Yield Optimization

tETH=LST+Arbitrage on Rate Discrepancies+Points\text{tETH} = \text{LST} + \text{Arbitrage on Rate Discrepancies} + \text{Points}

The yield generated by tETH is derived from liquid staking tokens (LSTs) further enhanced by interest rate arbitrage opportunities available on lending protocols.

Here's how it works:

  • Base Yield: tETH leverages LSTs as its underlying asset, which in turn generates yield. This yield is further enhanced through interest rate arbitrage strategies available on lending protocols.

  • Enhanced Yield Through Borrowing: Depending on the Safety Mechanisms and Profitability Assessments, the LSTs backing tETH may be utilized as collateral to borrow ETH. The borrowed ETH is then converted into LSTs to receive additional Ethereum Proof-of-Stake (PoS) rewards, effectively amplifying tETH's overall yield while contributing to the convergence of fragmented rates.

  • Additional Rewards: In addition to the underlying yield, holders of tETH may also benefit from rewards earned during the points campaign.

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