Rewards Handling

LST protocols have been experimenting with various reward-handling mechanisms:

  • Rebasing tokens

  • Interest-rate tokens

  • Staking/vaults which mint secondary LSTs

  • Dual-tokens (LST + LSTreward)

Each has its own trade-offs and benefits, however from a users perspective - they're having to interact with various protocols and mechanisms in order to compound their yield, which not only is time-consuming but also costly when it comes to gas fees due to how many transactions are required across LST protocols.

As such, tapETH standardizes how rewards are paid out and earned by holders - by unifying the yield into an easy claim interface, where users simply claim their rewards which are paid out in additional tapETH.

These rewards are able to be claimed, even if the user has deposited or staked their tapETH into a different protocol, in one of two ways:

  1. The DeFi protocol collects the tapETH rewards themselves, and distributes them to users as they wish (whether it be in the form of token emissions or stablecoins, etc)

  2. The user instead claims the tapETH rewards normally, as if they were simply holding it - with Tapio Finance working directly with the DeFi protocol and monitoring smart contract balances

    • We'll eventually have a boilerplate SDK of sorts, allowing any protocol to implement this natively when they want to support tapETH, without having to work with the Tapio team directly

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