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Lido Adapter

The Lido adapter is a smart contract that is used to generate yield on the locked tokens in a vault.

Only the vaults with the following tokens on Ethereum mainnet can generate yield using the Lido adapter:

  • ETH
  • WETH
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Once a vault is created, the adapter cannot be changed. Any change to the adapter only impacts the new vaults.

Deposit Flow​

When a user deposits into such vaults, the adapter transfers the tokens into the Lido protocol to earn yield. The adapter then tracks the yield generated per user.

When a user deposits WETH, the adapter transfers it to the Lido protocol and receives stETH in return. It then wraps the stETH into wstETH which is stored on the adapter contract address. The wstETH token represents the principal amount as well as the yield generated from Lido.

Redeem Flow​

When a vault settles or expires, users can redeem their shares for the underlying tokens. The adapter will then calculate the user's proportional share of the yield generated from Lido and transfer it to the user along with the original deposit amount.

During the first redemption, the adapter converts wstETH back into WETH and transfers them to the Bob contract. There are two pathways implemented in the adapter to convert wstETH back into WETH:

Curve Swap (Default)​

The default path follows wstETH → stETH → ETH via the Curve stETH/ETH pool, then wraps to WETH. This path:

  • Is immediate.
  • Uses Chainlink's stETH/ETH oracle for slippage protection.
  • Has a tight slippage tolerance.

Lido Withdrawal Queue​

In case the Curve exchange fails due to low liquidity, the Comptroller can request a withdrawal using the Lido withdrawal queue. This path:

  • Is slower due to the waiting period of the Lido withdrawal queue.
  • Has no slippage.
  • Takes precedence over the Curve path once initiated.

Yield Tracking​

The adapter tracks each user's balance using the following formula:

user WETH share=user wstETHvault total wstETH×total WETH from unstaking\text{user WETH share} = \frac{\text{user wstETH}}{\text{vault total wstETH}} \times \text{total WETH from unstaking}

When the yield is positive, a fee is applied to it. For example, if a user deposits 1 WETH and receives 1.05 WETH after redemption, the yield is 0.05 WETH. If the vault yield fee is 10%, the fee is 0.005 WETH. The user will receive 1.045 WETH.

Vaults Without Adapters​

Vaults created for tokens without any adapter hold the deposited tokens directly in the SablierBob contract. In this case, a flat fee in the chain's native token is charged at redemption.