Crypto exchange, BitMEX, has launched crypto’s first Ethereum staking yield swap, ETHYLD. This means users can now hedge and speculate on daily ETH staking rates with up to two times leverage.
Announcing this in a Twitter post, BitMEX stated ETHYLD is now on the exchange, and traders can now bet on the daily value of staking rewards on the Ethereum exchange.
Ethereum Yield (ETHYLD) is an Ethereum staking yield swap that enables users or traders to swap the variable yields that come from staking Ethereum on Lido (floating rate) for a fixed interest rate (fixed rate). This can also be done the other way around.
The Ethereum staking yield is now the number of tokens paid to validators for running the blockchain. Lido Finance is the liquid staking solution that enables immediate access to this liquidity using its derivative token.
According to a statement by BitMEX,
“Like all crypto derivative contracts on BitMEX, it is possible for ETHYLD traders to take a leveraged position (i.e., trade ETHYLD with up to 2x leverage). In addition, traders can also hold a position as long as they allocate enough margin to satisfy the maintenance margin requirement – once this is not the case, the trader will get liquidated.”
BitMEX stated there are two sides to an ETHYLD swap. This means that during the life of an ETHYLD contract, two interest rates are being swapped each day. The first is the floating rate based on the variable yield emanating from the Lido Finance validator pool.
For each staked ETH, users are issued stETH, and each day at 12:00UTC, a rebase happens where staking rewards are accumulated in the balance of stETH held in a wallet. The fixed rate is the trader’s best guess of the average daily ETH staking yield.
BitMEX stated the significant difference between ETHYLD and other crypto derivatives’ listing is that traders pay or receive the fixed rate on ETHYLD contracts rather than buy or sell.
