What is ETH Token?

Ether (ETH) is the native token used by the Ethereum blockchain and network as a payment system for verifying transactions. ERC-20 is the standard for creating smart contract-enabled fungible tokens to be used in the Ethereum ecosystem.

What does Derivate mean?

In traditional finance, a derivative is a contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate, and is often simply called the “underlying.” So, ETH derivates (such as aETH, rETH, stETH) are assets that are deriving their value from ETH token.

Ankr

aETHc: (formerly aETH) is a reward-bearing token that enables instant liquidity for staked ETH. aETHc represents the staked ETH plus all future staking rewards. Initially, at the start of ETH2 staking on December 1st 2020, aETHc was issued at a ratio of 1:1 to the amount of staked ETH. To reflect the accumulated rewards, the ratio of aETHc to ETH changes over time, meaning that 1 aETHc becomes worth increasingly more than 1 ETH. The amount of aETHc you hold will not increase. Instead, the price of aETHc is expected to grow in ETH value, as your aETHc contains your principal stake plus earned staking rewards.

aETHb: Similar to aETHc, aETHb (formerly fETH) also enables instant liquidity for staked ETH tokens in ETH 2.0 network. The main difference between aETHb and aETHc is that it distributes staking rewards through a rebasing process on a daily basis, meaning that its fair value should be equal to ETH price, contrary to aETHc, whose fair price is ETH + staking rewards embedded in aETHc (1 aETHc represents 1.04 ETH as of August 2021). Ankr Staking receives daily ETH rewards into the ETH2 staking pool, which are then reflected in aETHb holders’ wallets. As a result, the amount of aETHb that users hold in their wallet automatically increase with every daily rebase.

Lido

stETH is a token that represents staked ether in Lido, combining the value of initial deposit + staking rewards. stETH tokens are minted upon deposit and burned when redeemed. stETH token balances are issued 1:1 to the ethers that are staked by Lido. stETH token’s balances are updated when the oracle reports change in total stake every day. The mechanism which updates the stETH balances every day is called a “rebase”. Every day at 12PM UTC the amount of stETH in your address will increase with the current APR.

stETH tokens can be used as one would use ether, allowing users to earn ETH 2.0 staking rewards whilst benefiting from e.g. yields across decentralised finance products. Lido's stETH token lets users earn staking rewards for every day of holding these tokens in their wallet. They are fully liquid, so users can use them for their needs at any time — trade, sell, exchange, invest in DeFi projects, etc.

RocketPool

rETH is the Rocket Pool protocol's liquid staking token. The rETH token represents an amount of ETH that is being staked and earning rewards within Ethereum Proof-of-Stake. As Rocket Pool node operators, stake Ethereum on Proof-of-Stake the resulting rewards increase the value of rETH relative to ETH.

rETH represents both how much ETH user deposited, and when he/she deposited it. The value of rETH is determined by the following ratio:

> rETH:ETH ratio = (total ETH staked + Beacon Chain rewards) / (total rETH supply)

Since the Beacon Chain rewards will always be positive and will constantly grow, this means that rETH's value effectively always increases relative to ETH. The rETH/ETH exchange rate is updated approximately every 24 hours based on the Beacon Chain rewards earned by Rocket Pool node operators.

Methodology

We have the contract address for each token as below:

• aETHb: 0xd01ef7c0a5d8c432fc2d1a85c66cf2327362e5c6
• aETHc: 0xe95a203b1a91a908f9b9ce46459d101078c2c3cb
• rETH: 0xae78736cd615f374d3085123a210448e74fc6393
• stETH: 0xae7ab96520de3a18e5e111b5eaab095312d7fe84

So, considering above addresses and using ethereum.core.fact_hourly_token_prices table, we can calculate the average daily value of each token over time.

aETH

rETH

stETH

LIDO has a variety of advantages for staking ETH.

For example, there is no minimum amount for the staked tokens, despite other platforms that users need 16 / 32 ETH to perform a stake. Moreover, rewards on Lido are distributed daily (every 24 hours). On the other hand, users asset wont get freeze and they can withdraw their staked asset anytime they want. these were some main advantages of Lido vs other platforms that caused Lido as the leading ETH staking platform among others.

Summary and Conclusion

• Lido’s stETH has the best performance among all other ETH derivates and is the most popular staking method for ETH stakers. We have saw its price has least volatile over time and was very close to real ETH price.
• Also Rocket Pool rETH has a good satisfying performance after Lido’s stETH and its price was less affected by volatiles and was always pegged to ETH token price.
• total swap activity on these tokens is increasing over time especially during the recent weeks as we are getting closer and closer to The Merge upgrade.

Discord: Ali3N#8546

• 27 July 2022: ANKR project has released its Decentralized Application (DApp). Ankr application chains are designed to help Web3 projects and DApps run on a dedicated blockchain tailored to their exact needs and specifications. High spikes on 27th and 28th June can be because of this.

• 25th March 2022: Binance announced the launch of another feature of Binance Academy: the Learn & Earn program. This feature will grant users free crypto as they complete educational tasks. The program will be hosted regularly, starting on March 25. Terra, Woo Network, Polkastarter, and ANKR will be included in the first batch. We can see some hypes on aETH swaps after this date.

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There are two timespans on May and June 2022 for stETH high swaps activity, the main reason behind these spikes is because of stETH:ETH depegging and also Terra project failure:

> In May 2022, the crypto markets were already very shaky. Macro conditions had taken a turn for the worst, and on-chain yield opportunities were drying up as people started trading less. On top of that, the Terra blockchain crash had an immediate and dramatic effect on the entire DeFi ecosystem. By mid-June 2022, the Terra blowup contagion reached stETH. Even though Terra is a completely different chain, the composability across different chains created a delicate interlinked system that came back to bite us when things blew up. > > One of the products offered on Anchor (Terra’s lending protocol) was taking wrapped stETH and using that as collateral on their chain. This collateral essentially became trapped because 1) nobody could repay those loans to get their collateral (wrapped stETH) back on Terra, and 2) the Terra network shut down completely so it was impossible to access those tokens anyways. > > The people and entities using the Terra network were also the same ones using these leveraged yield products for stETH. Not only did they lose access to those funds, but a majority of their capital (including a “stable” asset) evaporated from the Terra fallout. This put those funds in a precarious condition that could lead to a “bank run.” > > The only way to unwind this was to sell stETH to cover their positions – creating selling pressure on stETH. > > This started the stETH price depegging causing liquidations in the positions held on Aave. > > The fundamental assumption for the stETH:ETH peg was being challenged. With 1stETH no longer closely equaling 1 ETH, cascading liquidations quickly ensued. As little as a 10% variance was enough to cause the collateral ratio to fall below the liquidation cutoff, due to how leveraged the loans were that these institutions had created. The cascading effects start with the riskiest and most leveraged ETH borrowers (who have the highest loan-to-value ratio) getting liquidated and having their stETH automatically sold on the open market. This selloff caused low liquidity in the stETH:ETH Curve Pool, which then created further sell pressure. This then led to more cascading liquidations, so on and so forth. Under normal circumstances, lenders were happy to lend out ETH as long as stETH was provided as collateral: the large demand and established consensus on price parity made for a comfortable situation. But, as the lending became more risky, all that liquidity dried up because no one wanted to lend out ETH – a truly liquid asset – for stETH, an asset representing an illiquid version of non-redeemable ETH.

Staking via Rocket Pool offers a lot of advantages:

• Firstly, stakers do not have to overcome the hurdle of a total of 32 ETH . Rather, staking is already possible with the small amount of 0.01 ETH.

• In addition, stakers on Rocket Pool can freely dispose of the rETH received and use it elsewhere (e.g. trading or lending via DeFi applications such as Uniswap). 

• It is also possible to exchange the received rETH back for ETH if there are enough resources in the staking pool. With conventional staking with Ethereum on the beacon chain, however, stakers cannot currently access their deposited ETH and the rewards received (only if withdrawals are imported via the corresponding EIP).

• Ethereum stakers also usually have to have some technical know-how, as they have to run special validator software permanently on their computer in order to receive staking rewards. Poolstakers who do not operate their own node are exempt from this, as they only have to deposit their ETH for staking and do not have to worry about the proper maintenance of a node. 

on June 2022 In a governance proposal that saw 64% approval by the MakerDAO community, users voted in favor of Rocket Pool ETH (rETH) as a new vault type, or collateral. The protocol will now hold an “executive vote” in the next thirty days to on-board the token as a collateral. The proposal to use rETH had been floated as early as March 2021. The proposal to adopt rETH comes as the largest DeFi protocol seeks to reduce the fallout from a potential insolvency of crypto lender Celsius and Three Arrows Capital. Both the entities have a high amount of stETH as collateral, and were seen dumping stETH to cover their positions. A liquidation of the two would see a large amount of stETH, ETH and Bitcoin being dumped on the open market.

On March 2022 yearn.finance announces in a tweet regarding the launch of its Ethereum staking vault Curve Rocket Pool. Yearn vaults helps user maximize yield through shifting capital, auto-compounding, and rebalancing.

The Merge Impact:

Soon, the current Ethereum Mainnet will merge with the Beacon Chain proof-of-stake system. This will mark the end of proof-of-work for Ethereum, and the full transition to proof-of-stake and sets the stage for future scaling upgrades including sharding. The Merge will reduce Ethereum's energy consumption by ~99.95%.

Totally on all tokens, during recent weeks, Users are withdrawing (swapping out) their derivate ETH token from staking platforms with getting closer to the “Merge” update on Ethereum. After this update, users will not be able to withdraw their staked ETH tokens for like 6~12 months (till Shanghai upgrade).

Since these derivate tokens should be always pegged with ETH/WETH token price, I have decided to check their volatile rate and analyze the their depeg rate by dividing WETH price to the related derivate token price over time. (the more close to 1, the better)

As we see on the above chart, stETH token (Lido) and rETH token (Rocketpool) are the best pegged token among all other ones and their peg-line is always close to the number 1 (which means equal price to ETH token). between these 2, rETH has even a better rate than stETH because stETH has almost depegged with ETH token during May and June (market price crash and mainly because of Terra project) but rETH was not depegged that much during this timespan.

Moreover, we can see aETHb token has the worst peg ratio with ETH token. the situation of aETHc is better than its partner (aETHb) but its not still as good as stETH and rETH.

and on the left chart, I have calculated the total average peg ratio of tokens with ETH token.

As mentioned above too, rETH and stETH tokens has the best peg ratio with ETH. total average peg ratio of stETH is a little better than rETH.

(The closer to 1, the better performance)

According to the above chart, Lido token (stETH) have more swap activity among other tokens in all terms of swaps, swappers and volume.

And based on the above charts, we can see an obvious increasing trend over time especially during the recent weeks and due to getting closer and closer to The Merge Ethereum upgrade (since users wont be able to withdraw their assets for like 6-12 month (Shanghai upgrade)). Moreover, we can see stETH swaps is leading in almost all bars over time. some high spikes for aETH is visible on the first days of the chart and then it has become so low comparing to others.

Rocketpool rETH swap activity has also increased dramatically during the recent weeks.

Based on the above charts, the stETH minting activity (= liquid staking activity) in both terms of volume and coun is more than other 2 tokens. during the recent weeks we can see high activity of rETH minting as mentioned before on the swap acitivity charts.

And on the left chart we can see these tokens comparison based on the number of the days that their price was lower on higher than WETH.

As we see, rETH price on almost 99% of days was higher than WETH and aETHC price on almost 97.5% of days was lower than WETH.

stETH price was also lower than WETH in most ot fhe days.