On Wednesday, DeFi protocol Sommelier announced the launch of their new ETH liquid staking token vault, Real Yield ETH. This vault is the product of strategy provider Seven Seas Capital and Web3 data analytics firm DeFine Logic Labs. Real Yield ETH is designed to generate yields on liquid staking tokens including rETH, stETH and cbETH, through two main techniques - leveraged staking on Aave and Compound and offering liquidity on Uniswap V3. According to Stephen Henkel, the CEO of Define Logic Labs, the idea of creating this vault was to have an index that follows the best yield on ETH. The token is constructed in a way that the more yield a particular strategy can give, the more share of the index the strategy can take.

The vault will live on the Ethereum blockchain, although it is built on top of Sommelier which is a member of the Cosmos Inter Blockchain Communication. Sommelier helps these strategies become possible by enabling Uniswap V3 tick optimization, making tight leverage loops and taking multiple positions across multiple assets and protocols possible.

According to Blockworks Research Analyst David Rodriguez, Sommelier's approach to leverage an app-chain to optimize the Ethereum DeFi experience that provides non-custodial, institutional-grade mid-frequency strategies is a 0 to 1 improvement compared to yield aggregation protocols like Yearn Finance. Rodriguez also declares that based on the unofficial backtested models, RealYieldETH should be able to hit a TVL of more than 60 million USD while providing an APY of more than 13% without liquidity incentives. This is more than double the yield given by Frax's sfrxETH product.

In a nutshell, Real Yield ETH goes to show the difference a well thought out yield generation protocol can make. The mix of Uniswap V3 optimization and leveraged staking can provide more than satisfactory returns which have a wide margin of superiority over competing products like Frax's sfrxETH product. This is the primary motive behind the launch of this product, and Real Yield ETH should become a powerhouse in the space of liquid staking tokens with its current architecture.



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