[RFC] Collateral Basket Change Proposal: Adding Wrapped OETH (wOETH) to the ETH+ Collateral Basket

[pete]

[RFC] Collateral Basket Change Proposal: Adding Wrapped OETH (wOETH) to the ETH+ Collateral Basket

Summary

This proposal recommends integrating Wrapped OETH (wOETH) into the ETH+ collateral basket to increase yield generation and enhance the diversification of the index LST following the mandate to add value to ETH+ holders through diversification.

Abstract

Origin Ether (OETH) was launched in May 2023 and is an ERC20 that generates yield while sitting in your wallet. Similar to stETH, OETH yield is paid out daily and automatically (sometimes multiple times per day) through a positive rebase in the form of additional OETH, proportional to the amount of OETH held.

Until a proposal earlier this year, OETH was an LST aggregator that earned yield by tapping into blue-chip protocols while being collateralized by other LSTs. Over the weeks following the proposal, the ability to deploy OETH collateral to other projects was removed and LST collateral was divested back to ETH, as OETH transitioned into a full-fledged LST with an extremely tight peg (1:1 redemptions to ETH thru Origin’s ARM) and high yields thanks to DVT direct staking through SSV/P2p.

wOETH is a ERC-4626 tokenized vault designed to accrue yield in price rather than in quantity. When you wrap OETH, you get back a fixed number of wOETH tokens. This number will not go up - you will have the same number of wOETH tokens tomorrow as you have today. However, the number of OETH tokens that you can unwrap to will go up over time, as wOETH earns yield at the same rate as standard OETH. The wOETH to OETH exchange rate can be read from the contract (0xDcEe70654261AF21C44c093C300eD3Bb97b78192 , function number 16), or via the OETH dapp.

Current exchange rate as of 9/19/24: 1 wOETH = 1.10449597 OETH

Problem Statement

The ETH+ collateral basket is currently made up of only three types of diversified staking collateral, limiting the risk spread and potential yield enhancement. There is a simple and straightforward opportunity to both further diversify ETH+, while also increasing its blended yield output.

Rationale

We’ve noticed many LSTs trade below their peg due to DEX fees and slippage, and to reflect the time value of money. LSTs that consistently trade below peg effectively impose a hidden exit fee - certain LSTs often trade ~0.25% below peg, meaning it takes three weeks of staking to break even. This may be ok for long-term holders, but is terrible for users who plan to loop LTSs for additional yield, or for those looking for short term yield. This will not be the case with OETH.

Using OETH on Reserve will produce higher yield than other top LSTs and have a near perfect ETH peg. OETH ARM mechanics and gas optimizations will ensure the best possible prices for traders looking for instant exit liquidity, while DVT staking will achieve greater risk-adjusted yield. Our vision for OETH is for it to become the most trusted LST for those seeking to integrate OETH into other tokens.

The current APY for wOETH stands at 4.48%, which is higher than ETH+'s existing components. It seems to be a logical next step to integrate a product such as this into the ETH+ collateral basket.

Enhanced Diversification: Adding wOETH diversifies the sources of yield within the basket and mitigates risks associated with the concentration in fewer staking platforms. Redemptions through Origin’s ARM ensure OETH can be exited back to ETH 1:1 at all times, without needing to sit through an exit queue.

Yield Improvement: While remaining tightly pegged to ETH, wOETH is designed to be high yielding. DVT direct staking through SSV/P2p combined with the AMO enable OETH to be the highest yielding ETH LST currently available. Historical OETH yields can be found on Proof of Yield.

New ETH+ Collateral Basket

Token	Allocation	APY = 3.26%
rETH	25%	2.36%
Wrapped stETH	25%	2.92%
sfrxETH	25%	3.28%
wOETH	25%	4.48%

Source: Reserve./org and Originprotocol./com

Risks

Adding another asset as collateral adds additional counterparty risk and smart contract risk. However, OETH and wOETH was built reusing 95% of the OUSD code, of which 10+ audits have been done since 2020. Not that long ago, OUSD reached a market cap of $300m without breaking, and without diminishing the APY it was capable of generating. All OETH audits can be found in the audits section of the OETH docs. We have recently retained yAudit to look at our PRs as we code, and OpenZeppelin is also held on retainer to review 100% of the OETH and OUSD smart contract changes. Origin also maintains an active bug bounty with rewards ranging in size from $100 OUSD for minor issues to $1,000,000 OUSD for major critical vulnerabilities. The bug bounty program is currently administered by Immunefi, where Origin maintains a median resolution time of 6 hours.

Conclusion

We would be happy to adjust the above parameters based on feedback from the community and core Reserve team and would be happy to answer any questions on Origin Protocol, OETH, or the proposal itself. Adding OETH as a collateral for ETH+ will be mutually beneficial for both Reserve and Origin Protocol, as it will increase the utility for OETH, while also increasing the Reserve TVL and rollout of ETH+. The Origin team can be reached at any time via the Origin Discord server.

• I am in favor of adding wOETH to ETH+ collateral
• I am not in favor of adding wOETH to ETH+ collateral

[Raphael_Anode]

Thank you for this well-formed and exciting proposal!

Given the overlap with the Stader ETHx proposal here, we wanted to know if you see this proposal as a replacement of or an addition to the ETHx one?

[pete]

Initially this proposal was submitted in addition to the ETHx proposal, but if the community prefers to chance it to a replacement, we will support it.

[river0x]

What is the cap on ARM redemption at the moment? ETH+ TVL is significant and to lose 0.1% through the legacy redeem function would be suboptimal. Your documentation doesn’t state a current liquidity floor. Indeed, what would stop ARM liquidity drying up in a time of crisis? RTokens, by design, do not move fast.

[pete]

@river0x

What is the cap on ARM redemption at the moment?

There is no cap, it is just bound by the amount of WETH in the contract. At the moment, Origin is the only LP for the ARM, but soon we will be opening it up for external LPs to provide their ETH. This should happen in October of this year.

@river0x

ETH+ TVL is significant and to lose 0.1% through the legacy redeem function would be suboptimal

If the total amount needed is not available in the ARM, async redemptions to ETH are 1:1, there should be no fee. The Instant vault redemption that you are referencing in the docs is the old exit method that is hardly used nowadays.

[Raphael_Anode]

We don’t have a preference there and were looking for clarification.

Your proposed basket does not have any ETHx included, though.
If your proposal is meant as an addition to Stader’s would you mind reflecting that in the basket you are proposing? It’s entirely up to you, though.

We’re here to check the formal requirements only.

[pete]

@Raphael_Anode

Your proposed basket does not have any ETHx included, though.
If your proposal is meant as an addition to Stader’s would you mind reflecting that in the basket you are proposing?

Sure, I will do it here. The numbers below are today’s APYs if the 5 LSTs were equally weighted at 20%.

Token	Allocation	APY = 3.226%
rETH	20%	2.37%
Wrapped stETH	20%	3.00%
sfrxETH	20%	3.35%
wOETH	20%	4.26%
ETHx	20%	3.15%

[Raphael_Anode]

Hey pete, not to be overly picky, but the current plan is to introduce 8% of ETHx to the basket. Do you propose to add more?

See this discussion here: [RFC] Addition of Stader’s ETHx into the ETH+ LST Basket - ETHPLUS (ETH+) - Reserve Protocol Forum

[pete]

No problem @Raphael_Anode, here are the same LSTs, with ETHx and OETH at 8%:

Token	Allocation	APY = 3.0396%
rETH	28%	2.38%
Wrapped stETH	28%	3.02%
sfrxETH	28%	3.37%
wOETH	8%	4.24%
ETHx	8%	3.06%

Since OETH is the highest yielding of the 5 LSTs, a higher allocation of OETH within the basket would bring up the total ETH+ yield, but we can leave that to the community, DAO, and risk stewards to determine/decide on.

[Raphael_Anode]

That looks good. Let me know if you need help to create a new RFC or want to push it to an on-chain proposal.

[pete]

@Raphael_Anode

Let me know if you need help to create a new RFC or want to push it to an on-chain proposal.

Rather than creating a new RFC, we can treat the above comments as truth. We could use some assistance with the on-chain proposal, but I believe we need to finish building the plugin before the on-chain vote is supposed to happen

[Raphael_Anode]

sounds good. RFC should get more than 50% approval in the forum poll before going on-chain. If that hasn’t been the case it could be helpful to repropose this with the new parameters. Up to you of course.

[ham]

Thank you for your proposal @pete and your responsiveness to the comments.

High-level OETH does look like an attractive collateral basket asset with superior yields and Origin’s lindyness and strong commitment to security, however there are other factors at play to get it included in the basket.

Firstly, the adapter - this will have to built and then likely audited by Reserve.

When redeeming or minting ETH+ currently opts for purchasing or selling the underlying basket through traditional DEX liquidity, this reduces frictions in protocol design as it’s simpler to interact with a few DEXs than the underlying mechanisms of each LST product. With this in mind I wonder if Origin ARM can be included in the OETH adapter on not. If like me you’re uncertain i’d be grateful if you could discuss this in our discords technical channel.

We need to see how this works and if we can route mints and redemptions through the ARM +/- the async redemptions you reference in the comments before we consider a collateral basket allocation. If we can’t and have to use more traditional sources of on-chain liquidity we will hit liquidity bottle necks much sooner and the introduction will be a lot slower.

Secondly, from your initial RFC and the comments you’re not up to date with ETH+ governance. I’d be more confident giving OETH a significant allocation when you are more familiar with the Reserve protocol and recent gov discussions especially the recent discussions addressing liquidity bottlenecks and the addition of ETHx to the collateral basket.

In this regard we are currently slowly introducing ETHx to the collateral basket in two steps, step one has just passed quorum and the collateral basket will be updated early next week and step two will be pushed for voting once we are satisfied with the safety criteria mentioned in the RFC. I’d rather wait until this two-step plan is complete and we have a stable basket before we introduce OETH. However if you are at the start of adapter development this may not be an issue as it will take time.

I notice you have also submitted a proposal on the bsdETH forum for the inclusion of wsuperOETHb to the bsdETH collateral basket. I will add to discussions on the bsdETH forum but given the superior yield I feel it will be very well received by the bsdETH community and given liquidity is on AERO there we be a significantly reduction in the technical burden of adapters development. To this end I propose you focus on developing that adapter if work has not started on this one and we introduce Origin to the Reserve ecosystem through that rToken while we finish the introduction of ETHx inclusion in the ETH+ basket and iron out any kinks with the OETH adapter routing through the Origin ARM.

[pete]

@ham

Firstly, the adapter - this will have to built and then likely audited by Reserve.

We are scoping this out right now, and understand it will need to be audited.

@ham

We need to see how this works and if we can route mints and redemptions through the ARM +/- the async redemptions you reference in the comments before we consider a collateral basket allocation. If we can’t and have to use more traditional sources of on-chain liquidity we will hit liquidity bottle necks much sooner and the introduction will be a lot slower.

Understood. We will scope building the adapter with this in mind. We’ll also join the technical discussion in the Discord

@ham

Secondly, from your initial RFC and the comments you’re not up to date with ETH+ governance. I’d be more confident giving OETH a significant allocation when you are more familiar with the Reserve protocol and recent gov discussions especially the recent discussions addressing liquidity bottlenecks and the addition of ETHx to the collateral basket.

We are fully aware of the ETHx proposal - we have been in touch with the Reserve team since July, and the ETHx proposal was sent to us then as an example to use for the OETH proposal, not as one to include in the OETH proposal

@ham

I’d rather wait until this two-step plan is complete and we have a stable basket before we introduce OETH. However if you are at the start of adapter development this may not be an issue as it will take time.

Thank you, we understand proposal lifecycles are typically not fast - this was initially submitted to get the ball rolling, but was not meant to be rushed through the process. If OETH is to be added, we want to make sure it is done correctly from the start.

@ham

I notice you have also submitted a proposal on the bsdETH forum for the inclusion of wsuperOETHb to the bsdETH collateral basket. I will add to discussions on the bsdETH forum but given the superior yield I feel it will be very well received by the bsdETH community and given liquidity is on AERO there we be a significantly reduction in the technical burden of adapters development. To this end I propose you focus on developing that adapter if work has not started on this one and we introduce Origin to the Reserve ecosystem through that rToken while we finish the introduction of ETHx inclusion in the ETH+ basket and iron out any kinks with the OETH adapter routing through the Origin ARM.

Understood. I will respond to your comments on that forum post as well.

[pete]

Quick update here to the Reserve and ETH+ community - Origin engineers are working on the plugin for this proposal right now! We are making sure it is done properly, rather than rushing to get it done.

[Raphael_Anode]

Thank you for the update! Well appreciated.

[pete]

I forgot to mention, Llamarisk did a full analysis of OETH last year, and then added an addendum this year: Addendum to Collateral Risk Assessment - Wrapped Origin ETH (wOETH) - Llama Risk

[pete]

Update on wOETH for ETH+

Hi everyone, I wanted to continue this thread since meaningful time for due dilligence has passed since the original RFC and the subsequent IP. After sitting on the forum for more than a year, building the plugin, and completing several additional audits, I am once again proposing a collateral basket change that includes wrapped OETH (wOETH) to the ETH+ collateral basket.

Where things stand

A quick recap for anyone newly following:

• The original RFC was opened in September 2024.

• The follow-up IP was posted in June 2025 and surfaced four substantive concerns from the Reserve/ABC Labs side: concentration, exit liquidity, AMO complexity / mandate fit, and governance / upgradability. We responded to each in the thread and adjusted the proposed allocation to 8% wOETH, comparable to where ETHx started.

• The onchain vote ultimately did not pass. Per my closing comment on that thread, the path forward was for ABC Labs to complete OETH DD, with that work expected to begin in August 2025.

• wOETH was subsequently approved for dgnETH and went onchain in July 2025, establishing internal precedent for OETH passing community DD. dgnETH has since become an Inactive DTF, but onboarding OETH to ETH+ was the original objective

• ETH+ went through a Q1 2026 rebalance in March 2026, which introduced weETH at 22% and cut the combined rETH/sfrxETH allocation from 42% to 20% to address the redemption weakness flagged in the Q4 2025 liquidity report. The diversification ratio improved from 65.5% to 67.5%. Adding wOETH continues that same diversification arc.

On the outstanding DD

The DD scoped on OETH at the time of the IP was expected to start in August 2025; we’re now into April 2026, roughly eight months past that planned start. In the interval, OETH has shipped substantial protocol upgrades (see below), completed multiple new third-party audits, and had onboarded into dgnETH after a full community review. I’d like to use this thread to either close the DD out collaboratively, or to surface what’s still open so it can be addressed before we go onchain again.

Major OETH upgrades since the IP

OETH today is materially different from the version under review at the time of the RFC and IP. The OETH upgrades fall into three buckets, and they all push in the same direction: less trust, more verifiability, and better redemption mechanics.

Merkle proof verification of Beacon Chain balances. OETH is one of the first liquid staking tokens to fully adopt onchain Merkle proof validation of validator balances via EIP-4788, eliminating the oracle/committee dependency that virtually every other LST still relies on. Today only EigenLayer, StakeFish, and OETH use native Merkle proof validation at this layer. Validator state changes that fail proof validation are rejected onchain. Links with more information can be found here: The End of Oracle Dependence and the announcement thread, and an additional write-up by Origin senior engineer of the EIP-4788 mechanics of OETH is here.

0x02 compounding validators with partial withdrawals. OETH staking has migrated to 0x02 compounding validators (EIP-7251), consolidating the validator set from roughly 1,000 sweeping validators to 15 compounding ones. Deposits now accept any amount above 1 ETH (eliminating idle capital that previously had to sit until it reached multiples of 32 ETH), rewards auto-compound at the validator level, and partial withdrawals are supported. This meaningfully improves the redemption flexibility for any DTF holding wOETH. We’ve validated the partial-withdrawal flow end-to-end against a yoETH withdrawal request, see the transaction, which we believe landed around epoch 439347. The full write-up can be found here: Origin Ether Staking Upgrade and the migration announcement. Full migration to 0x02 is expected to complete this quarter.

Front-run protection and a refreshed audit set. The new staking strategy uses a two-step deposit flow with Merkle-proof verification of withdrawal credentials before any large deposit lands, eliminating the standard validator front-running vector. The full upgrade has been independently audited by OpenZeppelin (September 2025), Sigma Prime (September 2025), and Nethermind (October 2025). The complete list of audits is in the Origin audit docs and the security repo. An audit summary thread is also available here.

Nethermind security auditors left a very positive impression of Origin’s documentation, as seen here:

Revisiting the four concerns from the IP

Pulling forward the four concerns from June 2025 and addressing each with where things stand today:

1. Concentration / share of OETH TVL. The proposal we took onchain was already at 8%, which is comparable to where ETHx started. With ETH+ supply now at ~35,155 ETH (Q1 2026 quarterly report), the absolute size of any starting allocation is materially smaller than at the time of the IP. We’d be comfortable starting smaller still - a 3,000 ETH starting allocation would put ETH+ at roughly 7.5% of OETH TVL, comfortably inside the <10% guideline Ham articulated in the Q4 liquidity report, and ramping from there using the same two-step pattern that onboarded ETHx.

2. Exit liquidity / price impact going out of OETH. The original concern was scoped against the prior Curve pool. Since then the new OETH/ETH Curve pool has gone live and stabilized, and the AMO operates with tighter peg-keeping and better single-sided rebalancing under the current design. On top of DEX exit liquidity, OETH supports async 1:1 redemptions back to ETH at any time, and partial withdrawals via compounding validators give us an additional exit lane that doesn’t rely on any single venue. I’ve added exit liquidity benchmark in the liquidity section below.

3. AMO complexity and fit with the ETH+ mandate. The OETH AMO maintains 100% collateralization at all times: protocol-owned OETH only enters circulation when fully backed by ETH delivered into the pool. ETH+ already holds collateral with AMO exposure - sfrxETH operates via Curve AMOs and historically had direct exposure to LRTs (ezETH, pzETH); the OETH AMO is comparatively simpler, with exposure only to ETH and WETH. OETH is also a less-complex version of superOETH, which has been a bsdETH collateral for over a year. On mandate fit: OETH stakes via SSV’s distributed validator technology with two clusters of four nodes across separate geographies, which directly contributes to Ethereum staking decentralization, perfectly within the ETH+ mandate to positively impact the Ethereum staking distribution.

4. Governance / upgradability. OETH is controlled 100% by xOGN with a 48-hour timelock (see governance docs). Upgradability has only ever been used to harden the protocol. The recent staking architecture rework is a clear example. Every subsequent upgrade has gone through an independent audit before deployment. Some immutable LST/stablecoin protocols haven’t had the same option when issues have surfaced.

Where OETH helps on liquidity

The Q1 2026 ETH+ quarterly report frames the priority going forward as “rebuilding sustainable, unincentivised liquidity while continuing to expand distribution across DeFi and structured products.” That’s a precise description of what the OETH AMO provides: protocol-controlled depth on the OETH/ETH Curve pool that doesn’t depend on incentive programs or third-party LP behavior. The Q1 rebalance has already partially addressed the rETH/sfrxETH redemption weakness flagged in Q4 2025 by cutting their combined allocation from 42% to 20% and bringing in weETH; wOETH continues that arc with a structurally distinct, non-mercenary liquidity profile.

On peg specifically, OETH currently has the tightest peg-to-ETH of any major LST when exiting via aggregated DEX liquidity. Recent CoW Swap exit rates make this clear:

rETH and ETHx are both already in the ETH+ basket, and both fall off a cliff at size. stETH and eETH are two of the biggest LSTs globally, and OETH still beats them on peg. The protocol-controlled AMO is one of the reasons OETH holds up at this size - depth on the OETH/ETH Curve pool isn’t subject to mercenary LP behavior. For ETH+'s size, that matters.

Next steps

I’d like to use the next few days to surface any remaining DD items or open questions from ABC Labs and/or the Reserve community, then come back with a concrete basket proposal and move to an onchain vote. The basket breakdown is something I’d prefer to align on with the community/DAO here, taking into account the Q1 2026 quarterly report, the Q4 2025 liquidity analysis, and the precedent set by the recent weETH addition.

Happy to walk through the AMO mechanics, the Merkle proof staking architecture, the partial-withdrawal flow, or any specific audit in more depth.

Tagging @ham @pmckelvy @akshatmittal @griffpeer who are often involved in ETH+ rebalances

[ham]

Hey @pete, thank you for following up here and informing us of the work Origin have been doing at the protocol level to optimise for safety, liquidity and yield. As you know, all things we weight heavily when considering new or large collateral allocations.

The last few years have given us time to deepen our relationship, see how your products perform with Reserve DTFs and watch the Origin protocol mature, as these updates clearly show. Given this I’m majority FOR your inclusion in the basket, especially given it may help address two key issues the ETHplus collateral basket is currently facing, with redemption liquidity bottlenecking very close to our mandated constraint (20% of TVL) and a holder yield profile which currently underperforms it’s benchmark, stETH. However, I do still have some concerns which I’d appreciate further clarity on.

1. Concentration / OETH dependency.

I’m trying to simulate your results here but coming up with a different number. The OETH landing page has the OETH supply at 28k ETH, so a 3,000 ETH allocation in the ETHplus basket would mean we hold almost 11% of OETH TVL. While I understand these figures are constantly in flux and ETHplus supply may shrink and OETH may grow coming straight in at a 3000 ETH allocation would not align with ETHplus methodology. I would be more comfortable exploring a smaller initial allocation that remains within methodology constraints.

2. / 3. Exit Liquidity and AMO complexity

I empathise that this has caused reoccurring friction despite it significantly contributing towards a deeply liquid asset and other collateral assets deploying similar / riskier AMOs as part of their peg stability frameworks. However, I do echo @river0x concerns( 1,2) that I don’t think were ever sufficiently answered.

To summarise it here briefly;

• A large portion, if not all, of the OETH/ETH Curve pool is provided by the OETH AMO.
• If true the protocol is able to remove this at any. This has already happened once during market stress when liquidity was removed during the Curve Vyper Bug in 2023.
• The risk of liquidity being concentrated in POL is compounded by the low fee generation on the pool meaning LPs are likely to rush in with liquidity to replace the withdrawn Origin LP as there is low financial incentive to do so.

I’d appreciate if you could confirm the validity of this summary @pete. While I trust Origin to operate faithfully in both normal and stressed market conditions this does raise some concerns given we not be able to rebalance out of any future position. These concerns are somewhat mitigated by the small allocation we’d likely attribute to OETH but given the size of ETHplus and it’s thin layer of over-collateralisation, it’s likely to still be a big problem. These concerns also lend to the argument in point 1 as we consider how much of a share of OETH we are willing to take.

Finally, I’m aware that there were plans to open up the Origin AMO to external LPs in Oct 2024 as per your comments here. Has this happened? Can you give us any other assurances? Unfortunately, due to protocol / plugin design we wouldn’t be able to easily use the other exit lanes you mentioned, async 1:1 redemptions back to ETH or partial withdrawals via compounding validators.

4. Governance and Upgradability

I’m less concerned here as Origin governance appears reasonably robust and has a governance cycle roughly equal to our own.

Summary

While I’ve consistently been impressed by Origin’s willingness to engage openly with the community and the clear progress made in improving protocol robustness and maturity, I still have a number of outstanding questions that prevent me from fully supporting OETH inclusion at this stage.

That said, I do recognise that OETH has the potential to address some of the key challenges currently facing the ETHplus basket, particularly around redemption liquidity and yield competitiveness versus our benchmark.

@pete, I’d appreciate further clarity on the points above, both to help close out these concerns and to better understand how OETH can be integrated in a way that aligns with ETHplus methodology and risk constraints.

[pete]

Hey @ham, thanks for the thoughtful response and for engaging on the specifics. Also caught up on your Q1 2026 ETH+ Liquidity Analysis posted a few days ago, and a lot of what’s in there directly addresses these points. Working through them in order:

1. Concentration / OETH dependency

You’re right on the math against the circulating OETH supply. The landing page figure (~28k ETH) reflects circulating wOETH backing. It is worth flagging that this number doesn’t include Origin’s POL position in the OETH/ETH Curve pool, which currently represents an additional ~14.3k ETH on the protocol’s balance sheet. Per the AMO design, the OETH paired with that ETH in the pool is uncollateralized until it leaves through a swap, so I understand why DeFiLlama and the landing page report only circulating supply, but the ETH side of the POL is real and provides additional exit depth that doesn’t show up in the headline TVL figure.

If including the POL is acceptable, then a 3000 ETH allocation of OETH into ETH+ lands at ~7.1% of total protocol-backed assets, well within the ETHplus methodology constraint.

If including the POL is not acceptable, then coming down to a 2700-2,800 ETH allocation of OETH into ETH+ would keep the OETH allocation within the constraint.

Reasonable ETH+ community members and delegates could read this either way - we would lean toward including POL since it is what’s actually delivering OETH’s redemption depth, but we are flexible if the community lands on the narrower reading.

We’ve included an updated screenshot of OETH peg stability versus the other ETH+ constituents below.

2 & 3. Exit liquidity and the AMO

Your latest liquidity report makes most of this case directly:

@ham

OETH has improved considerably and now exhibits the strongest redemption profile in the set, with minimal slippage observed across the tested range…OETH’s improvements are likely driven by the depth of protocol owned liquidity in the OETH/ETH Curve pool alongside more responsive AMO design, which together provide more consistent exit pathways at size.

The AMO is doing what it is meant to do, and your report does confirm that. To your specifics:

On POL composition. Correct, the OETH AMO provides a large share of the OETH/ETH Curve pool depth via protocol-owned liquidity. This is by design and is the same model used by OUSD and superOETH (which has been a bsdETH collateral since 2025). Frax also uses an AMO within frxETH, although the frxETH AMO also has exposure to wstETH, stETH, ezETH, and pzETH, which OETH’s does not.

On the 2023 Curve Vyper Bug. Yes, the protocol moved POL during that incident, but the action was defensive, the Vyper compiler had a known active reentrancy vulnerability affecting the pool, and pulling liquidity protected OETH holders from a live exploit. Once Curve patched the bug, the POL was restored. I’d argue this is a feature rather than a concern, leaving POL exposed to a known active exploit would have been worse for everyone, including ETH+ if it had been a holder at the time. Any future POL movement under similar conditions would be for the same reason.

On economic incentive and replacement LPs. The pool fee is intentionally low to minimize peg drift for users redeeming, but Origin earns CRV and CVX rewards from staking the LP tokens in Convex. Those rewards are harvested and distributed to OETH holders. Pulling POL for non-defensive reasons would drop OETH yield, drift the peg, and damage the protocol’s largest integrations (Morpho, EigenLayer, Pendle, superOETH, and others). Fees are also purposely set low as the OETH/WETH pool is meant to be the cheapest pool for getting back to ETH from other LSTs paired with OETH that may utilize Yield Forwarding and Pool Booster - pairing with OETH and using the OETH AMO pool for exiting can be more capital efficient than other LSTs pairing directly with ETH.

POL has been in place in the OETH/ETH pool since 2023 (and 2025 in the new, more efficient pool that supports much larger trades with less slippage), and the only time it has materially moved was the Vyper case, after which it was restored. The CoW data below is the practical test of whether the model is working today: OETH currently exits tighter than stETH at 4,000 ETH despite stETH having mature, fully formed third-party LP liquidity. That is the AMO doing its job, and Origin has every reason to keep it doing that.

On the ARM. Worth being straight about this one. The OETH-specific ARM was an experiment rather than a load-bearing exit lane for OETH. The original idea was to provide instant 1:1 liquidity by absorbing peg costs against the OGN treasury, which isn’t a sustainable model and isn’t where OETH’s liquidity or solvency actually sit. It looks unlikely we’ll ship it in its original form. The good news is that’s also not the question that matters here: the CoW data already shows OETH has the tightest peg of any major LST tested, including stETH, which does have a fully launched ARM. OETH’s exit liquidity comes from the AMO and the Curve pool, not from an ARM.

On plugin-supported exit lanes. Fair point that the Reserve plugin can’t natively use async withdrawals or partial validator withdrawals, and that the practical exit lane for ETH+ is the Curve pool. That’s why the CoW exit benchmark is the right test. Refreshed numbers below, now with frxETH included since it’s the relevant liquid market for sfrxETH exits:

At 4,000 ETH, OETH outperforms every current ETH+ basket constituent on exit slippage, consistent with the broader curve analysis in your report. Per your report, the basket as a whole is now breaching the 0.5% threshold at ~5,000 ETH (down from ~30,000 post-rebalance). With ETHplus supply now at 23,207 ETH, 20% of supply works out to ~4,641 ETH, which means the basket is currently sitting just past the mandate’s redemption-side constraint (≤0.5% slippage for sizes up to 20% of supply). ETHx has emerged as the dominant bottleneck despite its 8% allocation, and an OETH allocation directly relieves that pressure.

4. Governance

Appreciated, leaving this one closed.

On your three questions for governors

Your liquidity report closes by asking governors how to address three concurrent pressures. OETH speaks directly to all three:

1. Restore redemption capacity and reduce the ETHx-driven bottleneck. OETH currently exhibits the strongest exit liquidity in the basket per your own analysis. Adding OETH increases the share of the basket with structurally robust exit liquidity while reducing the share concentrated in ETHx, which is now the dominant constraint despite its 8% allocation.

2. Manage frxETH dependency. ETHplus’ share of frxETH TVL has risen to 6.9% even after the Q1 rebalance dropped the allocation to 10%. Cutting frxETH further to make room for OETH directly relieves that dependency while substituting in a constituent at a much lower TVL share.

3. Re-establish a yield profile that exceeds the stETH benchmark. OETH yield has historically tracked at or above the major LST average per Origin’s analytics. Substituting OETH for the lowest-yielding basket members directly lifts the blended yield closer to or above the stETH benchmark.

All three concerns could fit in a single rebalance. Happy to assist with modeling exact numbers for the redemption curve, blended yield, and TVL-share metrics for a 2700-3000 ETH OETH starting allocation before we move to a basket proposal.