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icETH vs. dsETH: Understanding the Difference | 2/22 Newsletter
icETH vs. dsETH: Understanding the Difference | 2/22 Newsletter
A guide to understanding the difference between dsETH and icETH
2/22/2023
Index Coop
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icETH vs. dsETH: Understanding the Difference
At Index Coop, we understand that navigating the world of DeFi can be overwhelming. With so much information and news out there, it can be difficult to know what to trust or where to start.
That's why we encourage everyone in our community to ask questions. We are here to help you learn and understand DeFi and our products so you can make informed decisions that are right for you and your situation.
Recently, we’ve had questions about the difference between dsETH and icETH, so we’ve written up a thorough explainer.
If you have additional questions, don't hesitate to contact us in Discord or reply to this email.
This week we’re sharing:
A guide to understanding the difference between dsETH and icETH
A new index that makes it simple to allocate to an ETH-BTC strategy
Who’s the new meta-DEX aggregator on the block?
— The Index Coop team
icETH vs. dsETH: Understanding the Difference
Index Coop has developed two tokenized strategies to help ETH holders generate a yield: the Diversified Staked ETH Index (dsETH) and the Interest Compounding ETH Index (icETH).
But how are they different, and what are the right use cases for each?
dsETH is a simple and diversified way to gain exposure to staked ETH rewards, while icETH provides an enhanced yield on ETH with an automated leverage strategy. dsETH promotes decentralization amongst liquid staking protocols, while icETH eliminates the need to manage collateral and debt balances.
Learn more about dsETH and icETH
Inexpensive Exposure to the ETH-BTC Ratio
The Index Coop has proposed launching a product that provides exposure to the ETH-BTC ratio. The product will use Aave's V3 Market to supply wETH, borrow wBTC, sell it for wETH, and supply it back as collateral to Aave V3.
This higher-risk strategy has historically outperformed both dsETH and icETH strategies over a long-term time horizon. The product delivers value to customers by offering exposure to the ETH-BTC ratio in a low-risk fashion, abstracting the management of collateral and debt balances, and socializing gas costs associated with maintenance.
The target audience for this product includes on-chain Ethereum investors and traders who believe ETH-BTC outperformance is likely to continue.
Read More About The ETH-BTC Ratio Index
Index Coop 🦉 ❤️ DefiLlama 🦙
Index Coop’s latest token, dsETH, is now available on DefiLlama's new DEX meta-aggregator.
A DEX meta-aggregator enables users to search for the most favorable price and conduct trades across several decentralized exchanges simultaneously.
By trading on a platform like DeFiLlama, you can save money and quickly find the best deals when trading Index Coop products and cryptocurrencies.
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FAQs
Index Coop yield tokens simplify earning yield in DeFi by automating complex strategies and diversifying across protocols. They are user-friendly and cost-efficient, appealing to both new and seasoned DeFi users.
Leverage tokens automate a leveraged position by utilizing onchain money markets like Aave or Morpho to borrow funds, amplifying a user's exposure to an asset without requiring manual management. The token's smart contracts autonomously handle the borrowing, lending, and rebalancing of assets, maintaining a consistent leverage ratio despite market fluctuations. This automation eliminates the complexities of collateral management and liquidation risks, while also charging low, transparent fees that avoid expensive funding rates often charged by perps.
Index Coop is a decentralized autonomous organization (DAO) that specializes in creating and maintaining onchain structured products. Index Coop aims to democratize access to the crypto market, empowering everyone to participate in the growing digital asset ecosystem with ease.
No, yield automatically compounds and accrues to the token price. The value of the tokens you hold in your wallet will simply go up over time without the need to claim or compound rewards.
Index Coop products protect you from liquidation with automated risk management that rebalances assets to maintain a target leverage ratio that avoids liquidation.
INDEX is the ERC-20 governance token on Ethereum for Index Coop. INDEX empowers its holders to participate in decision-making processes that shape the future of Index Coop.
Yes, all Index Coop products are instantly redeemable for their underlying value at all times.
Yes, all Index Coop smart contracts have been audited by leading independent security firms such as OpenZeppelin, ABDK, Isosiro, & more. There is also an active bug bounty program through ImmuneFi. Audit information is published in the docs here.
Streaming fees (an annual fee paid continuously block-by-block), mint and redeem fees (only on leverage tokens), and borrow costs (interest paid to borrow funds from onchain markets when using leverage).