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TIP-0045: Treasury Allocation to stETH via Lido with Lending Deployment #163

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TIP-0045: Treasury Allocation to stETH via Lido with Lending Deployment #163

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---
tip: 45
title: Treasury Allocation to stETH via Lido with Lending Deployment
author: defiyaco (@defiyaco)
status: Draft
type: Standards Track
created: 2025-10-23
---

## Abstract

This proposal recommends that Talos stakes ETH for stETH and deposit it to protocols such as Fluid or AAVE to earn additional lending yield on top of the base staking rewards.


## Motivation

Lido is the biggest liquid staking protocol for Ethereum, accounting for ~24% of all staked ETH. Lido stETH token provides a reward-bearing representation of staked ETH, accruing staking rewards automatically. By converting treasury ETH into stETH, Talos ensures that core treasury holdings are not idle but generating sustainable yield.
Beyond staking rewards, stETH can be deposited into established DeFi protocols such as Fluid or AAVE to earn lending yield, compounding returns. This approach balances security (staking rewards) with DeFi-native upside (lending yield), in line with Talos’s mission of treasury-backed, AI-optimized yield strategies.


## Specification

Asset Pathway:
1. Swap treasury ETH → stETH via Lido
2. Deposit stETH into Fluid or AAVE lending markets.

Yield Sources:
1. Staking yield: ETH staking rewards (~2-3% annually, variable).
2. Lending yield: Additional APY from Fluid or AAVE depending on demand for stETH borrowing.


## Rationale

* Native alignment: ETH is already a core treasury asset. stETH compounds yield without introducing exposure to unfamiliar collateral.


* Stacked yield: Staking yield plus lending yield increases treasury returns compared to holding idle ETH.


* Liquidity preservation: stETH is widely integrated across DeFi and maintains liquid secondary markets.


## Security Considerations

* Smart contract risk: Smart contract risk and negative rebase risk
* stETH price volatility risk: During stress events, stETH may be volatile relative ETH on secondary markets, however, withdrawal with Lido is a workaround that is not impacted with secondary market activity
* Lending protocol risk: Smart contract risks, liquidation cascades, or borrower defaults within Fluid or AAVE.


## Implementation

Conversion: Stake ETH → stETH through Lido.


Deployment: Deposit stETH into Fluid or AAVE lending protocols.


Monitoring: Track staking and lending yields, liquidity conditions, and stETH/ETH peg health.