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LSD Protocol Token Transfers

The following documentation targets protected staking and or fees and MEV liquidity providers that have contributed ETH to an Ethereum validator via the LSD protocol either through the giant pools, or fren delegation directly to a specific validator. Importantly, we are only concerned with validators that have been activated on the consensus layer and have minted Stakehouse derivatives i.e. validators that are yielding.

Protected stakers (savETH and dETH based LP tokens) and transfer behaviour

Once derivatives are minted (lifecycle status 3), LP token holders for protected staking (regardless of the user being a fren delegation or giant pool user) have the ability to:

  • Burn the LP tokens to receive their derivative ETH (dETH), or
  • Periodically report their balance to the Stakehouse protocol and skim the yield from consensus rewards

Note, the LSD protocol has a back stop feature that one can use to supply dETH withdrawn from LSD management back into the LSD protected staking pool so that the yield of the specific validator can be isolated thereby boosting the yield versus a socialised yield rate across many validators.

Transferring an LP token

Fren delegation protected staking LP tokens total supply is attached 1:1 with a specific BLS public key. Giant protected staking pool simply holds and manages these. With the derivatives minted, transferring one of these LP tokens will have the following behaviour:

  • Underlying dETH redemption transfers to the new owner. The new LP owner will be able to burn the LP and receive their pro-rata share of dETH based on how much LP token they hold

    • If dETH gets borrowed for rage quit, then the new owner will be able to claim rage quit ETH

  • Any unclaimed ETH from skimming (partial withdrawals or sweeps which take a validator balance down to 32 ETH) will be auto-claimed and sent to the current owner doing the transfer. Further balance reporting and associated skimming will then be received by new owner

The behaviour of the giant pool LP token is similar but you may receive the ability to redeem unstaked ETH and dETH for multiple validators depending on how the LP token is spread across the different allocated batches which are associated with either unstaked ETH or specific keys from one or more LSD networks.

Fees and MEV stakers and transfer behaviour

Once derivatives are minted (lifecycle status 3), LP token holders for fees and mev users (regardless of the user being a fren delegation or giant pool user) have the ability to:

  • Redeem a pro-rata share of any MEV rewards received through syndicate contracts which manage the distribution of network revenue 50% to the fees and mev users and rest goes to node operators

Transferring an LP token

Transferring Fren Delegation MEV LP token

Fren delegation fees and mev LP tokens total supply is attached 1:1 with a specific BLS public key. The associated giant pool owns these LP tokens, redistributing ETH rewards to it and onto its LPs. With the derivatives minted, transferring one of these fren LP tokens will have the following behaviour:

Any unclaimed ETH received in MEV revenue not yet claimed is transferred to the original owner during the transfer. The new owner will be able to receive future revenue but does not get historical rewards.

Transferring Giant MEV Pool LP token

The behaviour of the giant pool LP token when a transfer takes place is similar to that of the fren LP transfer: The giant pool will send any unclaimed ETH already in the giant pool to the original owner (their pro-rata share for BLS key batches that are ACTIVE). To put it another way, in normal day to day operations any user can claim their pro-rata share of the MEV rewards in the giant pool by poking the giant pool AND the Syndicate contract from the LSD networks that have active validators which will call the MEV rewards owed to giant pool and its LP. ETH that is entitled for other giant pool users will be tracked and can be claimed later either via calling the giant pool's claim functionality or triggering a transfer of the Giant pool LP token.

Note that during the giant LP transfer, it does not have the ability to know if there is further ETH to claim from any LSD networks since the last time the giant pool triggered a claim to the LSD network(s) as that would be too costly in GAS. Instead, any accrued ETH pro-rata that is not pulled into the giant pool before the transfer of the LP token will be claimable by the new owner. As a result it is recommended that users check the LSD dapp for any unclaimed rewards before transferring their LP tokens or before they engage in any trading of the token. Any protocol integrating the tokens also needs to make sure they claim and account for the ETH associated with the Giant MEV LP token so that all of the ETH rewards are maximised for both protocol and users.