Get ready – the ARM is set to open up its ETH vault to external liquidity providers!
The Automated Redemption Manager presents a unique opportunity for liquidity providers to earn passive ETH yield on a single-asset vault. Thanks to its unique design, the ARM offers higher yields than AMM liquidity provision, zero impermanent loss, and an extremely low risk profile.
Since December 2023, Origin has been the exclusive liquidity provider of ETH to the ARM stETH Redemption Vault, which routes liquidity to the stETH/ETH ARM pool. During this time, we've optimized the pool's efficiency, ensuring that the ARM can generate consistent yield with minimal risk.
Now, we are preparing to open this opportunity to the public, inviting external liquidity providers to participate. Having earned a daily average APY above 7%, the Automated Redemption Manager presents a compelling, stable yield opportunity for ETH holders looking to earn higher yield with comparable or lower risk than holding LSTs.
The ARM’s stETH Redemption Vault opens to the public at 12 pm EST on 10/23.
This week, the stETH Redemption Vault will be added to the Origin Dapp. The vault routes ETH liquidity to the ARM’s stETH/ETH pool, earning passive, low-risk yield for those who deposit into the vault. Since the ARM is integrated with 1inch and CoWSwap, LPs have a stable source of trading volume without relying on the Origin Dapp. Let’s take a look at how the stETH Redemption Vault earns yield, and how it maintains its low risk profile.
How it works: The stETH Redemption Vault lets users deposit ETH to the stETH/ETH ARM pool and earn passive yield. In the background, the ARM purchases stETH at a discount from the market, using structural advantages to acquire stETH at the widest spread possible at any given time. The ARM then sends stETH to the Lido redemption queue, redeeming stETH for ETH at a 1:1 basis. Once redeemed, the newly acquired ETH is sent back to the stETH Redemption Vault to repeat the cycle.
Since the ARM deposits stETH to Lido’s redemption queue, liquidity cycles through the ARM in a predictable manner. While users will be able to withdraw funds from the stETH Redemption Vault on-demand the majority of the time, sometimes users may need to wait for stETH to be redeemed for sufficient liquidity. The amount of available liquidity can be monitored on the ARM analytics page, which shows the predictable cycle of liquidity for LPs. It typically takes 1 day to receive ETH from Lido’s redemption queue, but redemptions may take several days under abnormal market conditions.
Beyond providing a new yield opportunity for ETH holders, opening up liquidity provision on the Automated Redemption Manager enables us to grow the product to become a core piece of Ethereum’s liquid staking ecosystem. The ARM is already one of the top contracts by stETH redemption volume, and we aim to make the product the de facto route for instant liquidity on Lido stETH.
In addition to delivering a new yield opportunity for liquidity providers, the ARM also benefits the $OGN DAO. A portion of the fees generated by the ARM accrue to the DAO, boosting protocol-owned value and creating a new revenue stream for the DAO. As the ARM scales, the fees flowing back to the Origin DAO will grow in tandem, reinforcing OGN’s position as a key value accrual token in Ethereum’s liquid staking ecosystem.
The ARM’s highly efficient design allows it to win trades on DEX aggregators without relying on the deepest liquidity. The ARM has already processed more than $500 million in volume from its stETH/ETH pool, despite having just $2 million in the liquidity pool. As the pool’s liquidity grows with stETH Redemption Vault deposits, the ARM will continue winning more stETH-to-ETH swaps across DeFi.
As we prepare for launch, we're excited to see the ARM continue to capture a substantial share of stETH volume. With its efficient design and proven performance, the ARM has already made an impact on the stETH-to-ETH redemption market.
By depositing ETH to the stETH Redemption Vault, liquidity providers are presented with a unique opportunity. Liquidity provision on the ARM is compelling due to its single-asset (ETH) design and higher yields compared to holding LSTs or providing liquidity on popular AMMs. As LPs join the ARM, we expect even greater adoption and continued growth in trading volume. Stay tuned – to be the first to know when deposits open, be sure to join us in Discord and follow us on X.
