BitMEX Launches Swap Contract for Staking Yield on Lido Finance

Derivatives exchange BitMEX has introduced a new swap contract for staking yield on Ethereum (ETH) via Lido Finance.

BitMEX Launches Swap Contract for Ethereum Staking Yield

The contract offered by BitMEX is called the ETH Staking Yield Swap (ETHYLD). This contract allows traders to either go long or short on the staking yield generated through the Lido Finance network. The maximum leverage for a long-short position will be x2.

See also: Arrakis

Ethereum staking yield represents the rewards earned by validators who contribute to the overall security of the network. Lido Finance provides a liquid staking solution, enabling users to participate in staking without needing the minimum 32 ETH required to run a validator node.

>> See also: Tokenomics Research #1: Lido Finance is a Solid Protocol, but the LDO Token is Not

Essentially, there are two types of positions users can take:

• Payer (Long): Users trade a current stable fixed rate for the opportunity to earn a potentially higher floating yield in the future. If the staking yield decreases in the future, this position will incur a loss.
• Receiver (Short): Users exchange a future floating yield for a stable fixed rate in the present. This implies that this position does not expect higher yields in the future.

BitMEX states that this contract will provide an opportunity for those staking on Lido who are wary of yield fluctuations to lock in a fixed yield, thus securing profits at a predetermined yield level.