Star Round 2 Weekly Update

Growth
4

Monthly Update

Mainnet Liquidity

Although liquidity has recovered to nearly $10M thanks to additional incentives from Balancer and support from Rocksolid, the liquidity is currently concentrated in: https://debank.com/profile/0x9Ca1d6E730Eb9fbfD45c9FF5F0AC4E3d172d8F4d and https://debank.com/profile/0xde53bcda6527d2aa15ec733352c8d393c2e0ec99. However, as the APR declines, it no longer matches the Rocksolid target APR, and it is uncertain how long this can be sustained.

Since the liquidity is primarily supported externally, the previous sources were mainly Ethereum OGs. Their support was driven by their commitment to Rocket Pool’s decentralization; however, due to market conditions and yield factors, they have now exited:

The exited rETH is being gradually sold off or swapped into wstETH.

Liquidity shortage has now become a challenge for rETH. We have attempted to contact Spark, but they seem to have limited interest; Spark’s liquidity is primarily provided on Curve. A contact group has been established with @maverick .

Prime Asset

rETH is not currently being listed as a prime asset. In fact, there have been ongoing attempts to have Ethena and Resolv adopt rETH as part of their ETH stable strategies, but these have not been successful. For ETH stable strategies, most protocols increase their buying power for ETH and ETH LSTs when the ETH price rises rapidly and steadily, while simultaneously opening ETH short positions on Hyperliquid. However, when the ETH price trends downward—as seen in the past few days—these protocols reduce their ETH positions to mitigate risk by selling ETH and ETH LSTs.

The main reasons rETH hasn’t been included are depegging risks and the lack of a instant withdrawal. This will be addressed in the upcoming RPIP that supports withdrawal.

Furthermore, rETH’s exclusion from prime assets has led to very little exposure in markets like Morpho. Currently, rETH is only listed on Morpho Base and is absent from other chains.

Discussions with curators like Gauntlet indicate that this is mainly due to liquidity and peg stability; rETH is perceived as weaker in these areas compared to stETH and weETH (which supports instant withdrawals). WBETH is primarily supported as collateral on Binance.

Additionally, Steakhouse has built a custom strategy market based on Morpho Vault V2: https://app.steakhouse.financial/earn/8453/0xBEEFFFdeADc2c172130Ac4C5Ae48c8D4708BFb40

Institutional Lending Protocols

Institutional lending protocols are a direction I am personally optimistic about. Maple’s growth over the past year suggests this is a viable path. Morpho and Aave are not particularly friendly to institutions due to their variable borrowing rates and unstable liquidity. In contrast, institutional-facing lending protocols solve this by providing fixed rates and ample liquidity. Some researched institutional lending protocols include:

Outreach for this sector is primarily via B2B emails, which are permissioned and require verification. The core team may need to submit some contact forms and collaborate on the follow-up. Furthermore, this could serve as a benefit for institutional adoption of rETH. cc @langers @maverick

Other Protocols

  • MakinaFi: A new protocol, but a recent exploit occurred; no further progress for now.

  • Aave V4: Expected to launch this year. Unsure if a previous contact group exists; currently trying to reach out to TokenLogic to understand and move this forward.

  • ETHGas: Requires verification; the contact form has been forwarded to @maverick .

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