# ETH0

## Overview

**ETH0** is a synthetic Ethereum-based asset issued by the Usual Protocol and **fully collateralized by Lido’s wrapped staked ETH (wstETH)**. It’s designed for institutions, whales, and sophisticated DeFi users who want to maintain ETH exposure while significantly boosting yield. Unlike traditional staked ETH (which earns \~3.5% APY), ETH0 holders don’t receive yield directly. Instead, they earn USUAL tokens, which capture protocol revenues and speculative upside, potentially pushing **effective returns to double digits** (e.g. 13% APY according to simulations).

**ETH0** allows users to:

* Retain full ETH exposure (1:1 peg to ETH)
* Earn yield through USUAL distributions
* Redeem their position anytime for wstETH
* Use ETH0 composably across DeFi platforms like Pendle or Morpho

Built on the same infrastructure as Usual’s USD0 stablecoin (backed by tokenized T-bills), ETH0 brings a **DeFi-native yield abstraction model** to ETH-based portfolios. All minting and redemption are atomic, on-chain, and secured by a rigorously audited, upgradeable contract system with oracle-based price validation.

<details>

<summary><strong>How to mint ETH0</strong></summary>

1. User holds wstETH (wrapped stETH from Lido).
2. They visit the Usual dApp and navigate to the ETH0 Vault interface.
3. The user deposits wstETH via the smart contract.
4. The protocol validates collateral via oracles and mints ETH0 tokens at a 1:1 ETH value.
5. ETH0 is sent to the user’s wallet. Minting is atomic, permissionless, and immediate.

</details>

<details>

<summary>How to redeem ETH0</summary>

1. User holds ETH0 and wants to convert back to wstETH.
2. They initiate a redemption via the Usual dApp.
3. The ETH0 tokens are burned, and the contract releases the underlying wstETH.
4. A small redemption fee (e.g., 3-5 bps) may apply.
5. The wstETH is transferred to the user’s wallet, completing the redemption.

</details>

<details>

<summary><strong>How earn yield in USUAL for holding ETH0</strong></summary>

1. By simply holding ETH0 in their wallet, users start accumulating protocol-based rewards.
2. The staking yield from the underlying wstETH is redirected to the Usual treasury.
3. That value is redistributed via USUAL token emissions, which are claimable by ETH0 holders (e.g. via a claim UI or distribution mechanism).
4. The USUAL token provides speculative upside and participation in protocol revenue—potentially boosting effective APY well beyond wstETH’s base yield.
5. Users may choose to hold, sell, or stake USUAL to amplify returns further (e.g., in USUALx programs).

</details>

## Smart Contracts

{% content-ref url="/pages/8r4eu8RTOTRGJfvRqvTf" %}
[ETH0](/smart-contracts/token-contracts/eth0.md)
{% endcontent-ref %}


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