Redemption Process

Redemptions of tETH on the Treehouse dApp will be facilitated through Liquidity Pool, which involves an on-chain swap to wstETH via the tETH/wstETH Curve Liquidity Pool.

Treehouse will assist in facilitating redemptions that exceed the value of the Redemption Band.

Liquidity Pool

tETH redemptions that are within the value of the Redemption Band will be facilitated through the tETH/wstETH Curve Liquidity Pool, allowing the immediate conversion of tETH to wstETH.

This pool will also feature a new proprietary safety mechanism developed by Treehouse, known as the Protocol-Owned Pegged Protection (PPP).

Redemption Band

Normal Redemption

The Redemption Band refers to Redemptions made between 0 wstETH to 200 wstETH.

To maintain liquidity and reduce slippage in the tETH/wstETH Curve Liquidity Pool, users who redeem an amount above the Redemption Band can opt to directly engage with Treehouse. Through this process, they can burn their tETH and receive their corresponding share of underlying assets at the prevailing tETH:wstETH exchange rate displayed on the dApp.

However, such redemptions are subject to a withdrawal period of approximately 7 days. This duration allows the protocol ample time to unwind the underlying LST assets back into native ETH to fulfill the redemption request.

Note: The redemption amount displayed on the front end is only an estimate of the final redemption. The actual redemption amount will be determined by a minimum function of the tETH/Underlying LST exchange rate and the Underlying LST/Native ETH exchange rate at both the time of initiation and finalization. To offset interest expenses being accrued during the redemption window, users will also incur a 5bps charge to help the protocol facilitate this process. This practice is enforced to protect the remaining vault users from any costs associated with the redemption.

Following a redemption request, the protocol may perform a series of rebalancing actions, including:

• Unwrapping to ETH: A corresponding amount of LSTs will be unwrapped into native ETH. The timeframe for this process may vary depending on the specific LST protocol, with some requiring a withdrawal period of 5 days or more.

• Loan Repayment: The converted native ETH will be used to repay loans obtained on lending platforms.

• Returning Deposits: Once the withdrawal period elapses, wstETH becomes available for claim by the depositor, enabling the user to complete the redemption process.

Note: The Redemption Band mechanism is a governance determined feature and parameter.

Understanding Redemption Fees and Your wstETH Amount

When you redeem your tETH for wstETH, your wstETH return amount can decrease slightly due to the redemption fee. Here's a quick guide to help you understand how the wstETH amount you receive is calculated:

At T_Redemption, when you submit your redemption, the redeeming information will include:

• tETH return amount = 200

• tETH/wstETH rate = 1.00065

• wstETH/stETH rate = 1.1912

• Redemption fee = 0.05%

At T_Claim, when you claim your assets, claim information includes:

• tETH return amount = 200

• tETH/wstETH rate = 1.00078

• wstETH/stETH rate = 1.1919

• Redemption fee = 0.05%

wstETH amount before fee:

\text{wstETH}_{\text{before fee}} = \text{tETH return amount} \times \min(\text{tETH/wstETH rate}) \times \frac{\min(\text{wstETH/stETH rate})}{\max(\text{wstETH/stETH rate})}$

$$\text{wstETH}_{\text{before fee}} = 200 \times \min(1.00065, 1.00078) \times \frac{\min(1.1912, 1.1919)}{\max(1.1912, 1.1919)}$$

$$\text{wstETH}_{\text{before fee}} = 200.0124641$$

Redemption fee amount:

$$\text{Redemption Fee} = \text{wstETH}_{\text{before fee}} \times \text{Redemption Fee Rate}$$

$$\text{wstETH}_{\text{after fee}} = 200.0124641 - 0.1000062321$$

$$\text{wstETH}_{\text{after fee}} = 199.9124579$$

Fast Lane Redemption

Fast Redemption provides users who need instant access to their underlying assets. This allows immediate redemptions of tETH up to a certain limit at any given time. Upon fast redemption, underlying wstETH is withdrawn from the Strategy Vault and sent directly to the user's wallet.

To account for the expedited process and ensure sustainable liquidity management, a flat fee of 2% is applied for each fast redemption, which is directed to the Treehouse treasury in the redeemed asset.