I come to you to make a pool proposition on Saber, the Lido WstETH-ETH pool.
As we can see, ETH has a very big presence in the Solana ecosystem, there is around 600k ETH on the Solana chain and quite all are use in the DeFi ecosystem. In fact, it doesn’t make sense to simply hodl your ETHs on Solana where there is a bridge risk. So all the people who holds ETHs on Solana are willing to take small risks in exchange for a profit.
At the same time, the growth of liquid staking is very important, in fact it allows to have a token almost as liquid which captures the yield associated with staking. On ETH this growth is already very significant but should be even more so after the merge where the significant Ethereum transaction costs will be allocated to staking, probably passing the APY linked to staking from 4.5% to around 10 %.
Evolution of the number of ETHs in Lido
That’s why and more so because eths on solana are prone to taking risks and the risks associated with liquid staking on a big player like lido are limited, I think most eths on solana go as to be replaced by stETH.
However, two things are limiting this growth at the moment:
First, the ease of switching from eth to steth in one direction or the other. Indeed, today there is no liquidity to do it directly on Solana. We are therefore forced to bridge our ETHs to Ethereum, stack them on Lido and then bridge them again to Solana. This is restrictive and excessively expensive. By creating a pool on Saber, this would facilitate this operation and make the cost almost non-existent, already pushing a large number of people to switch from ETH to stETH
Second, the integration of stETH into the Solana ecosystem. The interest in owning stETH on Solana is currently non-existent because there is no Dapp that allows it to be exploited. By bringing liquidity via this pair, this will make possible more integrations, especially for borrow lending platforms that need sufficient liquidity to be able to liquidate.
The interests that Saber has in setting up this pool:
Create a pool with one of the largest volume. The presence of ETH is so important on Solana (6th most traded token on Jupiter), that if a significant part of its ETHs are replaced by stETH, which I think, we can imagine the wstETH-ETH pool will become one of the largest saber pools in terms of volume. As with the msol-sol or steth-eth pool on curve, to a lesser degree of course but easily several hundred thousand dollars a day once there is a big adoption. Especially since there is currently no competition in the Solana ecosystem on this pool.
Engage the Lido DAO further in the Saber war. Lido is one of the biggest DAOs, perhaps the one that will become the wealthiest in a few months/years. We see their involvement in terms of encouraging the adoption of the stsol. The massive adoption of the steth on Solana would also be a big win for them and we can think that they will be active in promoting this adoption. Even if today these incentives are found more in the liquidity mining of Lido DAO Token, we can think that this type of pools will eventually encourage Lido to buy SBR for longer-term incentives on its liquidity.