Ethereum News Today: OETH Surpasses 7.7% APY as New Yield Aggregator Outperforms Traditional LSTs

OETH has emerged as a novel Ethereum yield aggregator that enables investors to gain exposure to liquid staking with higher yields compared to traditional liquid staking tokens (LSTs). As the DeFi landscape continues to evolve, liquid staking has become a cornerstone of the ecosystem, allowing users to stake their assets while retaining liquidity. Despite Ethereum’s Shapella upgrade, which enabled withdrawals of staked Ether, the demand for liquid staking remains strong, with over $45 billion in staked ETH in 2023 [1]. However, the increasing number of liquid staking protocols and participants has led to compressed yields, with staking returns for most LSTs averaging between 3.5% and 5.5% APY [1].

In response to this challenge, OETH was introduced as part of a new category of DeFi protocols known as LSTFi—platforms that build on top of LSTs to create innovative products aimed at enhancing returns. OETH is backed by a diversified mix of ETH, WETH, and LSTs including stETH, rETH, and frxETH. The protocol utilizes these assets to deploy yield-generating strategies across platforms like Curve, Convex, and Morpho, allowing OETH holders to earn not only staking rewards but also additional token rewards and trading fees from liquidity provision [1].

One of the key features of OETH is its ability to compound yields through its Automated Market Operator (AMO) strategy, which helps maintain its peg to ETH and optimizes capital efficiency within Curve pools. This strategy is inspired by the Frax protocol and enables OETH to automatically adjust liquidity positions based on market conditions. The protocol also collects a 20% performance fee on generated yields, which is used to purchase and vote-lock CVX tokens for future reward generation [1].

Compared to traditional LSTs such as stETH and rETH, OETH has demonstrated a significantly higher yield. Over the past 30 days, OETH has delivered returns of approximately 7.7% APY, nearly double that of stETH [1]. This performance is largely attributed to the diversified composition of its collateral and the compounding strategies employed across multiple DeFi protocols. Additionally, OETH allows users to redeem their tokens for ETH or LSTs, with a small 0.5% exit fee applied only when redeeming through the OETH front-end. This fee serves as a security measure against price oracle attacks and is redistributed to remaining OETH holders as additional yield [1].

OETH is part of the broader Origin DeFi ecosystem, which is governed by the native token Origin DeFi Governance (OGV). Users who stake OGV to earn vote-escrowed OGV (veOGV) can participate in protocol governance, including proposals related to fee structures or the implementation of new strategies [1].

While OETH presents an attractive alternative for liquid staking, it also comes with unique risks. As a multi-layered DeFi product, OETH is exposed to smart contract vulnerabilities and the inherent risks of yield compounding strategies. Although the protocol has undergone multiple audits by OpenZeppelin, it carries a slightly higher risk profile than single LSTs due to its exposure to multiple DeFi platforms and LSTs [1]. However, OETH’s design ensures that the token trades within 0.5% of ETH, with arbitrageurs incentivized to correct any deviation from its peg.

For investors seeking higher yields and willing to take on additional risk, OETH represents an innovative approach to liquid staking. It leverages the composability of DeFi to aggregate and optimize returns beyond traditional staking mechanisms. Whether users are long-term hodlers or active DeFi participants, OETH offers a compelling opportunity to engage with the evolving liquid staking market [1].

Source: [1] OETH: Gain Exposure to Liquid Staking With Higher Yield (https://www.coingecko.com/learn/oeth-gain-exposure-to-liquid-staking-with-higher-yield)