Sunset ETHx Native Staking on Arbitrum

Non-grant related Proposals
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Intro

The proposal is intended to gather community feedback regarding the potential sunset of the ETHx native staking option on Arbitrum. The solution is built on a child-pool mechanism which requires active management that cannot be justified anymore considering the very little TVL flowing in through that channel

Summary

Stader launched on Arbitrum in Q2 ‘24 when L2s were all the rage; especially Arbitrum with its sweeping grant program (LTIPP) that incentivized projects across the board. And here’s how it’s built out

All the ETHx is pre-minted, bridged to Arbitrum and held in a contract which is then served to the user on Arbitrum in exchange for ETH based on the current mainnet contract rate. As the contract keeps accumulating more and more ETH, it has to be bridged back to mainnet for staking and the process continues.

All of this is abstracted from the users who could access it through a dedicated Arbitrum frontend similar to that of mainnet where they simply deposit the ETH and receive the ETHx and can go on to utilize it across several DeFi hotspots. The overall sentiment and DeFi adoption was promising starting out considering the seamless nature of the solution from the user perspective coupled with the low gas advantage of Arbitrum and the boosted APRs across the ecosystem courtesy of LTIPP

However, all this explosive growth ended with the grant which meant the APRs were back to sustainable levels and the TVL has flown out of the chain and <10 ETHx was natively staked post this phase

Conclusion

So given the current situation, it makes sense to sunset this solution to avoid further operational challenges and any unforeseen risks

Few points to note:

  • Only the native staking route is being sealed, which means users can still stake on mainnet, bridge it and leverage the low gas features of Arbitrum. And the entire bridging infrastructure would stay intact even after the sunset
  • The unstaking route remains the same where users have to bridge the ETHx back to mainnet and unstake. While bridging from mainnet to Arbitrum is real time, bridging back takes a week which is pretty much a common restriction amongst L2s

Would love to hear the community feedback for the same and incase of alignment, the process should be done by April and we will detail out the next steps

2 Likes
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After introduction of blobs, mainnet transactions are very cheap. It is a commonsense move and I support it.

1 Like
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I understand the move and will support it. As @Mariella says now it is cheap to stake in mainnet and even bridge it to Arbitrum !

Looking at Ethereum technical roadmap, they are going to continue scaling the chain and there is no end in sight regarding cheap gas fees.