Vault Rationale
The K3 Capital ETH Maxi MetaMorpho vault lends ETH against the most liquid and battle-tested liquid staking and staking tokens on Unichain: wstETH and weETH, respectively. The vault is aiming to drive LST and LRT adoption and improve the market structure, allowing for capital efficient rehypotication and just-in-time liquidity for AMMs to facilitate leveraged looping and liquidations.
Built for resilience and scale, K3 Capital ETH Maxi serves delta-neutral strategies that:
- allow active asset managers to improve the return on their yield-bearing inventory (wstETH and weETH) through recursive borrowing of WETH.
- acts as a set-and-forget savings account for passive ETH lenders, benefitting from steep utilization curve and third party incentives
Vault information
- Address: 0xfA355999c12C63c465c591daf9C462e14ACf470b
- Ticker: K3WETH
- Timelock: 3 days
Token Issuers
wstETH is the wrapped, non-rebasing ERC-20 version of Lido’s staked-ETH token (stETH). Each wstETH represents an ever-growing share of the underlying ETH validator pool: the token’s balance stays fixed, while its exchange rate versus stETH and ETH rises as staking rewards accrue. This fixed-supply behavior makes wstETH plug-and-play collateral across DeFi markets, lending pools, and cross-chain bridges — delivering the same staking yield with broader protocol compatibility.
Lido is the largest ETH staking provider, commanding 25.9% market share:
Ethereum ETH Staking Dune Dashboard by hildobby
Market parameters
- Collateral asset: wstETH
- Borrowable asset: WETH
- Collateral supply limit: 15,000 WETH
- Liquidation loan-to-value (LLTV): 96.5%
- Oracle: Redstone Fundamental Oracle (exchange rate)
- Interest rate model (IRM): Adaptive Curve IRM
weETH is ether.fi’s wrapped, non-rebasing ERC-20 token. It locks a fixed token balance while its exchange rate versus eETH/ETH steadily rises to pass through (1) vanilla Ethereum staking rewards and (2) extra EigenLayer restaking yield and loyalty points. Similarly to wstETH, the design allows for clear weETH integrations with DeFi money markets, DEXs, bridges and L2s that can’t natively support rebasing tokens.
Ether.fi is by far the largest and most liquid LRT provider on the market. To date, the protocol controls 72.6% of the market:
LRT War - Liquid Restaking Token Dune Dashboard by hashed_official
Market parameters
- Collateral asset: weETH
- Borrowable asset: WETH
- Supply limit: 10,000 WETH
- Liquidation loan-to-value (LLTV): 94.5%
- Oracle: Redstone Fundamental Oracle (exchange rate)
- Interest rate model (IRM): Adaptive Curve IRM
Fees
The performance fee for the vault is fixed at 10%.
About us
K3 Capital is an institutional DeFi liquidity provider and risk optimization firm focused on shaping the future of decentralized finance through rigorous fundamental-driven research and active market participation. Originating as an on-chain asset manager in 2021, K3 Capital is actively managing delta-neutral portfolios exceeding $570M, gaining unmatched insight into the mechanics of DeFi markets at scale.
Leveraging its institutional experience, industry relationships, and balance sheet, K3 Capital expanded into managing risk across a list of public markets and proprietary products — with an emphasis on stablecoin products and borrow/lend marketplaces.
Learn more about K3 Capital:
Website | X | Telegram Updates | Dune Dashboards
Risk disclosure
The high LLTVs and fundamental oracles used are aiming to create an efficient and robust market. However, it overexposes lenders to substantial risk towards Lido’s and EtherFi’s infrastructure and slashing.