Yield Generation
Last updated
Last updated
When a user deposits approved assets to mint vETH, they're presented with two different avenues to earn yield: liquidity provision or vETH staking.
The first option allows users to earn rewards from various partner DEXs, such as BAL rewards on Balancer, SOLID rewards on Solidly, and LIT rewards on Bunni - as well as VEC and WETH! One of the primary goals of Vector is to make vETH liquid on as many DEXs as possible, allowing vETH liquidity providers to benefit from a diverse range of rewards, and enabling composability, widespread adoption and genuine utility across DeFi.
The second option allows users to earn rewards accrued by the collateral of vETH. These yield generation mechanisms are detailed below. The yield generation of vETH is multifaceted, deriving from several sources within the omnichain Ethereum ecosystem and is calculated as per the formula below. These include:
LST and LRT Yields: vETH holders benefit from the yields generated by LSTs and LRTs within Vector Reserve’s LPs and treasury.
Points Accrual: LRTs permit Vector to earn both EigenLayer airdrop points as well as the points from various partner LRT protocols.
Trading Fees and Emissions: Participation in various liquidity pools across multiple chains and DEXs enables vETH to accrue trading fees and emissions, enhancing its yield potential.
: Utilizing EigenLayer's Superfluid Staking, vETH allows for the restaking of ETH LPs, further amplifying the yield opportunities beyond traditional staking methods.
Arbitrage: WETH in the treasury is used to take advantage of arbitrage opportunities presented by the various LPs, maintaining the vETH peg and generating additional revenue for vETH yield.