Today we are partnering with Lido to provide users with additional incentives for shifting from using ETH into stETH in either MakerDAO or Aave. Lido's stETH is currently the most liquid staking option for Ethereum and it has recently become a very popular collateral option for use in decentralized finance.
If you're here just here for the details on the promo, feel free to scroll to the bottom right away! Otherwise, let's first talk about the advantages of using stETH.
Why use stETH instead of ETH in DeFi?
The main benefit of staking ETH via Lido and holding stETH is simple - you will be receiving Ethereum staking rewards and you stand to ultimately end up with more ETH, either when withdrawals are enabled from Ethereum staking or whenever you decide to swap stETH back for ETH.
However, the option of using stETH in decentralized finance protocols on Ethereum makes things a lot more interesting.
For example, using stETH as collateral versus stablecoin borrowings effectively makes your position a self-repaying one, given that your collateral value is growing quicker (~4.5% APY) than your debt (e.g. WSTETH-A Stability fee in Maker is currently at 2.5%).
And besides borrowing, Aave, being a money market protocol, now offers one extremely interesting low-risk, high-yield option for your Ether - leveraged stETH/ETH positions that currently provide north of 10% APY.
Here at DeFi Saver we have unique tools for setting up such leveraged positions or for instantly shifting collateral of existing positions without having to unwind, so let's go over the deets on how you can do all of this (all while earning extra $LDO rewards for doing it).
Using stETH in Aave
Firstly, if you currently have an Aave position where you're using ETH as collateral, you can use our Loan Shifter to quickly switch from ETH to stETH.
This is something you can do at https://app.defisaver.com/shifter and the process would use a flash loan to free your collateral, then withdraw your ETH, stake it through Lido and deposit the stETH back - all done in one transaction, without any fees other than the transaction fee and without you ever having to unwind your position.
Secondly, if you're looking to set up a leveraged stETH/ETH position, this is where our Recipe Creator can come in handy. If you load up this custom recipe, you can do the whole process in one quick transaction. About 3x is the recommended leverage level, though you could push it a bit higher if wanted.
Note that in case you already have stETH to start with, we'd recommend using our Aave Create option instead, where you can select stETH as collateral, ETH as debt and set up wanted leverage levels.
The leveraged stETH/ETH option is something that's already been utilized by some of our users for a full month now, here's one such example:
Using stETH in MakerDAO
First thing to note about Maker is that it doesn't support using rebasing tokens, such as stETH. Instead, Maker onboarded wstETH (Wrapped stETH) which was introduced for exactly this reason - to allow easier compatibility with various DeFi protocols.
The way wstETH works is through value accrual instead of rebasing, or, in other words, wstETH increases in value, while stETH increases in balance (and you can always check the current rate at https://stake.lido.fi/wrap).
In terms of using stETH as collateral in MakerDAO, there are currently two Vault types that utilize it in some form: WSTETH-A and CRVV1ETHSTETH-A (which is a name that doesn't really roll off the tongue, so we'll call it the steCRV Vault here).
The MakerDAO WSTETH-A Vault type
As mentioned earlier, the benefit of using the WSTETH-A Vault type is that the staking rewards eliminate any borrowing costs, which
In case you already have any kind of MakerDAO ETH-based CDP open, you can extremely simply convert it to a WSTETH-A one using DeFi Saver, without any fees besides the transaction fee.
The process uses a DAI flash loan to clear debt in your original CDP, withdraws ETH, stakes it with Lido and wraps it into wstETH, then deposits the wstETH into a new Maker CDP and, finally, generates DAI there to clear the initial flash loan.
The MakerDAO steCRV Vault type
The fairly new CRVV1ETHSTETH-A Vaults support using the LP tokens of the Curve stETH/ETH pool (commonly known as steCRV).
The interesting thing here is that this is the first vault of its kind where a new CropJoin adapter is used which allows for the collateral deposited into Maker to be automatically staked elsewhere for additional rewards. In this case, the steCRV tokens are staked in the Lido protocol, which means that you'll be receiving additional $LDO rewards for this position.
The complete list of benefits of using Maker steCRV Vaults is:
- You receive staking rewards from Lido
(though keep in mind that stETH makes up only 50% of steCRV)
- You receive trading fees from Curve
- You receive additional $LDO incentives
(which are expected to last until staking withdrawals are enabled or longer, as mentioned here)
And one of the cool things we created in regards to Maker steCRV Vaults is the ability to create them directly from ETH, which is something you can do at https://app.defisaver.com/makerdao/create-cdp, like so:
However, the unfortunate thing is that the debt ceiling for steCRV Vaults is basically maxed out, with just some 15,000 DAI left to be generated at the time of writing.
We hope the MakerDAO Governance will be quick to increase the ceiling and allow more people to make use of this cool new vault type.
- 2,500 LDO in total will be rewarded, split proportionally (according to deployed ETH amounts)
- Eligible accounts are all that make actions where ETH is staked through Lido and stETH deployed into Maker or Aave (see full list below)
- Promotional period is April 04 15:00 UTC - April 18 15:00 UTC.
The full list of eligible actions on DeFi Saver for these LDO rewards is:
- (Maker) Loan Shifts from ETH-A/B/C into WSTETH-A and CRVV1ETHSTETH-A
- (Maker) Creating (leveraged) CRVV1ETHSTETH-A or WSTETH-A Vaults starting with ETH
- (Aave) Collateral Loan Shifts from ETH into stETH
- (Aave) Creating leveraged stETH/ETH positions
ℹ️If you'd like to make sure a certain action would be eligible, please feel free to reach out in our discord to check.