Updated on November 28th, 2023
With StakeWise V3 now live, it’s time to talk about the migration path! Lots of changes are here, but don’t worry — this post will address any uncertainties around the transition to StakeWise V3 to make it as smooth as possible. We will cover the main differences between V2 and V3 and explain the migration process as clearly as we can. Let’s begin!
The Big Picture
StakeWise V3 is a wholly different system from the current iteration of StakeWise. To understand the scope of the upcoming changes, here’s a quick recap of the V3 system:
- At the heart of StakeWise V3 is a network of Vaults — staking pools that can be launched by individuals, communities, and companies to stake Ether on behalf of StakeWise users. No permission is required to launch Vaults, and users are free to choose which Vaults to stake into.
- Every Vault has its own set of validators created using deposits in the Vaults, as well as its own branding, fees, operators, approach to infrastructure, and MEV. Rewards and losses of validators in every Vault are isolated from other Vaults, allowing users to pick specific terms on which their ETH is staked.
- Stakers in Vaults can make their stake liquid by minting osETH, the liquid staked Ether token of StakeWise V3. osETH stands for overcollateralized staked ETH because only up to 90% of the stake can be liquid with osETH, while the whole stake serves as backing for it. For example, staking 100 ETH into a Vault will allow a user to mint at most 90 ETH worth of osETH. User’s whole stake (including accrued rewards) can be unstaked in full once they burn osETH.
- osETH appreciates in value over time to reflect the accrual of staking rewards. It can always be redeemed for ETH staked in Vaults at the ETH value it represents. This means that osETH can be bought on exchanges to be held for staking rewards, or sold to quickly exit from staking. In that, it is similar to DAI or LUSD. StakeWise DAO commission of 5% is automatically deducted from its rewards.
Summarizing V3, it introduces changes to i) the staking process, ii) the tokenomics of staked ETH, iii) the fee structure, and iv) the ecosystem around staked ETH. Let’s explore how these changes are implemented.
The staking process
To simplify the transition from the existing StakeWise Pool to an open marketplace of Vaults, we foresee the current Pool becoming the first Vault in StakeWise V3, codenamed “Genesis”. Upon transition, it will maintain the same operator set (Cryptomanufaktur, Finoa, StakeWise Labs, T-Systems) and commission (5% of rewards for operators), leaving no impact on how users’ Ether is being staked.
The migration process is very straightforward:
- Access the V3 app via https://app.stakewise.io
- Connect the wallet that holds sETH2 and rETH2 tokens
- Press on the Migrate button at the top of the page
- Enter the amount of staked ETH you would like to migrate to the “Genesis” Vault
- Press Migrate and confirm the transaction in your wallet
That’s it! Once your transaction is finalized on the Ethereum network, your stake will have migrated to StakeWise V3.
Find the full instructions on how to migrate your stake here: https://docs.stakewise.io/guides/stakewise-v2/migrate-to-stakewise-v3
The tokenomics of staked ETH
This part of the StakeWise Pool underwent the most change. With the current version of StakeWise turning into a Vault, the sETH2 and rETH2 tokens are being phased out. Instead, a user’s stake in the “Genesis” Vault is not represented by any token and will not be transferable to other wallets, unless they mint osETH to make their stake liquid (which is optional). However, even without a token users benefit from the auto-compounding of staking rewards in the “Genesis” Vault and can unstake ETH at any time.
Actions required:
The transition to StakeWise V3 requires users to burn their sETH2 and rETH2 tokens in order to move their stake to the “Genesis” Vault. Once there, users don’t need to do anything else and will continue staking as usual.
There is ample time for migration, as sETH2 and rETH2 tokens will not cease to exist after V3 is live; however, they will have no liquidity and will have a larger fee (10%) than StakeWise V3 (5%).
The fee structure
In StakeWise V2, all users paid a flat fee of 10% on the staking rewards. The fee was then split between the DAO and the node operators. Operators received up to 50% of the staking fee, proportionately to the share of validators they are hosting. The remaining 50% went to the StakeWise DAO Treasury.
With the advent of StakeWise V3, users pay only the operator fee by default, known as the Vault Fee. It remains at 5% in the “Genesis” Vault. A separate fee, known as the osETH fee, is charged only once users mint osETH to make their stake liquid. This fee is set at 5% of staking rewards of osETH and goes to the StakeWise DAO.
The ecosystem around staked ETH
sETH2 and rETH2 have several liquidity pools & means to apply the tokens for farming or other rewards, including StakeWise’s own liquidity mining programs.
As of today, incentives have stopped flowing to these pools. Instead, new pools involving osETH and SWISE will be incentivized on Balancer, Uniswap V3, and Curve in the coming days, according to this liquidity strategy.
The StakeWise team will leverage liquidity in these pools to build a pipeline of DeFi integrations for osETH, making sure that the token gets wide adoption as quickly as possible. We recommend that existing liquidity providers and users who have sETH2 & rETH2 locked in other protocols consider migrating to V3 as soon as possible to take advantage of all the new opportunities.
Actions required:
For a quick transition to StakeWise V3 and osETH, current liquidity providers will want to remove their Uniswap positions to put sETH2 and rETH2 tokens back in their wallets ahead of burning them. Similarly, users of Opium Vaults will need to remove sETH2 from the Opium contract. All users will need to claim any rETH2 they have accrued in the Merkle Distributor — this can be done on the Farms page. After that, stakers can burn sETH2 and rETH2 to fully migrate to V3. Those who want to provide liquidity for the new token and enjoy the benefits of liquid staking will then want to mint osETH.
Closing remarks
A smooth transition for stakers is of paramount importance. Our energies are focused on ensuring that the migration process is as simple as possible. Formal step-by-step instructions for the migration can be found here to guide all users through the process.
We do not want our existing stakers to have any concerns regarding the transition to a new token model. This means that the team will be on hand throughout the entire period of the actual migration & following the V3 release to answer any questions.
A new era dawns for StakeWise — join the discussion about V3 now: https://discord.gg/StakeWise
