This SIP proposes integrating Origin’s stETH ARM vault into the ETH Mainnet (Higher Risk) vault in the Lazy Summer Protocol.
This vault provides instant ETH liquidity for stETH users with zero slippage. It earns yield by taking a redemption arbitrage - that is, buying discounted stETH from the market and then redeeming the stETH for ETH 1-1 using Lido’s withdrawal queue. This vault has handled more than 424,000 ETH of swaps over the past year, or more than $1.5 billion at the current price of ETH. More details on the ARM can be found on the ARM docs and analytics page.
Adding this ARM vault will diversify ETH yield strategies, tap into Origin’s unique redemption vault model, and expand Lazy Summer’s yield-generating sources beyond standard DeFi lending protocols.
Motivation
Expand yield sources – Provides exposure to Origin’s ETH ARM product, adding an ETH arbitrage strategy alongside existing ARKs.
Attract new user types – Engages current ETH and stETH holders, deepening penetration into the ETH staking ecosystem.
Increase TVL – Adds a ETH ARK, supporting Lazy Summer’s ETH vault growth objectives.
Hey @pete, thanks for the proposal! For the upcoming proposals I would kindly ask you to refer to the SIP Template when creating a proposal. When it comes to withdrawals I found that it takes approx. 10min. to withdraw from the ARM stETH Redemption Vault.
It looks alike a nice addition into the ETH HR Fleet, so am looking forward to the assesment and caps proposal being set by @BlockAnalitica!
Origin released an upgrade to the ARM on Wednesday 8/13, where idle ETH in the ARM will be lent to MEVcapital 's Morpho vault to create a base level of yield:
With this upgrade the ARM can handle a lot more TVL, and this sets a baseline yield for the ARM. Additionally, if the ETH is not being used for the arb strategy and is going to the Morpho vault then it can be withdrawn from the ARM faster when there is a withdrawal request.
We have used our quantitative risk model to compute initial parameters for the Origin stETH ARM Ark in the Higher Risk Fleet Mainnet ETH. Following assessment and internal reviews, we propose the following initial parameters:
Ark
Symbol/Vault
maxCap
Max. %TVL
maxInflow
maxOutflow
origin
ARM-stETH
510
31.4%
510
510
Our review includes not only factors related to TVL and collateral assets but also the time Lido takes to redeem stETH into ETH. This is a highly dynamic metric, so we monitor 7-day averages. Last week for example, this Origin product had more than 98% of assets in the redemption queue, which led to the small caps at this stage. For more details, see origin analytics page. These parameters may change as the markets evolve.
The respective Fleet has a cooldown period of 1 hour, which affects all Arks.
I have posted a supplementary proposal to the forum to increase the deposit cap on this ARK, as the ARM is capable of accepting 2-3x the amount of it’s TVL right now before yields start to compress.