🔥 tETH – ETH With Cash Flow for DeFi Collateral

@Treehouse Official #Treehouse $TREE

💡 What is tETH?

tETH is a Liquid Staking Token 2.0 (LST 2.0) representing staked ETH via Lido’s wstETH, but enhanced through automated arbitrage. It leverages the spread between staking and lending markets by rehypothecating ETH once—staking borrowed ETH again to extract Market Efficiency Yield (MEY) beyond basic staking.

📈 Why tETH is strong collateral

Yield-boosted asset: Unlike plain staked ETH, tETH compounds returns over time while retaining liquidity.

Risk-mitigated design: Only one leverage loop is used, with Peg Protection and an Insurance Fund to absorb de-peg risk.

DeFi-ready integration: Already supported across Aave, Morpho, Euler, Venus, and Compound, making tETH highly composable.

🏦 Where it’s already accepted

Aave Prime/Core: Use tETH as collateral to borrow USDC or GHO at prime-level interest rates.

Morpho & Euler: Deploy tETH for yield-boosting lending strategies or leveraged borrowing.

Venus Protocol: Proposal to include tETH in the liquid staked ETH pool, with additional rewards like Nuts Boost.

🛡️ Security mechanisms

tETH employs isolated leverage to prevent cascading liquidations and monitors partner protocol risk carefully. If peg instability occurs, the Peg Protection fund intervenes to restore collateral reliability.

✨ Conclusion

tETH isn’t just staked ETH—it’s ETH with yield flow. By combining staking returns, arbitrage efficiency, and multi-protocol support, it becomes one of the most resilient and productive collateral options in DeFi.

👉 Would you use tETH first for borrowing stablecoins or for leveraged yield strategies?