# ETH0

## ETH0: An ETH-Pegged Synthetic Backed by wstETH

**ETH0** is an **Ethereum-pegged synthetic asset** issued by **Usual Protocol**, **fully collateralized 1:1 by Lido’s wrapped staked ETH (wstETH)**. In practical terms, **1 ETH0 is designed to track \~1 ETH**, backed by actual staked ETH reserves. This lets users, from DeFi natives to institutions, maintain direct ETH exposure while accessing additional protocol incentives on top of conventional staking returns.

Like Usual’s **USD0** stablecoin, **ETH0 is permissionless and fully transferable**: anyone can **mint or redeem on-chain** without restrictions. ETH0 is the second **Liquid Deposit Token (LDT)** in the Usual ecosystem, extending the same infrastructure that powers USD0 into the ETH-denominated asset class.

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## Key Features

* **Yield Access (via USUAL)**\
  Holding ETH0 unlocks yield mechanisms that allow users to **claim yield in $USUAL tokens**. Staking rewards generated by the underlying **wstETH collateral** are redistributed as **USUAL governance tokens**, increasing effective returns beyond the typical **\~3.0–3.5%** ETH staking yield.
* **1:1 ETH Exposure**\
  ETH0 is designed to **tightly mirror ETH on a 1:1 basis**, giving holders full ETH upside (and downside) while unlocking additional yield pathways—**without giving up core wstETH exposure**.
* **Permissionless & Composable**\
  ETH0 follows the same **LDT model** as USD0: permissionless on-chain minting/redemption and seamless integration across DeFi for lending, liquidity provision, and yield strategies.

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## ETH0 Characteristics

* **Liquidity and Composability**\
  ETH0 maintains full liquidity and composability within DeFi, following the same model as **USD0** and **bUSD0**. It can be used across lending markets, DEX liquidity pools, and yield protocols.
* **Transparency and Trust**\
  Real-time reserve transparency is provided by each fund administrator, offering complete on-chain visibility into the collateral backing every ETH0 token.
* **Fully Collateralized; Redeemable Anytime**\
  ETH0 is fully backed by **wstETH** and builds on USD0’s proven collateral model. There is **no fractional reserve**: every ETH0 is backed **1:1**.
* **Higher Yield on ETH (USUAL Emissions)**\
  The staking rewards from the wstETH collateral are distributed as **USUAL governance tokens** to ETH0 holders, boosting total returns beyond conventional staking or restaking strategies.

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## How ETH0 Fits into Usual’s Architecture

ETH0 is the second Liquid Deposit Token (LDT) built on the **Usual Collateral Bridge Infrastructure (UCBI)**—the same foundational layer that powers USD0. The litepaper defines the LDT framework as extensible to multiple asset classes:

| LDT      | Collateral Type                    | Status |
| -------- | ---------------------------------- | ------ |
| **USD0** | US Treasury Bills (USYC, M, USTBL) | Live   |
| **ETH0** | Liquid Staking Tokens (wstETH)     | Live   |
| **EUR0** | Eurozone sovereign assets (euTBL)  | Live   |

Because ETH0 shares core infrastructure with USD0, it inherits the same **minting/redemption mechanics, oracle system, collateral controller, and governance framework** already battle-tested in production.

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## How ETH0 Works

### Minting & Redemption

ETH0 uses the same **1:1 minting and redemption** framework as USD0:

```
Mint:   wstETH → Usual Protocol → ETH0 (1:1 in ETH terms)
Redeem: ETH0   → Usual Protocol → wstETH (1:1 in ETH terms)
```

* **Direct minting**: deposit wstETH and receive ETH0 at par.
* **Redemption**: return ETH0 and receive the underlying wstETH collateral.
* **Secondary markets**: ETH0 can be traded on DEXs for immediate liquidity.

The **UCBI layer** bridges permissioned and permissionless users. Collateral providers are economically incentivized via **USUAL token rewards**, using the same infrastructure as USD0.

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## Contract Addresses

| Token | Network  | Address                                                                                                                                                                                             |
| ----- | -------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| ETH0  | Ethereum | *Refer to the* [*Contract Addresses*](https://github.com/Pi-2lavega/usual-gitbook-sync/blob/main/technical/smart-contracts/contract-addresses/README.md) *page for the latest deployment addresses* |

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## Summary

| Property          | Detail                                                          |
| ----------------- | --------------------------------------------------------------- |
| **Asset Type**    | Ethereum-pegged Liquid Deposit Token (LDT)                      |
| **Collateral**    | Lido wstETH (1:1 backing)                                       |
| **Native Yield**  | \~3.0–3.5% APR (ETH staking)                                    |
| **USUAL Yield**   | Additional USUAL token emissions on top of native staking yield |
| **Minting**       | Permissionless, 1:1 deposit of wstETH                           |
| **Redemption**    | 1:1 withdrawal of wstETH at any time                            |
| **Bond Variant**  | bETH0 (Liquid Bond Token for enhanced yield)                    |
| **Composability** | Full DeFi integration (lending, DEXs, yield protocols)          |
| **Governance**    | Collateral types and parameters governed by USUAL DAO           |

***