# Beyond Staking — pETH: A New Yield-Bearing Primitive for ETH - Token Brice | Polaris & Pharos Watch

- Channel: [ETH Belgrade Community](https://streameth.org/eth-belgrade-community)
- Date: 2026-10-06
- Duration: 19:05
- Topics: People & Blogs
- Watch: https://streameth.org/watch/yt-wQEwBPl1u5Y
- YouTube: https://www.youtube.com/watch?v=wQEwBPl1u5Y

## Transcript

Hello, Belgrade. Glad to be around. So, this is a bit of a special emotional one for me, right? Uh conference has been happening for three years and I've been here since the first edition. Um but this one, as you can see, I'm I'm uh the opening speaker for it and it's a bit of a long brewing story. Uh but I guess if I had to summarize it on uh a key idea is uh what I found in Serbia is they have this term here they call in and in is the capacity for stubborn defiance. It doesn't translate so well in English but it's essentially uh my understanding of it is you can try to tell a Serbian what to do but ultimately he will do what he believes is right to do and no matter the cost and the consequences of this choice. Uh and I think there is something in that enut that is very punk, very aligned with what we're doing in DeFi, right? Uh essentially we are building the tools for um practical inut in D5. So that's kind of my connection I guess between Servia and Athereum. I really think it's a space to look at uh for people that are here just for uh this conference. Maybe they will go like me and stay in Belgrade for many more editions to come. So today I want to talk to you about Polaris, a protocol I'm working on uh that is uh uh both um a yield engine for ease and then uh an infrastructure for stable coin. Uh today we're going to focus more on the east side of Polaris, but the two really go uh hand in hand. Um is it working? No. I'm sorry. Yeah. Well, it's okay. I can't switch slide, but it's fine. Um so the main thing you might have seen with the um discussion recently regarding staking right on uh EIP 8363 uh which was essentially a proposal for reducing staking and having a form of u u modulated um ponderation of the staking rewards uh depending on how much of the east supply in total is staked into uh the staking contract. Uh yes. Okay. Um so uh that leads us to the current situation with staking, right? It's very concentrated. Uh about a third of all the east in existence are staked and then among those E stake you have um consolidation within one dominant provider which is Laido. Uh you have a staking yield that is compressing of course as more and more people are piling up with more and more leverage. Um and yeah overall that led to the CIP that at face value was rejected but I think it's also the moment the ACM community as a whole realize that uh the topping of staking budget is a big like the retirement reform in modern democracies right you can beat around the bush but you will get back to it until you actually take action decisive action that are longlasting. So this is first attempt that resulted in a failure in terms of no change was made to the network. But uh people do understand that there is a topic here and uh I think the thing that really made me click is just this figure. Uh back when we were in the proof of work days the architect of the proof of stake uh when asked what would be the ideal amount of e stake on the network to achieve maximal security benefits. uh they were essentially giving figures in the 15 to 20% range. So uh a threshold we crossed two years ago uh again now we at 33%. So essentially we pass a stage where additional stake translate into additional security benefit for the network. We're in a stage where additional stake translate in to uh additional economic cost for the security budget of the network with no tangible security benefits. But yeah, it's a bit of a nerdy discussion, but that's a broader context on on staking, right? And it's very important in DeFi because uh staking is uh kind of the root layer of a lot of things that you see around. So if you think of the big protocol that uh we know of something like Avy for instance, um last time I checked about half of the AVL was some form of uh staked east looping or restake east looping. So you know we're talking 50% of the business of a protocol like AI but you have other protocols where it's also huge numbers on the dexes on pendal and so on. So alto together the staking industry is huge and deeply integrated into D5. Um there are also other more practical question regarding the staking model right and this is more about essentially what why you haven't seen a stable coin using rap stis as collateral. Um you know with staking growing out so much you could envision some form of rapis back stable coin performing really well. uh but there are um there are various technical reasons as to why it's not happening. We will see as we go into the pe um so yeah that's really the most fundamental thing to understand about polarist is you have this situation on the east takingaking where we need an alternative productive source on east that is not correlated to network security because we've overdone that by a factor of two already. uh and then this asset can have interesting properties that makes it uh having potential for things beyond just being a productive yield source on ease but most notably backing stable coin. Um so the key uh the key notion here is uh the bonding curve with polaris pes. So essentially um the way it works is it's a curve that ensure liquidity between P and E at all time right uh so instead of swapping against a liquidity pool like you'll do with a rap sties for instance uh you're taking you are swapping directly against a contract that has predictable capacity um and yeah that's huge factor right because if you take the uh wrap stake and Aries and other stake token at face value they great liquidity, right? You look at you want to dump a hundred million dollar of rap steakies today, you can probably do it with minimal consequences on the price and and get a good uh a good slipage. Uh the question arise when there is stress on the market uh and especially when there is stress on the uh given um stake token then the liquidity providers can pull out and essentially you have no guarantee and you're kind of back to the stone age of having to go through the reser queue and the delays that are here and so on. Um so essentially the uh liquidity on staked E is here when you don't necessarily need it but can um be pulled away from you in the time of most needs and we've seen that happen times and times again. Um so here with speed east the bonding curve bonding curve has no liquidity providers right so there is no one pulling from you when the market turns south the bonding curve just has a massive pile of ease that anyone can redeem their ps for or buy against um so yeah that's the first layer for pe right bonding curve guaranteed permanent liquidity availability Uh the second component is this idea of a rising flow price and essentially the fact that pees is actually two tokens wrapped into one. So um interactions with the bonding curve and other mechanism in polaris captures a fee in pe and then that pes is essentially burned which raise the floor price of a piece and liberate some ease that can then be rejected into the system as yield. So that leads you to u piece as an asset essentially having two price and two subassets that represent them. Uh the first price is the floor price. So again we go back to this question of capacity to exit in all situations including the most adverse one. This is really what the flow price is about. Flow price is telling you if every single PE holder right now want to exit immediately this is how much ease you're getting per pe and that's a capacity that again you literally do not have when you go on a st token for instance because you don't have this kind of guarantees uh the second dimension is that uh pie has this flow price right guaranteed by this uh uh fps the uh burn mechanism uh but Then peace has a market price that will evolve above the floor price. People are trading uh peace buying and selling against the bonding curve. Um and essentially the distance between the floor price and the market price is the second component of PC VP. Uh so it might sound a bit like financial alchemy but uh you need to realize here what's happening is essentially a new primitive on with subcomponents that allows you to essentially express any kind of exposure on that PE and uh earn a yield while doing so. Um so yeah I was talking about the the how the flow price appreciate. uh that's an important factor but essentially uh when you have swaps on the bonding curve or when you have uh all the fees captured in the system uh such as u um piece being burned for converting into polar all of this is captured into a fee routter and then distributed to uh the pe holders in a way essentially uh technically how it work is a fee is captured in pe burned that freeze east from the bonding curve then used to repurchase pe on the market and fuel the yield system. So it kind of guarantees a double uh marginal but double and consistent flow price appreciation of every interaction with the protocol. Um so this is a bit of how equation of splitting looks like right. Uh so the pees that is essentially uh yield bearing uh is variant with a volatile price market price but also a flow price against ease and you can split that pees into just a flow price component and just a volatility component if you want to. Um again more interesting than just the row assets themselves is also the exposure this allows you to do. Um so for instance you know maybe you want to use polaris to mean some stable coin but um for whatever reason you don't want to be exposed to the volatility on pe right you're happy with an exposure but not the volatility on pe well then what you can do is simply you acquire pe on the market uh you will do your uh borrowing on polaris and then you short vpes to an equal amount that the amount of pe you And essentially what you have achieved as an exposure is your base is PE you neutralize the FP the VP component. So you left with a floor prices exposure. So it's just one example of what you can do in practice but it kind shows you that um what you can do with this system is is is quite huge and uh fitting to all kinds of profile being from treasuries to uh individual whales defi users uh really um everyone um so the floor price east is an interesting one right because it's essentially an up only is wrapper um protected from downside with a guaranteed uh redemption price. Um so it's a pretty good long-term hold for people who are just looking to park east over the long term and make a yield of uh Ethereum on Ethereum essentially by uh being in FPS you will follow the um flow price appreciation of the bonding curve and so essentially if the system keeps growing there is activity uh your FPS will trickle uh trickle and appreciate against um against the east underlying VP is more of a wild pie, right? But it's also where uh the highest capital efficiency multiples are made. Uh VP is essentially the volatility absorber of the system in the split. So the FPS is capturing the floor. VPS captures the distance from the floor to the market price. So depending on the sentiment of what's happening, this spread can be more or less uh important. Right? So if a lot of people are dumping PS for instance because there is a wave of panic and people are looking for liquidity it will likely compress the market price closer to the floor price making a potential good entry on VPs. Then as people get excited on the system they buy a lot of P. So at once again it pushes the market price of PE up the floor price always follow but the floor price is you know on his own momentum that is much slower. So this is a moment where you would want to be exposed to VPs to capture that expansion of the market premium. Um yeah, Polaris is a is a dense product. You have a lot uh that you can do with it. So I'm trying to focus on the essential but really uh the core thing is uh an alternative base layer on is right with this piece that then has a maximal optionality for you as to what you want to do. So the uh VPs FPES using piece as collateral for loan just looping piece itself. Um and all of this enforced by imitable code and essentially security guarantees that are completely different than what you have on the staking side. Uh and I know the uh this is probably the craziest component of polaris right uh this is kind of the last component that we have on fps uh that is allowed just by the guarantees that the system is able to provide. So uh because again an FPS is a claim on the floor price of one piece right. So an FPS has a permanently guaranteed always available east capacity underlying. So what the reserve loans do is essentially allow you to mobilize that capacity instantly. So those are essentially non-liquidatable loans on your FBE. um and the interest is paid by is on the appreciation that you made against the for price. So it's essentially a great device for um a long-term hish holder that want to harness the yield of polaris will acquire fps and then can put it in a reserve loan and essentially lever up his position if he wants to or even harness other yield sources on top of polaris. So you know the reserve loans give you access to E and then you can I don't know redeploy those E for instance in a just regular staking system to harness the staking Y on top. So it allows the system to kind of track the yield of other assets and define uh the the base rate on it. Um another important dimension is uh this difference with uh the guarantees that you have um compared to uh st. So uh here on this slide pees and uh st are compared right and uh there's this question of availability of the liquidity I was mentioning to you before this is really the main one right completely overlooked but really important and the main reason why again the ultimate proof of that is like okay find me a $3 billion stable coin backed by stis because stis is like 60 100 billion if you put them all together even more so why is there not even 3% % of that backing a stable coin. Well, the why is right there. The why is because okay fine, I might be all cute and have three billion of stable supply backed by some st. But then panic happen because of some EIP or whatever and liquidity provider starts to pull out and I end up with 300k mobilizable at the time of need. I know there is an east dump and I have to actually liquidate but I literally don't have access to the liquidity and I need to wait seven days which is eternity for defy protocol to to mobilize. So the stake token simply cannot work well as guarantees for stable coin. Uh the pees and especially the fpes kind of matches what people have in mind with the stake token but with a completely different set of guarantees. So the the PE has some volatility all right that you won't have in ST this situation but if you consider the FPE it's kind of one one matching with the wrap stake so it constantly appreciate against ease and you can get in and out at any time um so yeah we believe the FP side of the business has a lot of uh room for growth on just passive solder with a long-term perspective Um yeah so uh I've really focused a talk on the uh east side of Polaris but as I was saying uh Polaris is is kind of a dual head protocol right you have the east side and then you have the stable coin side initially um it was really focused on the stable coin the east side cayen as um almost like as a research device right because all of what I was saying about the um st token as collateral for stablecoin all this understanding that we had. Uh then we looked into okay how do you solve this? How do you make essentially a token that is is variant an is rapper an is correlated token but that also has um very good proprieties to back a stable coin out of it. Uh and as the system grew the stable specified we realized the east side has a lot uh to it as well and um has a lot of merits by itself. So even if you're not interested at all into minting a stable coin, USDP or goldp uh there are a lot of options that are uh enabled by this east side with FFPS NVPs. So yeah, uh this is my uh my talk for for Polaris. Uh I don't know if we have time for some question. Uh else I'll be around the conference anyway. We have a booth right below. What's the status? All right. Thank you. Thank you, Token.