Thetanuts Finance, a prominent decentralized on-chain options protocol, has recently unveiled its integration with Pendle Finance’s $PT-eETH, launching a Leveraged LRT Strategy Vault on the Ethereum Mainnet. This initiative marks Thetanuts’ initial venture into restaking and Liquid Restaking Tokens (LRTs), a burgeoning segment within the Decentralized Finance (DeFi) sector that boasts over $10 billion in Total Value Locked (TVL).
Restaking enables DeFi participants to leverage their staked $ETH for securing additional networks, thereby earning yields beyond those available on the Ethereum Mainnet. Originated by EigenLayer, this mechanism offers users the option to restake either directly through EigenLayer’s native dApp or via liquid restaking protocols like EtherFi. Through these protocols, users can create “Liquid Restaking Tokens” or LRTs, which can be further utilized to generate extra yield.
EtherFi emerges as a leading figure in the LRT domain, holding over $2.5 billion in TVL. It allows for the deposit of various Ethereum-based tokens to mint $eETH, an LRT that elevates rewards through EigenLayer points and additional protocol points, including EtherFi Loyalty Points. Pendle Finance enhances this ecosystem by dividing $eETH into two tokens: $PT-eETH, which offers a fixed ~20% APY without yield or points, and $YT-eETH, providing leveraged yield exposure.
Thetanuts Finance’s Leveraged LRT Strategy Vault aims to augment yields for $PT-eETH holders by leveraging option premiums and rewards. This innovative approach requires users to “Zap” their $PT-eETH into the Thetanuts Finance v3 Lending Market, borrow $ETH, and invest it in the $ETH Call Basic Vault for additional option premiums, albeit with short volatility risk.
Thetanuts Finance’s Leveraged LRT Vaults introduce a novel strategy allowing $PT-eETH holders to utilize their assets before maturity to earn yields in five different ways, including EigenLayer Points, EtherFi Loyalty Points, fixed yield from Pendle’s $PT-eETH, Thetanuts’ option premiums, and future $NUTS Rewards. This positions Thetanuts Finance as a pioneer in the options market, creating a unique yield-generating mechanism for LRT-related products. With 150,000 $PT-eETH in circulation, there’s anticipated strong demand for this innovative product.
Thetanuts plans to extend its Leveraged LRT Strategy Vaults to other LRT protocols, providing a similar strategy with different LRTs as collateral. However, like all DeFi investments, these ventures carry risks, including the potential for deposit loss if the market for eETH or PT-eETH faces downturns.
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