Summary
This proposal aims to adjust the ETH+ revenue distribution methodology to better align with the current risk profile of the product and the long-term health of the Reserve ecosystem. The ETH+ revenue share is currently defined within the ETH+ methodology, which passed an IP vote in early January. This RFC proposes a change to that methodology.
Proposed changes:
- Total take rate: 5% → 10%
- RSR staker share: 5% → 3%
- Platform fee (RSR buy & burn): 0% → 7%
Net effect on ETH+ holders: This proposal is bundled with the introduction of weETH to the ETH+ basket. The combined effect of the basket upgrade and the revised take rate results in a holder APY of approximately 2.40%. Compared to the pre-eETH basket under the previous 5% take rate, which delivered approximately 2.57% to holders, the net impact is a modest reduction of ~17bps.
Even where yield is marginally compressed, ETH+ continues to offer meaningful advantages over holding any single LST: diversification across multiple providers, deeper DeFi integrations, and a basket that will continue to be optimized as higher-yielding collateral becomes available and liquid.
Looking ahead: Basket composition is not static. As higher-yielding collateral options mature and their liquidity profiles improve, they will be evaluated for inclusion with the goal of closing any gap to single-asset benchmarks and potentially exceeding them.
Problem statement
ETH+ currently operates at a significant negative gross margin, making it the most deeply unprofitable DTF in the Reserve ecosystem. While incentive programs were successful in scaling supply, much of that TVL was concentrated in leveraged positions on Morpho. When market conditions shifted, these positions rapidly unwound, leading to significant deleveraging and the exit of a large portion of ETH+ supply over a short period. This highlighted the fragility of leverage-dependent TVL and the limitations of relying on a small number of counterparties for sustained liquidity.
Entering 2026, ETH+ supply is materially lower. However, even with strong forecasted growth, ETH+ remains structurally unprofitable at a 5% take rate. The revenue generated at current and projected supply levels is not sufficient to offset the cost of serving and growing the product, making the current revenue structure unsustainable without meaningful change.
Rationale
1. Risk profile has changed
When ETH+ launched, RSR stakers were compensated at 5% because they bore meaningful risk — specifically, the risk of slashing in the event of a depeg or collateral failure.
Now that default detection has been turned off, the risk of slashing has been substantially reduced. The historical performance of the underlying collateral has been stable and rebalances have not incurred any bad debt. With this in mind, we now believe that the staking pool is mature and sufficient for an asset of ETH+'s size.
In any market, lower risk means lower expected returns. This adjustment reflects that reality.
2. Governance remains intact
RSR stakers still provide an important function through governance. That role has not changed, and the 3% allocation ensures the staking pool remains robust enough to secure the protocol.
Even with a reduced yield, the staking pool is expected to remain well above the threshold needed for healthy governance — likely staying above $1M for an $80M+ asset.
3. RSR holders benefit (including stakers)
The 7% platform fee will be used for RSR buy and burn.
RSR stakers are also RSR holders. While their direct yield decreases by 2%, they benefit from protocol-level value accrual through the buy and burn mechanism.
This represents a shift in value distribution rather than a loss. Direct yield is exchanged for token appreciation.
For the broader RSR holder community, this is unambiguously positive. Revenue that previously flowed to a small group of stakers now accrues to all RSR holders.
4. Holder yield in context
This proposal is bundled with the introduction of weETH to the ETH+ basket. When evaluating the impact on ETH+ holders, the relevant comparison is the yield holders were receiving prior to eETH inclusion under the original 5% take rate.
Under the pre-eETH basket, holders received an effective APY of approximately 2.57%. Under the proposed final basket with the revised 10% take rate, holders receive approximately 2.40%. The weETH addition partially offsets the increased take rate, and the net impact to holders is marginal.
Importantly, ETH+ provides value that single-asset benchmarks do not capture: diversification across LST providers, composability across DeFi, and an actively managed basket that can adapt to market conditions. These structural advantages should be weighed alongside any marginal yield difference.
Risks
1. Backing shortfall during rebalances
The backing could drop to a point where it does not cover expected loss during basket rebalances. This risk is mitigated by the lindy nature of the underlying assets — ETH+ has never slashed RSR stakers during rebalances — and the imminent introduction of CowSwap solvers into the rebalance process.
2. Yield falling below benchmark
ETH+ yield may fall below single-asset benchmarks such as stETH. However, this is offset by the diversification and DeFi utility benefits that ETH+ provides, as well as the ability to rebalance into higher-yielding weETH and frxETH allocations at a later date. Liquidity profiles support this approach at the current time.
3. Increased susceptibility to governance attacks
With a reduced staking yield, the staking pool could shrink, increasing susceptibility to governance attacks. However, ETH+ is still expected to have approximately $1M governing the DTF, with governance oversight from multiple parties including ABC, CC, StakeDAO, the DTF Champion, and the Governance Facilitator.
Impact by stakeholder
| Stakeholder | Impact | Notes |
|---|---|---|
| RSR holders (broad) |  Positive |
Buy & burn benefits all holders |
| ETH+ holders |  Marginal yield change |
Offset by diversification, DeFi utility, and future basket optimization |
| RSR stakers on ETH+ | Reduced direct yield |
Offset by buy & burn + lower risk profile implies lower expected returns |
Timing
This proposal is bundled with the second governance action introducing weETH to the ETH+ basket. The yield boost from weETH partially offsets the take rate adjustment, minimizing the impact on ETH+ holders.
This is considered the appropriate moment to make this change. The weETH addition softens the impact on holder yield, making now the least disruptive time to adjust the revenue structure.
Open for discussion
Feedback from the community is welcome. This RFC is intended to start the conversation, not end it.