ETHplus Rebalance Q2 2026 - Step 1 Interim Report
The first step of the Q1 2026 rebalance was successfully completed on 13th June 2026. As the backing buffer was heavily overfilled, ~150%, prior to the rebalance, the rebalance did not drop the buffer below 100%. As a result, ETHplus holders and RSR stakers experienced no interruption in yield distribution, as any debt burdens to the buffer must be filled in with new appreciation before yield distributions can continue.
While the completion of the interim basket hasn’t materially improved the executional depth of ETHplus, with 100% of the supply (5,000 ETH) being able to enter and exit ETHplus in a single transaction with under 0.5% slippage before and after the rebalance, we do see material improvements in the holder yield profile which is now trails it’s stETH benchmark by 3% Vs 7% before the completion of the first step of the rebalance.
Interim Basket
Proposed Final Basket
Achieved by completing the proposed second step of the Q2 rebalance.
Summary
Looking ahead, there remains a clear benefit to completing the second step of the Q2 rebalance, which will involve a further 5% reduction in rETH, 1.5% reduction in ETHx, a 5% increase in frxETH and 1.5% increase in weETH. Based on current estimates, completing the second step will marginally increase the executional depth of ETHplus, ensuring that 100% of the collateral basket can be exited in a single transaction with under 0.5% slippage, and with healthy executional depth for minting ETHplus provides substantial headroom for growth.
More importantly given executional depth is less of an issue with a supply of roughly 5,000 ETH this second step allows us to continue optimising for yield. Prior to the first step of the rebalance, the basket under performed it’s stETH benchmark by 7%, underperforms it by 3% at present with the completion of the first step of the rebalance and with the completion of the second step will underperform by only 2%. This sets the groundwork for future optimisations which have the potential to outperform the benchmark at the next rebalance at the end of Q3 2026.
With the continued contraction in ETH supply to ETHplus we have seen TVL drop from $22m to $8m between liquidity reports and subsequently seen the percentage of the total TVL of collateral assets held within ETHplus contract as well. During the Q2 Rebalance discussion, a core reason against increasing frxETH’s share was the concentration risk, with ETHplus supply contracting ETHplus now holds 1.84% of frxETH’s total TVL and will hold 2.46% after we rebalance into the final basket, mitigating this concern.
Next Steps
I now plan to liaise with ABC Labs on scheduling the second step of the rebalance. Their operational oversight is greatly appreciated in order to mitigate loss. Once timing is confirmed I will announce it here. As always, feedback from governors is welcomed.