Pegging $mevETH

Hello.

Currently $mevETH is sitting at 6% under its target value. This is because withdrawals are not enabled but also because holders lack confidence in the project.

Opening withdrawals would do the job - but before they are enabled it is crucial to repeg $mevETH. Restoring the peg beforehand would eventually lead to greater TVL as less people would be inclined to exit.

  • We avoid opportunistic withdrawals from arbitrage seekers
  • The sooner the peg is restored the more confidence the project projects (less holders want to exit)

I realise there are plans to do this via incentivizing LP pools. I don’t believe this is optimal as it (a) costs money (b) creates more liquidity but not the buy pressure which is needed.

I propose an alternative approach:

The team should unstake a large portion of ETH (a few x% of the currently staked amount). With this it should create a large TWAP order on CoW Swap that lasts a few weeks.

I think the following approach has a few obvious benefits:

  • Buying discounted mevETH will be profitable. This way the profits are captured by the team and can be returned to the protocol.
  • It increases buy pressure as people will have a hard signal (the TWAP order) that the $mevETH peg will be restored.

Once the peg is restored once it will boost the confidence in the project - making it more likely to stay at the peg.

What I like most about this approach is that arb profits are routed back into $mevETH instead of being lost to bots / lucky holders who will withdraw first. So I hope we can do something like this.

Finally I would like to ask if someone can elaborate a bit on how the withdrawal process works. I’m not familiar with this in general. Are there any remaining blockers with $mevETH before they can be enabled? How does it work with Lido? How much can be withdrawn per day / per user? How long would it take to unstake 5% of $mevETH? Thanks.

1 month later peg is at 0.96 and 51% of mevETH has entered the queue to unstake.

Doesn’t really mean anything if you say “post on forums” 20x times in telegram if you don’t give the forum any attention.

Hi Gerald,

Thank you for your suggestions. Apologies you did not get a response earlier. Our team has been very busy. On your points, the market prices of mevETH on balancer, curve and uniswap are more or less in equilibrium now. This is not something we have control over, neither does the team have infinite resources to peg market prices. We have however, been protecting contract funds from mev arbitrage via multisend withdrawal queue processing.

On the withdrawal queue, we snapshot how much needs to be processed every week. Validator exits are initiated which can take anywhere from a week to a month to finalize through external validator and sweep queues. Funds can then be disbursed to users. Lido works in a similar fashion. Further, we have a mevRouter which uses the best rate for instant redemptions.