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:
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:
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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.
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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.
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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.