Transition to Aggregated Liquidity

The 0FX protocol will transition from being listed on EtherFi’s restaking token, weETH, to using an aggregated basket of liquid-staking, liquid-restaking, and liquid-lending assets managed by one of the protocol's forthcoming applications. This transition aims to diversify and maximize rewards while maintaining a secure and robust investment environment.

Aggregated Basket of Liquid Staking, Restaking, and Lending Assets

Composition and Purpose

The new basket of assets will consist of various liquid-staking, liquid-restaking, and liquid-lending tokens linked to multiple different Proof-of-Stake (PoS) blockchains and reputable protocols. The primary objectives are:

1

Maximizing Rewards

By incorporating tokens from multiple PoS blockchains and lending protocols, the protocol aims to increase overall rewards.

2

Diversifying Income

A diverse basket of staking, restaking, and lending assets helps spread risk and stabilizes income streams from multiple blockchain networks and protocols.

Governance and Proportion

The composition and proportions of these liquid-staking, restaking, and lending positions will be determined by the protocol's governance. This ensures that the community has a say in optimizing the rewards and managing the risk profile.

Criteria for Liquid-Staking, Restaking, and Lending Protocols

To ensure the highest level of security and efficiency, the chosen liquid-staking, restaking, and lending protocols must meet several criteria:

1

Audited by Reputable Firms

Protocols must be thoroughly audited by respected industry auditors to ensure their security and reliability.

2

Reputation and Track Record

Preference will be given to protocols with a proven track record and strong reputation in the industry.

Auto-Aggregation and Rebalancing System

Automated Management

The basket of liquid-staking, restaking, and lending assets will be managed through an automated system that ensures optimal allocation and rebalancing without manual intervention. This system includes:

1

Routing System

New deposits are automatically added to the portion of the basket with the least assets relative to its target proportion. Withdrawals are processed from the portion with the most assets, maintaining the desired balance.

2

Dynamic Rebalancing

Continuous rebalancing based on user actions helps maintain the target proportions, ensuring efficient and balanced allocation across different assets.

Benefits of Auto-Aggregation

1

Increased Performance

Automated rebalancing can enhance performance by reducing the need for manual adjustments and minimizing transaction fees.

2

Diversification and Risk Management

A well-balanced, diversified basket reduces risk and improves the overall stability of returns.

Enhanced Performance and Volatility Management

Performance Benefits

By transitioning to a basket of liquid-staking, restaking, and lending tokens, the protocol can achieve better performance compared to relying solely on Ethereum. The diversified nature of the basket can lead to:

1

Higher Returns

Exposure to multiple PoS blockchains and lending opportunities increases the potential for higher returns.

2

Smoothed Volatility

Diversification helps mitigate the impact of price fluctuations in individual assets, resulting in more stable returns.

Risk-Adjusted Returns

Investing in a diverse range of staking, restaking, and lending protocols allows the protocol to optimize its risk-adjusted returns. This approach balances the pursuit of higher rewards with effective risk management.

The transition to an aggregated basket of liquid-staking, restaking, and lending assets marks a significant step forward for the 0FX protocol. By leveraging the strengths of multiple PoS blockchains and lending opportunities, the protocol aims to deliver enhanced performance, greater diversification, and improved risk management for its investors. This automated, user-driven approach ensures a robust and dynamic investment environment, aligning with the protocol's commitment to innovation and security.