vETH is collateralized by a basket of Ethereum liquid staking and restaking tokens.
Amid the continuing liquid restaking increase, Ethereum-based DeFi protocol Vector Reserve has launched vETH, a novel Liquidity Place Spinoff (LPD) backed by a basket of yield-bearing tokens.
vETH, which might be minted with Lido’s stETH, Renzo’s ezETH, ether.fi’s eETH, KelpDAO’s rsETH and common WETH, has achieved a market capitalization of $5.2M since launching 5 days in the past.
In the meantime, the challenge’s VEC token, which the documentation calls a “multi-dimensional reserve asset,” has tripled in worth since its launch, buying and selling at a circulating market cap of $35M.
Vector has integrated the bonding mechanism pioneered by Olympus DAO to accumulate protocol-owned liquidity for vETH and VEC. Merchants can bond numerous liquidity supplier (LP) tokens in change for discounted VEC that vests over seven days.
Buyers have undoubtedly been lured in by the excessive staking yields, which stand at 230% for vETH and almost 400% for VEC on the time of writing.
vETH captures yield from a number of sources along with the underlying staking and restaking yields – LP buying and selling charges and token rewards from liquidity deployed on DEXs, and a portion of the VEC transaction tax. VEC levies a 3% tax on purchases and gross sales.
Vector plans to spice up the yield additional via superfluid staking on EigenLayer, which is able to enable LP tokens to be restaked on the platform as soon as the performance goes reside. Presently, solely native ETH and LSTs might be restaked.
The challenge can be collaborating with established DeFi protocols like Balancer, Aura and Hidden Hand to supply a number of avenues for vETH to be deployed for extra yield.
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Ethereum customers have been piling into EigenLayer, a extremely anticipated restaking protocol that launched final summer season and at the moment has over $2B of ETH deposits. Restaking caps are set to be quickly lifted on Feb. 5.
