
- Replacing ETH with yield bearing staked ETH throughout Arbitrum Defi through unsETH
While unshETH Ether is the second most liquid form of staked ETH on Arbitrum after Lido wstETH, most ETH on Arbitrum is not natively yield-bearing. We believe that with this grant, we can increase the proportion of ETH on Arbitrum that is staked and yield-bearing. Furthermore, with the recent deployment of our first price-oracle, developed by DIA specifically for Arbitrum, we aspire to diversify the asset offerings available to Arbitrum users, enriching their experience within the ecosystem. Combined with the fact that a significant portion of our ARB grant would be used to incentivize partner protocols, as well as our matching the grant with 1M USH tokens, we believe this will result in a rising tide that lifts all boats, as using other Defi protocols on Arbitrum such as DEXs and lending protocols on Arbitrum becomes more attractive.
- Increasing ARB liquidity
As part of growing unshETH, we not only hope to bring users to the Arbitrum ecosystem but increase ARB liquidity. Through incentivising the unshETH-ARB pair we aim to increase ARB liquidity for users in the Arbitrum ecosystem. We believe through this grant we are not only encouraging greater participation but also enhancing the overall liquidity and stability of the complete ecosystem. This, in turn, will spur further adoption of Arbitrum-based solutions.
Justification for the size of the grant:
The unshETH core team identified the grant request size proposed here after reviewing and analyzing it’s past past incentives programs. From that review a plan for the most efficacious future incentive program, enabled by this grant and a further allocation of 1,000,000 USH tokens, was derived. We believe that the projected total impact for Arbitrum Defi is well worth it.
For reference, our previous liquidity mining programs:
-
BSC: ~$300K in USH token incentives distributed to grow unshETH TVL over 6 months.
-
Arbitrum: ~$300K in USH token incentives spent over last 4 months.
We believe strongly that the similarly sized grant requested in this proposal will supercharge growth further and enable deeper integration in the Arbitrum ecosystem over the next 4 month. It’s our understanding that based on the recommended guidelines for grant proposals and our history of achieving $4M in TVL and >4 months live on Arbitrum, the maximum unshETH protocol would qualify for is a 750,000 ARB token grant. We believe maximum per-token effectiveness for our incentive program sits at a much lower grant amount of 375,000 tokens.
Execution Strategy:
The funds will be handled by unshETH’s core team to provide incentives as described earlier. To recap, the rewards will be distributed through 3 main channels:
-
Farm rewards for unshETH ETH staking via the unshETH protocol
-
Pool rewards on Arbitrum DEXs for unshETH-ETH liquidity and other pools required to support expanded liquidity availability and integrations.
-
Rewards emitted via partner protocols on Arbitrum to bootstrap and/or accelerate new and exciting integrations
-
Planned and existing partnerships:
1. Lending and LSDfi: Pendle, Savvy, Dolomite, Abracadabra, Rodeo, Timeswap, Gravita, Equilibrium
2. Perpetuals: Unidex, GMX v2, HMX, Vertex
3. DEX’s: Camelot, Trader Joe, Arrakis, Pancakeswap, Balancer/Aura
Grant Timeline:
Grants will be used within 4 months
Do you accept the funding of your grant streamed linearly for the duration of your grant proposal, and that the multisig holds the power to halt your stream?
Yes
SECTION 4: PROTOCOL DETAILS
Provide details about the Arbitrum protocol requirements relevant to the grant. This information ensures that the applicant is aligned with the technical specifications and commitments of the grant.
Is the Protocol Native to Arbitrum?:
unshETH is multichain and bridged to Arbitrum via LayerZero
On what other networks is the protocol deployed?:
Ethereum Mainnet, BNB Chain
What date did you deploy on Arbitrum?:
May 16th, 2023
Protocol Performance (since launching on Arbitrum):
Overall ETH Staked TVL: ~$10-30M across all networks
Current ETH Staked TVL: ~$10M across all networks
Avg unshETH trading volume: $200-300k/day
unshETH on Arbitrum has been a great success and created excitement and sticky liquidity for our users on the network
Total TVL on Arbitrum: $3-5M
unshETH Bridged to Arbitrum: $2.5-3.5M
unshETH Arbitrum DEX Liquidity: $500K-$1M
vdUSH on Arbitrum: $100-200K
USH Holders: 4,187
unshETH Ether holders: 5600
Protocol Roadmap:
Developing deep, sticky liquidity on Arbitrum is a key strategic initiative in our project roadmap going forward. Additionally we aim to launch unshETH as the base pair for partner projects on Arbitrum ecosystem partners. We’ve recently launched Project Sentience Phase 1 and will continue our rollout over the coming weeks to strengthen our commitment to validator decentralization. Read more here: Link
Audit History:
SECTION 5: Data and Reporting
Is your team prepared to create Dune Dashboards for your incentive program?:
Yes. unshETH has an existing dune dashboard for tracking incentive programs. It will be updated with a dedicated section to track and report relevant KPIs as part of the usage of incentives from this grant. The existing dune dashboard can be found here: https://dune.com/unsheth/unshethxyz
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread?
Our team will provide reporting on the progress of achieving our KPIs on the Arbitrum Forum Thread.
Does your team acknowledge that failure to comply with any of the above requests can result in the halting of the program’s funding stream?:
Yes
