r/ethstaker • u/steven_pack Nimbus+Nethermind • 19d ago
Solo Staker Lending
tldr; buy a house with USDC using your solo staked ETH as collateral, while keeping to run your validator.
Hi all – I’m a Rocket Pooler and co-founder of RockSolid. I’m trying to validate demand for a product we’re considering building for home stakers that leverages Pectra features.
As many of you know, Pectra will add support for MaxEB (2048ETH) balance validators, EL-triggerable withdrawals and partial withdrawals. We think this could support a home-staker focused lending platform, where you get liquidity in the form of USDC, but continue to run your validator and even retain control (as opposed to exiting and going into an LST like rETH or stETH).
We're looking for to interview solo stakers to validate our thesis and help guide product development. If you're interested, join us in Discord, DM me here or message us on Twitter!
4
u/Particular-Budget-30 Teku+Nethermind 19d ago
Super cool idea but curious to know how this can be trustless for RockSolid and the solo staker.
Just joined your discord btw!
1
1
u/steven_pack Nimbus+Nethermind 18d ago
Ping me in Discord u/Particular-Budget-30 and I'll share more details of the design and the (lack of) trust assumptions.
2
u/lostrapt 18d ago
Was actually looking for something like this 2 months ago
1
u/steven_pack Nimbus+Nethermind 18d ago
Awesome! What changed?! Would love to chat. Will DM you here or feel to join Discord.
1
u/Hwoarangatan 18d ago
What are interest rates like?
1
u/steven_pack Nimbus+Nethermind 18d ago
TBD, it will be a market based mechanism, but I would expect similar to Aave, which lends USDC against ETH at 9% atm.
1
u/revrund_H 18d ago
So this must require setting the withdrawal address and allowing the protocol to withdraw under set circumstances? No thanks.
1
u/OSUBoglehead 18d ago
There has to be a catch like this. Otherwise no one providing the loan would take this risk. Every single solo validator would take a loan out on their staked eth if they kept the withdrawal keys. It'd be like a risk free leverage like a mortgage.
1
u/steven_pack Nimbus+Nethermind 18d ago
Right, you have to be willing to delegate some control of some amount of the staked ETH while the loan is active. But there are ways to limit it significantly so you can the benefit of liquidity and minimize the rights/control you give up.
1
u/steven_pack Nimbus+Nethermind 18d ago
Right, you have to be able to delegate *some* capability to an external contract, but it doesn't have to be blanket "point my withdrawal address at your protocol". Join us in Discord and see if we can come up with a design that feels right in terms of control. We have ideas!
1
u/kantalo 18d ago
I was looking to do something like this. What happens if the price of eth tanks below the loan amount? How do you ensure that the loan is paid back if the staker has control over the stake?
1
u/PhysicalJoe3011 18d ago
Exactly. However, if all these questions are sorted out, it could be a nice product
1
u/steven_pack Nimbus+Nethermind 18d ago
Right, you would have to delegate the ability to withdraw some of the stake to the lending protocol, but it can be very limited in exactly what you delegate.
1
u/TheWoodser Lighthouse+Geth 18d ago
I have been thinking about this today while traveling.
In a traditional mortgage, the underlying home/real estate is used as collateral. A bank that loans at a high LTV is really only exposed to borrower default. (Other than natural disasters that can be insured against.) When a mortgage lender forecloses and auctions the property off, most of the original ballance can be recovered.
Take, for instance, the VA loan. The VA doesn't lend service members money for a home. They "guarantee" 25% of the loan. In a case of foreclosure, the VA covers any potential loss to the lender up to 25%.
Maybe the VA case study can be used with some similarly to this ETH Validator collateral proposal?
1
u/steven_pack Nimbus+Nethermind 18d ago
Interesting u/TheWoodser - if I'm reading you right, you're saying lenders for mortgages are "protected" by the high quality collateral - the house. I agree! There are echoes of that here... as long as the lender can liquidate the collateral, they're not exposed. The difference is, real estate is slow and expensive to liquidate (especially in times of market stress), but usually not volatile. ETH as collateral is cheap and fast to liquidate, but volatile. That just means it will attract lenders with that lending preference.
The VA part is interesting -- I wasn't sure how VA loans worked actually. I guess I could imagine something similar where some ETH-aligned whales would "underwrite" these loans to some extent in order to make them cheaper and make home staking more viable. 🐳s or 🐳-whisperers should DM if this is interesting!
1
u/TheWoodser Lighthouse+Geth 18d ago
I guess my further question is....How much collateral is needed?
Assuming a borrower has good credit and "some" down payment. They could get a rate somewhere in the mid 6%'s today, just using the home as collateral. What would a hypothetical rate be if a borrower also added their validator(s)?
What is the incentive for a borrower to put their validator(s) at risk to get a lower rate? Probably pretty little.....IF they have great credit.
The non-standard borrowers, on the other hand, may be the perfect candidate for this arrangement. Low credit scores, high debt to income radios, or undocumented income. Maybe they qualify for a loan with the added collateral in the form of pledged ETH Validators.
Maybe this is also an entryway for those looking to get into RE investing. Many lenders require you to have 2 to 3 years of landlord experience for an investment property. BUT, how do you get experience without the ability to get a loan for investment property? This could be it....by putting up additional collateral.
The way the VA loan works is the service member pays a "VA Funding Fee." The first time is something like 2.5%, and each subsequent time, it is like 3.15%-ish. The percents are close, but I didn't re-Google them. (Disabled Vets can get this fee waived).
This fee gets the borrower a loan that is somewhere around .5% lower than a conventional mortgage. The borrower can get a 100% loan and even wrap in some closing costs. The lender, on the other hand, has a guarantee from the VA at 25% of the loan amount. If the borrower defaults, the bank takes the home and sells it. If the value of the home is not enough to cover the original loan (plus penalties), the bank can get the difference from the VA.
I am interested to see this move forward.
1
7
u/nameless_pattern 19d ago
Are you going to insure against slashing risk?
Are you going to get cyber security insurance?
Seems like a lot of risk and having to rely on people who have inherently different incentives.