END: Liquid Staking Yield Token
A liquid staking yield token (LSYT), or a "meta-LST", is a metamorphic LST of concentrated yield.
END Token
The END token is the native yield token of the Ender Protocol, providing a concentrated yield as well as a token for liquidity allocation or provision into other LST protocols and strategies. This means that the token is fully backed from the yields coming from the bond deposited assets in LSTs, which will include multiple different LSTs like stETH, rETH, frxETH, cbETH, etc.
'Universal' Liquid Staking Power
With the native yield token of the protocol, not only can you stake the tokens for sEND to get a rebase reward of concentrated yield, you can further use them as a liquidity allocation token within the protocol to direct the LST assets deposited through the bonds in order to actively direct concentrated staking power to various strategies or LSTs.
Essentially, by staking END tokens, you are able to capture the staking power and liquidity of ALL of the LSTs deposited into the protocol. This means that even if 1 END tokens represented .1 ETH of LSTs which came from the yield of the bond deposits backing the token, it could potentially influence the value of 1 or even 10 ETH deposited into the protocol by the bond deposits. This is the power of LSP tokens.
Concentrated Yield Tokens
Through the process of yield splitting, the END tokens are able to receive a concentrated yield based on the asset yield rate of the LSTs deposited into the bonds. This is because the bonds issue a yield based in the END tokens which are the base supply of the tokens fully backed by a portion of the yield from their bond deposits.
Subsequently, these tokens of a percentage of the overall asset yield are then able to be staked for the remaining portion of the rewards, meaning that they receive a proportionately higher amount of the rewards for their supply, providing them with a concentrated yield of the liquid staking rewards of the LSTs.
Yield Splitting
The END token is based on a novel protocol mechanism called "yield splitting", which takes the bond deposit yield of LSTs and splits the yield between the bond reward that the bond depositors get in the base supply of END tokens, but then through staking of the END tokens, rebases the tokens further to give the difference in the remaining rewards from the bond deposits.
This creates a token that can be staked for a concentrated yield that is being backed by the yield basis of the bond deposits, effectively allowing for the bond depositors to sell their liquid staking yield, creating a yield marketplace of staking power.
Rebasing Reward
By acquiring END tokens, you may further stake the tokens in order to receive a rebase reward after each epoch. As the staking yields from the LSTs deposited in the bonds are accrued in the treasury, we calculate the rebase reward value by the bond reward in END tokens subtracted from the deposit returns of the LSTs, and then rebase that value to the staked END tokens.
This means that the END tokens not only acquire the yield coming from the bonds, they are constantly over-backed by the deposit returns until each rebase, which effectively "rebalances" the token supply to match the backing ratio of the treasury assets composed of the bond deposits and its yield.
Staking Rebasing Calculation
At the core of the Ender Protocol, is the rebasing mechanism in which calculates based on the bond deposit return, and the bond yield return in END tokens, which are being issued against the LST returns at a lower rate, is then rebased to achieve a full-backing of the END token.
The formula to calculate the staking rebase value is as follows:
Deposit Return - Bond Return + Nominal Return = Staking (Rebase) Return
The deposit return is the return from the LST yield.
The bond return is the bond reward based on the bond yield in END.
The nominal return is to adjust for the compounding returns from the treasury assets, which are just the deposit returns after the END tokens minted through the bonding and staking mechanism have achieved full backing. This means that over time, the END token backing by the treasury will slowly increase due to the compounding returns, and so the nominal yield rate can be set to offset that.
What you get is the rebase value or staking return which gives the full backing of END based on the deposit returns.
Using a table, we can also show how the deposit flow works and the values being calculated for each column, in this example:
1
0.015068493151
5.4794520548
9.589041
15.068493
0.0150684932
2
0.016575342466
6.0273972603
10.547945
31.643836
0.0316438356
3
0.018232876712
6.6301369863
11.602740
49.876712
0.0498767123
4
0.020056164384
7.2931506849
12.763014
69.932877
0.0699328767
As you can see, the total deposit return is backing the total supply in END, creating a 100% backing. But the staking return is based on the bond return which you can stake the END coming from the bond return, that is a return that is concentrated thus creating concentrated yield through staking of END.
This table doesn't account for the value which is in the treasury backing the END tokens, which are just being added up as the total deposit return, but with that value being compounded on top. This will create an over-backing over a long period of time, which is considered as the treasury return.
This value can be adjusted for through the nominal return and further through the Treasury Mint.
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