Proposal Summary
ether.fi proposes an allocation of up to 10 million ETHFI tokens to be used specifically for listing Wrapped eETH (weETH) as collateral on centralized exchanges (CEX) for perpetual trading. This allocation will directly support the growth and adoption of ether.fi’s wrapped staking product (weETH) by providing incentives to CEX users through various promotional activities such as trading contests, deposit competitions, and giveaways.
Rationale
The core objective of this proposal is to expand the use cases of weETH while driving user adoption on CEX platforms. By securing weETH listings and incentivizing user participation, ether.fi aims to provide multiple benefits, including:
- Increased Adoption of weETH: Listing weETH as collateral for perpetual trading opens up a new use case for ether.fi’s staking asset, increasing its utility in DeFi and centralized trading environments and attracting new types of traders.
- Unlocking New Partnerships: ether.fi aims to unlock partnerships with centralized exchanges and valuable ecosystem protocols.
- User Incentives: The allocated tokens will focus on events such as trading contests, deposit competitions, and giveaways. These efforts will drive user engagement and establish ether.fi’s presence on CEX platforms.
- Improved Market Conditions: The broader exposure to perpetual trading, coupled with these incentives, can further contribute to the liquidity and market conditions for weETH, benefiting the ether.fi community and token holders.
- Growth in Basis Trade Opportunities: Listing weETH as collateral on CEX allows for arbitrage and basis trading opportunities, which can further contribute to the liquidity and utility of the wrapped token.
Supporting Data
There is significant potential to capture a portion of the existing market for ETH and staked ETH assets on centralized exchanges. By bringing weETH to these platforms, ether.fi can tap into a broader audience.
The high daily trading volume of ETH perpetual contracts across major exchanges underscores strong demand for leveraged ETH products. By introducing weETH as collateral for perpetual trading, ether.fi can tap into this growing market. With stETH currently being the only LST/LRT available for perpetual trading (on Weex CEX), there is a significant opportunity for ether.fi to position weETH as a competitive alternative, driving liquidity and adoption in the LST market. Given that 95% of ETH volume comes from perpetual futures, listing weETH in these markets is crucial for ether.fi to capture the majority of trading activity, ensuring broader participation and liquidity.
Further integrations will also be explored on exchanges, such as native minting of weETH, and paying out restaking rewards (through LRT²) directly to holders. This will further deepen adoption and spot liquidity, while providing an economic advantage to holding weETH over other comparable assets.
Exchange ETH Futures Open Interest (USD) - YTD
After a cooldown in ETH open interest and funding rates, there is a prime opportunity to introduce weETH in the next perp cycle, where renewed trading interest could capture premiums and offer attractive rates for users and institutions participating in perpetual markets.
Ecosystem Partners
These CEX integrations will further allow ether.fi to enter partnerships with the biggest potential. For example, we can use Ethena’s collateral utilization as a comparative for where LSTs are being used productively, specifically for the basis trade.
Using the data above from Ethena’s dashboard, of the $296M of collateral in LTSs, 59% is on Binance and 35% is on ByBit. Additionally, stETH, a relevant comparable asset for this initiative, does significant volume on ByBit, OKX, Derebit and Bitget.
Implementation Plan
- Allocation of 10M ETHFI: Allocate up to 10M ETHFI to be used exclusively for CEX incentives.
- Exchange Listings: Work with the Top 10 CEX platforms to get weETH listed as collateral for perpetual trading using a stablecoin pair.
- Incentive Distribution: Design and implement promotional activities (e.g., contests, and deposit incentives) to distribute ETHFI rewards.
- Roadmap for Deployment: Establish a timeline for weETH listings on targeted CEX platforms, alongside any required infrastructure developments. The targeted timeline for distribution of tokens is 12 months.
- Marketing and Partnerships: Build strategic partnerships with CEX platforms and market weETH’s benefits to their user bases.
- Monitoring and Adjustments: Regularly review and assess the impact of the incentives, adjusting the allocation and promotional strategies as necessary.
Conclusion
This proposal outlines a plan to allocate up to 10 million ETHFI to secure and promote listings of weETH on centralized exchanges. By utilizing ETHFI for user incentives, we aim to drive significant adoption of weETH while unlocking new opportunities for growth and partnerships. The proposed initiative aligns with ether.fi’s broader mission of expanding the utility of its staking token and foster long-term user engagement.
Next steps
- Following feedback and updates from the community, the request for comments will be posted to a snapshot vote.
Thank you for your continued support.