@hollowgrahm
What if there was a protocol that used ETH LSDs as collateral to mint either a) a stablecoin, or b) a leveraged ETH derivative, where the stablecoin is the senior tranche fully backed by reserves while the leverage token is the junior tranche and is backed by the residual value of the reserves minus stablecoin liabilities? The stablecoin could then be deposited into a stability pool that earns concentrated ETH yield (since yield on the entire reserves, not just the portion backing the stable, flows to stability pool) and any slashing on the staked reserves is absorbed by the leverage token holders as the junior tranche. Leverage token holders are essentially trading yield for amplified price volatility, shifting slashing risk away from the stablecoin into a perp like product, while stablecoin holders earn amplified yield from the entire reserves
0 reply
1 recast
3 reactions