Gm, defi degens! As I want to write ETH related content for all types of users, I thought I’d jump into the deep end of the pool this week for those who are a little more experienced. Today I’d like to talk about a protocol that’s been around for a little while, but has jumped 6x in TVL due to a couple of recent catalysts. Today we’re going to dive into yield time travel with FlashStake.
Flashstake has been operating on the Ethereum mainnet since mid 2022 when it became possible for ETH stakers to claim their ETH yield in advance, instead of waiting months or even years for their yield to accumulate. For the first time, APRs of 4–5% could be realized in an instant, virtually giving the staker the ability to time travel.
With Flashstake you’re able to stake ETH, wETH and stETH among other yield bearing stake-able tokens and in many cases the upfront yield that you receive is higher than the actual yield that you would get from the related protocol itself. Above you can see all the upfront yield that is currently available on Flashstake. Yes, instead of 4–5% APR on Lido staked ETH (stETH) after months, you can receive 13% APR on ETH related assets for up to a full year immediately when staking on FlashStake’s dashboard. You can claim those rewards in any of the tokens shown in the screenshot below, all without liquidation or loss of principal! This means for every one ETH that you stake today, you’ll receive 13% immediately. Based on the current price of ETH that’s $217 up-front yield if you stake for a full year that you can decide what to do with.
What would you do with upfront yield? Personally, since we’re nearing the next bitcoin having and have so many fundamental catalysts for ETH, I’d probably loop the rewards. For those of you unfamilair with the term looping, I’ll attempt to define it. In defi, especially in a bull cycle, it is common practice to lend ETH to a protocol like Aave, borrow stable coins like USDC and then swap that USDC for more ETH. In this way you’re able to compound the gains that you would receive when the price of ETH appreciates. The downside is that you are liable for the risk if ETH’s price were to decline to the liquidation threshold. The cool thing about Flashstake is there is no liquidation risk. If you were to go completely degen and squander that upfront yield leverage longing a meme coin, you’d still have your ETH locked in a staking contract for the duration of your choice in Flashstake’s ETH vault.
Beyond looping, you might choose to pay the taxes on your staking rewards by cashing out upfront yield in USDC. You might choose to give to a charitable organization, or invest in marketing or operational expenses with that instant upfront yield. Users are just now understanding the value of Flashstake’s time travel function and there have been some exciting and innovative use cases. Since the you can decide down to the minute how long you would like to stake, one user has been flashstaking on a day-to-day basis capitalizing on the high rewards that are currently offered without locking for more than 24 hours. Some have proposed that this guy is paying for his lunch on a daily basis with his up front yield. The screenshot below illustrates that if you have 25 stETH. You could receive $15 and change every 24 hours at the current rate of 12.44%.
What’s the catch?
Everyone in defi is skeptical so I’m sure you’re asking yourself, “How is this possible?” There are two mechanisms working behind the scenes that make upfront yield possible. First there are the rewards themself that accrue from the staked ETH in the Flashstake ETH vault and there is a receipt token (f-tokens) that represents a portion of the yield pool that is actively traded on the open market. These receipt tokens are minted when someone flashstakes and they can be burned to claim a portion of the yeild pool. In this way, the price of the underlying receipt token represents the upfront yield that the staker is able to receive. If the liquid price of the f-token were to ever drop below the real world yield of staked ETH, the f-token holder could arbitrage the difference by burning the f-token on the Flashstake dashboard in the advanced screen under “Flashburn” pictured below.
Flashstake incentivizes liquidity in LP pools providing rewards in FLASH tokens to holders of f-tokens and this is what keeps the price of f-tokens and therefor upfront yield higher than what you would get just staking ETH with Lido. FLASH tokens have risen in value as TVL has risen on the protocol from $2M in 2022 to $5M with the Flido (f-stETH) launch to over $12M with the recent launch of Flash on Arbitrum and the new staked GLP product, fsGLP.
Flashstake has thought through everything, including unstaking. If for some reason you need to cash out or have found a better opportunity for your ETH somewhere else, you can unstake your flashstaked assets as long as you pay back a portion of your upfront yield. For example, if you were to use Flashstake similarly to the lending example I mentioned earlier, assuming you profited on that 100x long on Dogelon, you could use the original yield to withdraw your staked assets and keep the profit.
As you can see there are many use cases for the Flashstake protocol. With the upcoming ETH upgrade and integration with more staked tokens like GLP, I think there is a long runway and a bright future for Flashstake, but don’t take my word for it. Do your own research and remember that this is not financial advice. I’m here to educated and entertain. If you like this content and want to consume more like it, please follow me on twitter at @AllThingsETH or on my YouTube channel. Thanks for reading. May God bless you and your investments!