xrETH
xrETH is a liquid Ether staking token which receives the same rewards as solo staking
Last updated
xrETH is a liquid Ether staking token which receives the same rewards as solo staking
Last updated
xrETH is Constellation's liquid staking token, offering several unique properties compared to other LST designs.
Functionally, xrETH is very similar to , but it offers the additional advantage of returning the full ETH staking APR. This gives xrETH a similar yield profile to solo staking while remaining liquid.
Also like rETH, xrETH uses the , where the protocol's exchange rate for xrETH adjusts over time with the value of earned rewards. This model is more gas efficient than a rebasing token, and it also may offer tax advantages to users in certain jurisdictions.
xrETH is designed to receive the same yield as standard Ethereum staking (including MEV). To achieve this, the ETH exchanged for xrETH is used inside Rocket Pool to create new minipools alongside rETH, and the rETH commission is used to incentivize other protocol participants. Although xrETH minters may consider it to be "feeless", there is technically a fee charged by the protocol which is equal to the extra rewards generated by the Rocket Pool validator rETH commission.
Each ETH bonded on a Rocket Pool node receives the following rewards on an LEB8 minipool:
(rETH commission * ETH staking yield * 3) + ETH staking yield
Constellation reserves an operational fee equal to:
rETH commission * ETH staking yield * 3
Therefore, xrETH rewards are equal to the typical ETH staking yield.
For example, if the rETH commission is 14% and the ETH staking yield is 4%, typical RP operators would receive 0.0568 ETH per year per ETH bonded (with an LEB8), and xrETH holders would receive 0.04 ETH per year per ETH deposited, but with no RPL exposure necessary. The difference is taken to pay for Constellation protocol operations and is split between the and .