Executive summary
In this proposal, we seek DAO approval for the launch of osToken redemption functionality on both Ethereum and Gnosis Chain, establishing a mechanism by which any osToken holder can redeem the token for ETH/GNO at a protocol-given rate. The new functionality has been audited by Statemind.
Motivation
StakeWise allows users who stake in Vaults to freely mint and burn osTokens (osETH on Ethereum and osGNO on Gnosis Chain), and the tokens are freely traded on DEXs.
However, the protocol has lacked a mechanism to defend the peg of the tokens to the fair exchange rate calculated internally.
When osTokens are trading at a discount to the fair exchange rate, traders currently have no process by which they can “sell” the tokens to the protocol, thus blocking the arbitrage trade that maintains the peg.
The introduction of redemption functionality will allow traders and users alike to return tokens to the protocol at the fair rate, even when they haven’t previously minted osTokens, providing constant demand for the token when it’s at a discount and keeping its price at a fair rate.
It will also allow StakeWise to recover ETH liquidity within its position in the Fluid protocol, which has fallen to single-digit ETH amounts and now mostly consists of osETH, which contributes to a persistent discount.
For more information on the mechanics of osToken redemptions, see StakeWise documentation: How osToken Works | StakeWise Docs
Specification
Ethereum
{
“transactions”: [
{
“to”: “0x287d1e2A8dE183A8bf8f2b09Fa1340fBd766eb59”,
“operation”: “0”,
“value”: “0.0”,
“data”: “0x3307ce84000000000000000000000000c43a7b16a7a167c0318390cba16787c11e9e1fd0”,
“method”: “setRedeemer(address)”,
“params”: [
“0xc43A7b16A7a167c0318390Cba16787C11e9e1FD0”
]
}
]
}
Gnosis Chain
{
“transactions”: [
{
“to”: “0xd6672fbE1D28877db598DC0ac2559A15745FC3ec”,
“operation”: “0”,
“value”: “0.0”,
“data”: “0x3307ce84000000000000000000000000b790391ee99b9193ebb80022bf127d24bac586c4”,
“method”: “setRedeemer(address)”,
“params”: [
“0xB790391ee99b9193Ebb80022bf127d24Bac586c4”
]
}
]
}
Considerations
We consider redemptions to be the last missing piece in establishing osTokens as the premier LSTs on Ethereum and Gnosis. Having a mechanism that allows osTokens to maintain their market value is crucial for attracting sophisticated holders and will help retail and institutional users alike have more confidence in StakeWise. The proposed functionality has been audited by Statemind as part of a holistic review of StakeWise’s codebase, back in June 2026.
Vote & discussion
The Snapshot vote to enable redemptions has now been published:
Please leave any comments and questions in this thread - we’re very happy to discuss any part of this proposal in depth.