# ETHplus Upgrade to Release 4.2.0 and Removal of Legacy Onchain State
[https://forum.reserve.org/t/ip-ethplus-upgrade-to-release-4-2-0-and-removal-of-legacy-onchain-state/1452](https://forum.reserve.org/t/ip-ethplus-upgrade-to-release-4-2-0-and-removal-of-legacy-onchain-state/1452)
This proposal recommends upgrading ETHplus to Reserve Protocol v4.2.0 to align it with the latest supported smart contract release. The upgrade consists of a single onchain spell that upgrades core contract implementation contracts and rotates governance and collateral plugins to their v4.2.0 equivalents.
The proposal also aims to remove legacy onchain state. Specifically, obsolete TimelockControllers that still retain pauser and freezer roles will be removed. These controllers were not removed after the v3.4.0 upgrade and represent an unnecessary governance grief vector.
# ETH+ revenue share adjustment
[https://forum.reserve.org/t/rfc-eth-revenue-share-adjustment/1450](https://forum.reserve.org/t/rfc-eth-revenue-share-adjustment/1450)
This proposal aims to adjust the ETH+ revenue distribution methodology to better align with the current risk profile of the product and the long-term health of the Reserve ecosystem. The ETH+ revenue share is currently defined within the ETH+ methodology, which passed an IP vote in early January. This RFC proposes a change to that methodology.
Proposed changes:
Total take rate: 5% → 10%.
RSR staker share: 5% → 3%.
Platform fee (RSR buy & burn): 0% → 7%
*The platform fee is to be directed to the community ran multi-sig. Currently, all funds sent to this address are used to buy and burn RSR.*
# ETHplus Rebalance Proposal Q1 2026 - Step 2
[https://forum.reserve.org/t/ip-ethplus-rebalance-proposal-q1-2026/1407/7](https://forum.reserve.org/t/ip-ethplus-rebalance-proposal-q1-2026/1407/7)
The first step of the Q1 2026 ETHplus rebalance was completed successfully on 27th Jan 2026 with no interruption to yield distribution. Execution was completed safely, with only 15% of the backing buffer utilised and the buffer remaining above 100% throughout.
Step 1 has improved executional depth relative to the December basket. The interim basket now supports redemptions below the 0.5% slippage threshold up to 22,500 ETH, compared to approximately 5,250 ETH previously, while mint capacity below the same threshold remains above 50,000 ETH.
These improvements have been achieved without compromising yield or diversification. Blended yield remains unchanged at 2.61% and concentration risk has been reduced, with ETHplus’ share of total frxETH TVL falling from 9.19% to 6.56%.
Completing the second step of the rebalance is expected to extend redemption capacity below the 0.5% slippage threshold to approximately 30,000 ETH while maintaining yield and diversification profiles, furthering ETHplus into mandate compliance and providing significant headroom for further supply growth.
I now plan to liaise with ABC Labs on scheduling the second step of the rebalance. Their operational oversight is greatly appreciated in order to mitigate loss. Once timing is confirmed I will announce it here and on ETHplus socials. As always, feedback from governors is welcomed.
# [IP] ETHplus Rebalance Proposal Q1 2026 / Ratification of mandate and methodology update
[https://forum.reserve.org/t/rfc-ethplus-rebalance-proposal-q1-2026/1407](https://forum.reserve.org/t/rfc-ethplus-rebalance-proposal-q1-2026/1407)
This on-chain vote combines approval of a quarterly collateral rebalance for ETHplus and ratification of an updated mandate with a formalised DTF methodology. The Rebalance Proposal responds to the December 2025 liquidity analysis showing that the current collateral basket’s redemption performance no longer meets the slippage standards in the proposed methodology, driven by concentrated risk in rETH and frxETH. The proposed solution reallocates weight toward deeper-liquidity assets, notably including weETH under the expanded mandate, which increases redemption capacity significantly while only modestly reducing yield. To manage execution risk, the rebalance is staged, beginning with an interim basket followed by a transition to the target allocation once defined liquidity criteria are met.
The Mandate and DTF Methodology Update formalises ETHplus’ governing principles and expands eligible collateral to include both liquid staking tokens and liquid restaking tokens, with clear guidelines on diversification, liquidity standards (e.g., slippage ≤ 0.5% for up to 20 % of supply), maximum asset concentration, yield benchmarking, and reporting. Ratifying this methodology on-chain aligns ETHplus with standards used by newer DTFs and supports consistent, transparent governance decisions.
The combined vote authorises moving ETHplus into an interim basket and ratifying the updated mandate and methodology as the foundational governance framework for future rebalances and risk management.
More information on either of these two proposals can be found below:
ETHplus Rebalance Proposal Q1 2026: https://forum.reserve.org/t/rfc-ethplus-rebalance-proposal-q1-2026/1407
Mandate and Methodology update: https://forum.reserve.org/t/rfc-ethplus-mandate-and-dtf-methodology-update/1383
# Proposal to Turn Off Default Detection of ETHplus Collateral Assets
[https://forum.reserve.org/t/rfc-modelling-how-ethplus-would-react-to-a-deep-and-sustained-steth-depeg-and-what-actions-we-can-take-via-governance-to-mitigate-loss/1238](https://forum.reserve.org/t/rfc-modelling-how-ethplus-would-react-to-a-deep-and-sustained-steth-depeg-and-what-actions-we-can-take-via-governance-to-mitigate-loss/1238)
ETHplus currently holds 50% of its collateral basket in stETH as it is considered a safe and liquid asset that dominates the LST category. However, over the last few months we have seen the withdrawal queue increase from less than a day to where it sits now at ~26 days. stETH holders looking to exit their position now have an option, exit via DEX liquidity at a slight discount or wait in the withdrawl queue where a 1:1 redemption is guarenteed. As the queue length increases more and more holders are chosing to exit via DEX LPs leading to a sustained 25-50bps depeg against ETH. This sustained depeg has led to some unwinding of the levered stETH trade extending the queue and the depeg even further.
Current Risk: The sustained 25-50bps depeg of stETH has raised concerns about a possible default which if triggered by the protocol at 0.975 would causing the collateral basket to sell off it's defaulting collateral and to flee to ETH, this sell-off by the protocol would likely incur significant slippage and leave ETHplus holders and RSR stakers with significant losses.
Protocol Mechanics: Currently, the protocol will programmatically sell off stETH if a 2.5% or greater depeg persists for 24 hours. The protocol will auction off the stETH to bidders but it’s likely the majority will be sold through on-chain liquidity. A previously moddeled worse case scenario, which sells stETH entirely through DEX liquidity led to a complete seizure of the RSR backing in an attempt to re-collateralise the basket but still left ETHplus holders with a ~10% haircut.
Likely Exit Dynamics: The worst case scenario modeled above is not likely to happen in practice as many ETHplus holders will exit their ETHplus positions and choose illiquidity via the withdrawal queue rather than choosing liquidity with the protocol seen as though this option allows for 1:1 redemption. The actions of these ETHplus holders reduces the amount of stETH that has to be sold via DEX liquidity, reducing loss for the remaining ETHplus holders first and then RSR stakers.
Mitigation Options: A number of options exist; accept current parameters as safe and do nothing, increase the default detection threshold, increase the default delay, a combination of both or turn off default detection on ETHplus collateral entirely.
Proposal: Forum discussion and an off chain poll saw most governors and ABC labs members to be in favour of turning off default detection for ETHplus. Given this majority the proposal to turn off the default detection, completed by setting the diversity factory of the emergency collateral to zero, has graduated to a onchain vote.
# Collateral basket change proposal to address liquidity bottlenecks
[https://forum.reserve.org/t/rfc-collateral-basket-change-proposal-to-address-liquidity-bottlenecks/1175/9](https://forum.reserve.org/t/rfc-collateral-basket-change-proposal-to-address-liquidity-bottlenecks/1175/9)
This proposal outlines a strategic update to the ETHplus collateral basket aimed at optimizing liquidity and minimizing slippage during large-scale minting and redemption events. As ETHplus has experienced significant growth—404% year-over-year in ETH-denominated TVL—the protocol now supports larger institutional LPs whose activities demand more robust liquidity infrastructure. The proposed changes rebalance the basket to improve the performance of redemption curves while maintaining a high level of diversification and increasing the overall yield profile. The proposal also introduces OETH as a new collateral asset, supported by third-party audits and risk assessments. This optimization enhances ETHplus scalability and positions it for continued sustainable growth.
# [IP] - Collateral basket change to address liquidity bottlenecks and slowly introduce ETHx - Step 2
[https://forum.reserve.org/t/rfc-collateral-basket-change-to-address-liquidity-bottlenecks-and-slowly-introduce-ethx-step-2/962](https://forum.reserve.org/t/rfc-collateral-basket-change-to-address-liquidity-bottlenecks-and-slowly-introduce-ethx-step-2/962)
This proposal seeks to complete the slow introduction of Stader’s ETHx to the Ethereum Plus, ETH+ collateral basket, now that the safety criteria set in Step 1 have been met. The approval of this proposal will fully integrate ETHx into the basket, completing the two-step process initiated in the previous RFC. This proposal has been made with the ETH+ mandate in mind, diversifying the collateral basket further without compromising on either yield opportunities or security.
# [IP] Addition of Stader’s ETHx to the ETH+ collateral basket 2.0
[https://forum.reserve.org/t/ip-addition-of-stader-s-ethx-to-the-eth-collateral-basket-2-0/925](https://forum.reserve.org/t/ip-addition-of-stader-s-ethx-to-the-eth-collateral-basket-2-0/925)
On the 22nd of August a collateral basket change was proposed in the Ethereum Plus, ETH+ forum. The proposal advocated for the addition of Stader’s ETHx to the basket in order to improve risk diversification, allow the basket to reflect the evolving Ethereum staking ecosystem, and potentially increase ETH+ yields. The initial proposal allocated 10% to ETHx however, after consideration by the community and MEV Capitals analysis, it has been found that the current liquidity constraints on ETHx limit allocation to 8%. During this analysis, it was also highlighted that liquidity during both ETH+ minting and redemptions could be improved by allocating 50% to wrapped staked ETH, wstETH, and 21% to both staked Frax ETH, sfrxETH and Rocket Pool ETH, rETH.
This proposal outlines a two-step plan for collateral basket change in order to improve basket diversification, spread risk, and potentially improve ETH+ yields as the initial RFC set out to do with the addition of ETHx and titrate wstETH, rETH, and sfrxETH allocations to improve minting and redemption liquidity. Given this is a two-step plan, if passed this RFC will result in the changes according to the step 1 collateral basket change, a second RFC will then be live on the forum for community discussion once the stated safety requirements below have been met before a second IP is pushed on-chain to achieve the final collateral basket change.
# [IP] Adjusting the ETHPLUS (ETH+) Reward Ratio from 2 weeks to 1 week
[https://forum.reserve.org/t/rfc-adjusting-the-ethplus-eth-reward-ratio-from-2-weeks-to-1-week/876](https://forum.reserve.org/t/rfc-adjusting-the-ethplus-eth-reward-ratio-from-2-weeks-to-1-week/876)
# Summary
Change the ETH Plus (ETH+) Reward Ratio from 2 weeks to 1 week.
#### From
2 Weeks: 0.000000534833333333
#### To
1 Week: 0.000001069666666666
# Abstract
This IP proposes changing the ETH+ reward distribution period from 2 weeks to 1 week, altering the reward ratio from 0.000000534833333333 to 0.000001069666666666. By moving to a 1-week distribution period, the protocol aims to establish a more sustainable and equitable reward system that ensures consistent reward flows and enhances long-term participation. This adjustment is designed to better align the protocol’s incentives with its goals of stability and fairness in the staking ecosystem.
# Problem Statement
The current reward distribution mechanism is set to distribute rewards over a period of 2 weeks corresponding to a reward ratio of 0.000000534833333333. The current model is too rigorous and reduces the reward distribution Early stakers may not be adequately incentivized, and the fast-paced distribution could cause inefficiencies in the reward system, impacting long-term user engagement and the stability of the protocol’s incentive structure.
# Rationale
The proposed change to extend the reward distribution period from 2 weeks to 1 week is driven by the need to create a more sustainable and equitable reward system within the protocol. The current rapid distribution schedule may lead to inefficiencies and diminish the incentive for early stakers, as rewards are quickly diluted with the influx of new participants. By slowing the distribution pace, the protocol can ensure a more consistent reward flow, enhancing long-term engagement and better aligning with the overall objectives of stability and fairness in the staking ecosystem.
By transitioning to a new reward ratio of 0.000001069666666666, which corresponds to a 1 week distribution period, This will create a more balanced and sustainable reward system that better aligns with the protocol’s long-term objectives.
# Risks
One potential risk is that it could introduce opportunities for people to stake, get yield, and then unstake. However, this is unlikely to be profitable with the 2 week unstaking delay.
# [IP] Collateral Basket Change Proposal: Adjusting ETH+ Collateral Basket To Address Liquidity Constraints
[https://forum.reserve.org/t/rfc-collateral-basket-change-proposal-adjusting-eth-collateral-basket-to-address-liquidity-constraints/841](https://forum.reserve.org/t/rfc-collateral-basket-change-proposal-adjusting-eth-collateral-basket-to-address-liquidity-constraints/841)
## Summary
ETH Plus (ETH+) has seen significant growth in the past year, with market growing from $15 million to $116 million since March 1st. As ETH+ grows, rETH is experiencing liquidity constraints, making it difficult for minters to access the token without higher slippage. Currently, rETH makes up 33% of the ETH+ basket, so limited rETH liquidity may hinder ETH+’s further growth. This RFC proposes two potential solutions: (a) adding cbETH to the collateral basket, and/or (b) increasing the percentage of stETH in the basket. By implementing a solution, ETH+‘s collateral basket will become more liquid, allowing it to easily be minted without liquidity constraints. New solutions introduced will be included as proposed in the reply section of the forum.
## Abstract
This RFC explores the liquidity challenges faced by rETH as ETH+ continues to expand. To mitigate these constraints, this proposal offers two potential solutions: (a) incorporating cbETH into the basket, and/or (b) increasing the allocation of stETH. Each option is evaluated based on its potential impact on liquidity, risk, and overall performance of the basket.
## Problem statement
rETH’s current backing collateral for ETH+ is over $42 Million, but the largest rETH liquidity pool holds only $51 million in liquidity. It’s time to consider adjusting the collateral basket to handle ETH+’s growth. Without adjusting the collateral basket, ETH+ growth will be limited due to liquidity constraints. If this is not addressed soon, it will create significant issues for the user experience of large users, as their ability to mint large amounts of ETH+ will be deterred.
## Rationale
Solutions 1 & 2 of the RFC will be combined to create an optimal community solution. cbETH will be added to the ETH+ collateral basket and wrapped stETH exposure will be increased as well.
| Token| Allocation| APY= 3.02% |
|--------|--------|--------|
| rETH | 15%| 2.77%|
| Wrapped stETH | 40%| 3.03%|
|sfrxETH| 22.5%| 3.26% |
| cbETH | 22.5% | 3.00% |
#### Diversification:
Adding cbETH further diversifies the ETH+ collateral basket, furthering the original mandate. By diversifying, ETH+’s exposure to the risks of any particular LST (e.g., slashings or depeg) is reduced.
#### cbETH plugin is already available:
The plugin for cbETH has already been created which means no time will be needed to be set aside to build and audit the plugin as it already has been completed.
#### Liquidity:
stETH (wstETH) has over $300 million in liquidity on the Ethereum blockchain paired against other ETH-pegged stable pairs. By increasing % exposure to stETH, ETH+ will gain higher exposure to the most liquid LST within its collateral basket, allowing it to scale more easily with fewer liquidity constraints. Limited Basket Adjustment:
## Risks
When considering the risks of these two LSTs, risk reports from Llama Risk will be utilized to establish key considerations for the community. The risk factors pulled from the report will be Liquidity, Smart Contract, Dependency, and Decentralization. By using a standard and reputable research group for both, the community can more easily evaluate this decision. Both reports are linked in the RFC.
### Adding cbETH to the ETH+ Collateral Basket
#### Liquidity
“cbETH is okay on liquidity because although it ranks 2nd by LSD market share after stETH, >97% of liquidity is on Coinbase and an $18.1m on-chain swap produces a similar slippage as a $300m stETH swap.”
Additional Notes on Liquidity Risk: Since this report, cbETH has even less on-chain liquidity. At current liquidity, a swap of 1,000 ETH for cbETH could create significant slippage. For ETH+, minters can obtain cbETH directly from Coinbase at a 1:1 ratio, but the on-chain liquidity of cbETH should be noted as a potential risk to the underlying basket.
#### Smart Contract Risk
“cbETH is ranked excellent in smart contracts because the contract architecture is straightforward, managed by permissioned Coinbase addresses, based on battle-tested contracts, is audited, and the contracts themselves do not handle user funds.”
Additional Thoughts on Smart Contract Risk: Though rated well on smart contract risk, it’s important to note that adding another layer of smart contract risk increases total exposure. This must always be considered when adding another LST to the basket.
#### Dependencies
“cbETH is ranked good in dependencies for having a reliable price feed available. A centralized service can be an advantage when managing system accounting, withdrawal processing, and unforeseen network issues (high withdrawal demand, Ethereum network issues, etc.).”
#### Decentralization
“cbETH is ranked poor in decentralization because it is a centralized service operated by Coinbase and users are thus exposed to counterparty risk. The User Agreement does offer assurances that users retain legal ownership of their staked ETH. Coinbase does make an effort to reduce centralization of its validators by diversifying across several software clients.”
### Solution 2: Increase Exposure to stETH (wstETH) in the Collateral Basket
stETH (wstETH) Risk Rating by Prisma Risk
#### Liquidity
“stETH is rated excellent on liquidity for being the clear market leader with the deepest liquidity.”
#### Smart Contract Risk
“stETH is rated good in smart contracts for being heavily audited, having a bug bounty program, and having a long history of securing billions in TVL without major incident. The recent upgrade to V2 increases smart contract uncertainty.”
#### Dependencies
“stETH is rated good in dependencies for having a reliable price feed available. Dependency on Lido oracle daemons can result in disruptions that can cause incorrect reward distribution or liquidity mismanagement.”
#### Decentralization
“stETH is rated good in centralization for having core system controls with a DAO that has reasonable backstop measures. Multiple multisigs are employed with limited privileges for specific precautionary functions.”
# [IP] Important Steps to be Completed Before Finalizing Release 3.4.0 Upgrade for ETH+
[https://forum.reserve.org/t/rfc-important-steps-to-be-completed-before-finalizing-release-3-4-0-upgrade-for-eth/804](https://forum.reserve.org/t/rfc-important-steps-to-be-completed-before-finalizing-release-3-4-0-upgrade-for-eth/804)
## Summary
Following the RFC to guide the ETH+ community through the next steps to finalize the upgrade to the 3.4.0 smart contract release by Reserve Protocol, the following prerequisites have been completed
- All reward token balances should be claimed beforehand
- All rebalancing and revenue auctions must run to completion
Once these steps are completed The final step to upgrade ETH+ to release 3.4.0 can proceed. This RFC will not follow a normal governance cycle, this RFC is designed to prompt the community to complete the required prerequisites, so the upgrade to release 3.4.0 can be finalized. Once these steps are completed, the second IP to finalize the upgrade will be launched.
## Abstract
ETH+ is in the last step of upgrading to the new contract release 3.4.0. Before the upgrade can be completed, governors must work with the community to ensure these two prerequisites are completed before executing the final upgrade. Once the prerequisites are completed, the second IP will go live to finalize the ETH+ contract upgrade to release 3.4.0.
## Problem Statement
Upgrading ETH+ to release 3.4.0 is a two-step process. Step 1 upgrades the core contracts and registers new collateral plugins. After Step 1 is executed, a new TimelockController and Governance will administer the RToken. Step 2 cleans up old plugins. Before executing Step 2, there are two important prerequisites:
All reward token balances should be claimed beforehand.
All rebalancing and revenue auctions must run to completion.
Once these steps are completed, the upgrade to release 3.4.0 from Reserve Protocol can be completed after the second IP is executed.
## Rationale
The community has already passed the initial IP to begin the upgrade to release 3.4.0. To finalize the upgrade, this last cleanup step is needed to complete the upgrade. Once the prerequisites are completed, ETH+ will be fully upgraded to release 3.4.0.
**Following the prerequisites,**
**All reward token balances should be claimed beforehand**
For ETH+ token holders, there are no additional reward tokens because collateral is wstETH, rETH, sfrxETH. There are no requirements for ETH+ holders to do for this step
**All rebalancing and revenue auctions must run to completio**n
All auctions for ETH+ must be completed, after being settled, ETH+ is ready to move forward with the second IP needed to finalize and upgrade ETH+ to release 3.4.0. Following this RFC, the cleanup step IP will be posted.
As you can see [here](https://app.reserve.org/ethereum/token/0xe72b141df173b999ae7c1adcbf60cc9833ce56a8/auctions), all auctions have been settled.
## Risks
The latest smart contract upgrade 3.4.0 has been audited by Trust, however, there is always a chance of a bug as there is with all smart contracts. If a new auction appears or any have not run to completion then capital will be lost as the governor and timelock contract have been updated. If the final step is not completed, ETH+ will not complete the final step to finalize the upgrade to release 3.4.0.