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dsETH

Diversified Staked Ethereum Index

The Diversified Staked Ethereum Index (dsETH) is an index token of the leading Ethereum liquid staking tokens.

About

Overview

The Diversified Staked Ethereum Index (dsETH) is an index token of the leading Ethereum liquid staking tokens. The index methodology weights the component tokens according to their degree of decentralization.

Methodology

The objective of the dsETH methodology is to give token holders diversified exposure to liquid staking tokens, with a weighting that favors decentralized liquid staking protocols as measured by the number of node operators as well as distribution of stake across node operators. To begin, constituents are equally weighted before adding a Node Operator Factor, which benefits staking protocols with more active node operators. An HHI (or Herfindahl-Hirschman Index) Factor is then added, which measures the concentration of stake and broader competition amongst active node operators within each protocol.

Token Inclusion Criteria:

Liquid staking tokens:

  • Available on the Ethereum blockchain
  • Minimum of $25m secondary market liquidity on Ethereum main net
  • Competitive APR relative to alternatives

Staking protocols:

  • Audited and reviewed by security professionals to determine that security best practices have been followed
  • In operation long enough for the decentralized finance community to arrive at a consensus regarding its safety
  • Is open source
  • Has Bug bounty program
  • Establishes and maintains client diversity amongst node operators

Other liquid staking tokens that meet these criteria can be added to the index over time. No one liquid staking token can exceed 50% of the index.

Maintenance

Rebalancing will be performed semi-annually or every 6 months in an effort to minimize exposure to secondary market pricing for liquid staking tokens before staking redemptions are enabled by the Shanghai update. The Index Coop will be responsible for providing updated weights for the pool at the beginning of each rebalance period, and once the rebalance period begins, swaps will be temporarily enabled in order for the pool to be appropriately arbitraged to the updated weighting. Rebalancing parameters may be revisited after the Shanghai update, including frequency and the pool’s default swap state.

Fees

Streaming fee: 0%

Mint fee: 0%

Redeem fee: 0%

Risks

The following risks may apply to this digital asset: full or partial loss of digital assets due to technical hacks, exploits, or failures that may occur at the protocol or smart contract level of a product’s infrastructure; restrictions placed on the digital assets by regulatory authorities in the end users region; loss of digital assets or loss of access to the digital assets due to decisions made by centralized providers of the underlying assets; full or partial loss of digital assets through standard product operations which can be hampered by unexpected market conditions; full or partial loss of digital assets due to changes to underlying product assets made by the originating protocols; full or partial loss of digital assets due to volatility, correlation, value at risk, and contagion risks; underperformance of digital assets due to deviation from intended methodology; full or partial loss of digital assets due to the variability and potential volatility of the yield source.

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