Origin Ether entered the liquid staking market 10 months ago, offering a novel LST aggregation mechanism to boost liquid staking APYs. OETH has grown to nearly $200 million in total value locked, exceeding liquidity requirements for various DeFi integrations.
Over the last few months, we’ve validated that composability is a major catalyst for OETH adoption. Integrations like Pendle and EigenLayer have increased Origin Ether’s TVL by tens of millions of dollars, offering users increased optionality for earning yield on OETH.
As such, Origin DeFi Governance (OGV) stakers have passed a proposal to simplify Origin Ether’s design to optimize for new ecosystem integrations. Operating as a true liquid staking token, the simplification expands OETH’s total addressable market. This invariably translates to added value for veOGV holders, who earn a share of revenue generated by the protocol.
This marks an exciting new chapter of OETH composability, unlocking integrations that were previously out of reach. Let’s delve into Origin Ether’s upcoming design changes and what you can expect moving forward.
The most significant change to Origin Ether will be support for Beacon Chain staking. Direct staking will use Distributed Validator Technology (DVT) to increase fault tolerance, decreasing potential slashing risks for holders.
These design changes will make Origin Ether more integration-friendly. Prior to this upgrade, OETH was only as strong as the LSTs that backed it. As a true LST, OETH will be able to better control its risk profile, opening the floodgates for new integrations and utility within DeFi.
In its current design as an LST aggregator, OETH earns yield from a basket of LSTs and audited DeFi strategies. LSTs will soon be divested from the OETH vault, and ETH will be staked directly to the Beacon Chain. To enhance yield generation and stabilize Origin Ether’s ETH peg, ETH will also be allocated to the OETH/ETH Curve pool through Origin’s Curve AMO.
In order to become a superior alternative to other LSTs on the market, Origin Ether will need to earn competitive yield while keeping a tight peg to ether. OETH’s AMO (Algorithmic Market Operations) strategy achieves both of these goals, providing an extremely capital efficient process for earning LP yield while offering low slippage trades between ETH and OETH.
The lion’s share of the OETH yield premium is already earned from Origin’s AMO, which will continue once Origin Ether transitions to its new design. Looking forward, there are opportunities for Origin to expand its AMO to other ecosystems, further strengthening Origin Ether’s peg and earnings potential.
To begin Origin Ether’s transition from yield aggregator to LST, minting OETH with liquid staking tokens has been disabled. Strategists have begun responsibly divesting LST collateral, optimizing for minimum market impact on stETH, rETH, and frxETH.
As these LSTs are divested, ETH proceeds will be allocated to the highest earning strategy before being gradually staked directly to the Beacon Chain. We’ve begun work on choosing a solution for Beacon Chain staking that implements Distributed Validator Technology (DVT) to increase fault tolerance and aid in Ethereum’s decentralization.
Along with these updates will come a reduction in OETH fees. With Origin Ether’s more simple design, additional defenses against de-pegging are no longer relevant. As such, Origin Ether’s redeem fee will decrease from 0.5% to 0.1%.
Origin’s AMO has the potential to expand to new ecosystems, further strengthening Origin Ether’s ETH peg and earning new yield for holders. To stay tuned to these upgrades and future plans for Origin Ether, be sure to join our Discord and participate in OGV governance.
