This report aims to provide a comprehensive update of all ETHplus related activities over the last quarter, including both on-chain and off-chain data. The purpose of this report is to inform and educate the wider Reserve community on the activities of ETHplus while also becoming a reference library for all governance, social media and on-chain data.
Summary
-
Q4 marked a sharp reversal from the growth seen in Q2 and Q3, with ETHplus market cap declining 71.4% quarter on quarter following broader market deleveraging after the 10/10 Balancer exploit.
-
The drawdown was primarily liquidity driven, not structural. Basket composition, methodology, and diversification remained unchanged, with the diversification ratio holding steady at 65.5% across the year.
-
Total ETHplus supply contracted by 60.3% over the quarter as large liquidity providers unwound positions to manage external losses across DeFi.
-
Despite overall TVL contraction, ETHplus continued to expand composability, with new leveraged strategies launched on Gearbox and approximately 2,000 ETH of supply added across smaller venues.
-
Gearbox emerged as a key distribution channel in Q4, with ETHplus selected as a launch asset for KPK curated vaults and seeing continued uptake despite the removal of incentives.
-
ETHplus supply across Term Finance fully unwound during the quarter, highlighting ongoing sensitivity to layered risk perceptions during periods of market stress.
-
Token holder and transfer metrics remained strong, with holders up 48% quarter on quarter and 90 day transfers increasing 186.9%, reinforcing continued organic usage despite declining TVL.
-
Looking ahead, focus will shift toward improving venue diversification, strengthening execution liquidity through the upcoming basket rebalance, and rebuilding sustainable unincentivized supply.
Question for Governors
As ETHplus transitions away from incentive driven growth, where should governance prioritise distribution efforts to rebuild sustainable, unincentivized TVL?
Should focus remain on deepening DeFi composability through protocols such as Gearbox, Curve, and lending markets, or should greater emphasis be placed on alternative distribution channels including structured products and fintech style integrations such as UglyCash?
Full Report
ETHplus Headline Metrics
For the first time since the inception of these quarterly reports, we now have a full calendar year of data. This allows us to assess not only quarter-on-quarter changes, but also how core metrics have evolved year on year. Unfortunately, Q4 marks a sharp reversal from the growth observed through Q2 and Q3, with most headline metrics contracting significantly. As ETHplus broadly tracks ETH, some degree of market cap and TVL volatility is expected during periods of ETH price weakness. However, the 71.4% decline in market cap cannot be explained solely by a roughly 25% drawdown in ETH over the quarter, and instead points to large scale position unwinds. While ETHplus was not directly exposed to the Balancer exploit on 10/10, second-order effects were significant with large liquidity providers being forced to unwind ETHplus positions to cover losses elsewhere. This unwind drove a 60.3% quarter-on-quarter reduction in ETH supply and a subsequent sharp decline in RSR staking APY. Importantly, metrics such as diversification remained unchanged across the year, with the diversification ratio holding steady at 65.5% due to no change in basket composition. This reinforces that the Q4 drawdown was primarily liquidity driven rather than a fault of poor basket composition or methodology drift.
When comparing year-on-year we can see that headline metrics are down against the start of the year as well. Market cap has returned broadly to Q1 levels at $101.9m, down from $103.0m at the start of the year While ETH supply has halved from 65,000 ETH to just 34,000. ETHplus therefore exits the year structurally intact, but operating at a much smaller scale than observed through Q2 and Q3. With the upcoming basket rebalance, which increases exposure to deeper liquidity assets with a combined 72% allocation to stETH and weETH, ETHplus will enter the new year in a meaningfully stronger position from an execution and liquidity perspective, setting the stage to reduce reliance on incentivised supply and instead attract new liquidity partners and capital allocators to bolster unincentivized supply as market conditions stabilize.
Current ETHplus Collateral Basket
No changes made to the collateral basket this quarter with yield decreasing from 2.82% to 2.62%.
Token Holder and Transfer Metrics
A very strong quarter for token holder and transfer metrics with a 48% growth in token holders and a 186.9% growth in 90d token transfers. When comparing year-on-year the growth in these metrics is even more stark with an over 100% growth, likely due to the increased DeFi composability of ETHplus with new strategies like Gearbox leverage looping for both ETHplus and the ETHplus/ETH Curve LP both significantly contributing to this growth.
DeFi Integrations
Despite improvements in DeFi composability and pockets of ETHplus supply growth across smaller venues, these gains were ultimately outweighed by a sharp contraction in total DeFi TVL this quarter. New markets on Gearbox came online and Curve recorded approximately 7% growth in ETHplus supply. However, this progress was overshadowed by a significant drawdown on Morpho, historically the largest venue for ETHplus supply, where balances declined from 43,667 to 7,659 ETH.
While ETHplus has benefited from strategic alignment with Morpho, this quarter highlighted the limits of concentration within a single liquidity venue. The market stress following the Balancer exploit on 10/10 triggered large position unwinds across the ecosystem, with second order effects impacting ETHplus supply despite no direct protocol exposure. Events of this nature reinforce the importance of improving DeFi composability to reduce reliance on any single protocol or liquidity partner, strengthening resilience during periods of systemic stress.
Outside of this contraction, ETHplus experienced a more constructive quarter. Leveraged lending markets for ETHplus and the ETHplus/ETH liquidity pool were launched, collectively attracting approximately 2,000 ETH in new supply. In parallel, the ETHplus/ETH Cryptoswap pool continued to see steady growth, with supply increasing by roughly 7% as incentives stabilised. While ETHplus supply across Term Finance dropped to zero with all vaults instead favouring assets with less layered risk, predominantly wsETH and Aave ETH.
On a year on year basis, ETHplus supply across DeFi expanded rapidly through the first three quarters, reaching a peak in Q3. However, this growth wasn’t resistant to the market stress seen after 10/10 and by year’s end saw subsequent contraction across major venues and reduced total ETHplus supply to levels 50% below the year open.
Morpho Markets
Curve LP Pairs
In Q3 we saw the migration of the main ETHplus/ETH LP from a Stableswap pool to the Cryptoswap variant. While this initially saw an aggregate decline in supply across Curve markets, supply has now stabilized at a higher baseline than that found in Q1 and Q2. While this may be partly due to higher yields and incentives in the new pool it is strongly supported by the KPK ETH V3 vault including the new ETHplus/ETH LP as collateral, enabling leveraged looping for the LP. This strategy remains the highest yielding ETH strategy on Gearbox and currently has a max live APY of 23.5% and 10x leverage.
Uniswap LP Pairs
Gearbox
This quarter marked a strong partnership between ETHplus, ABC Labs, KPK, and Gearbox, with ETHplus selected as a launch asset for the KPK-curated Gearbox vaults. ABC Labs supported the initial rollout by providing targeted incentives to accelerate early adoption and bootstrap supply. Although these incentives were originally scheduled to run for two months post-launch, an additional month was approved in response to sustained ETHplus utilisation within the vaults.
While incentives have now concluded, demand for leveraged ETHplus looping has remained high. As a result, when KPK and Gearbox expanded their product offering to include leveraged LP farming strategies optimised via Beefy, ETHplus emerged as the natural choice. Despite this market being both newly launched and currently unincentivized, uptake has been strong, with approximately 333 ETH supplied at year end.
Term Finance Markets
The final quarter of 2025 saw a full unwind of ETHplus positions by vault curators on Term Finance, with allocations rotating into either a blended position of stETH and weETH or into Aave ETH. While the blended stETH and weETH exposure broadly replicates the yield profile of ETHplus, Aave ETH underperforms by comparison.
At present, the precise drivers behind the complete exit from ETHplus on Term remain unclear. This may be linked to second order effects following the Balancer exploit on 10/10, though alternative factors cannot be ruled out. Regardless of the underlying cause, the scale of the withdrawal is a point of concern.
A key priority for the ETHplus champion in the coming quarter will be to engage with Term vault curators to better understand the rationale behind this decision and, where appropriate, encourage reallocation back into ETHplus. A further update will be provided in the next quarterly review.
Governance
Proposal 1 - Modelling how ETHplus would react to a deep and sustained stETH depeg and what actions we can take via governance to mitigate loss
RFC
Total unique commenters - 6
Off-chain Poll - 6 votes (6 for / 0 against)
IP
Unique Voters - 3
For - 113m (127% quorum)
Against - 0
Update - Phasing out incentives for ETH+/dgnETH on Curve
- Incentives for hyUSD/eUSD (Aerodrome) and dgnETH/ETH+ (Curve) will be phased out over separate timelines
- hyUSD/eUSD: three-week wind-down starting today
- dgnETH/ETH+: phased reductions beginning November 13 and concluding December 11
- Incentives will be reallocated toward LCAP and other Index DTFs
- LPs are encouraged to gradually exit or reallocate during each phase
Social Media
This section looks at the data surrounding the ETHplus X account only
Most Viral Tweet
Following explosive growth in Q3, ETHplus social media metrics stabilised at a higher baseline in Q4. Posting cadence increased by 46% on the quarter, though without replicating the peak virality observed in some Q3 posts. As a result, impressions declined over the quarter but remained elevated on a year on year basis, standing approximately 5x higher than Q1 and 3x higher than Q2. Combined with a 25% increase in follower count, this reflects continued and sustainable growth across the year rather than one off non-organic engagement.
Conclusion
Q4 marked a challenging period for ETHplus, with significant contraction across headline on-chain metrics following the market stress experienced in October. While ETHplus itself was not directly exposed to the Balancer exploit, the resulting second order effects drove widespread deleveraging and liquidity withdrawals across DeFi, materially impacting ETHplus supply and market cap. This quarter therefore represents a clear inflection point from the strong growth observed through Q2 and Q3.
Despite this contraction, several core fundamentals remained intact. Basket composition and diversification were unchanged throughout the year, reinforcing that the drawdown was driven primarily by liquidity dynamics rather than structural weaknesses in methodology or asset selection. At the same time, progress continued across integration and composability, with new leveraged strategies launched on Gearbox and continued development of ETHplus as a base asset across DeFi and structured products.
As ETHplus enters 2026, focus will shift toward restoring sustainable, unincentivized supply, improving venue diversification, and executing the upcoming basket rebalance to strengthen liquidity resilience. With governance processes maturing and clearer execution priorities established, ETHplus exits the year structurally sound, albeit operating at a reduced scale, and positioned to rebuild as market conditions stabilize.
If you’ve enjoyed this report, please find its companion liquidity report here. This report takes a closer look at the on-chain liquidity of ETHplus and its constituent collaterals with the aim of informing and educating the wider Reserve community, key stakeholders and institutional capital allocators on key liquidity metrics to support allocation decisions and governance activities over the next quarter.
Finally, if you’ve enjoyed this report and consider me, Ham, a valued steward of the ETHplus Yield DTF please consider delegating your voting power to me to ensure your voice is always represented in Reserve governance. I’m an independent delegate who, since my delegation platform began in July 2025, hasn’t missed a Yield protocol governance vote. You can find more information on my delegation platform.
TG: @hamdefi
Discord: Ham6869