Overview
This proposal seeks community approval to adjust key parameters within Treehouse’s tETH redemption framework to improve user experience while maintaining protocol sustainability.
Specifically, this proposal recommends:
- Reducing the Fast Track redemption fee from 2% to 0.5%
- Reducing the minimum Normal Track redemption amount from 200 wstETH to 50 wstETH
These adjustments aim to improve user experience by reducing redemption friction, while preserving responsible liquidity and treasury management.
Background
Treehouse currently offers three redemption pathways for tETH:
1. Swap Redemption
Users may swap tETH instantly for wstETH or other supported assets.
- Swaps are routed through on-chain LP venues (e.g., Curve and other integrated pools)
- Pricing is determined by market conditions and pool depth
- Execution is immediate, subject to market liquidity and slippage
This pathway serves as the default redemption route for most users, offering efficient and market-driven execution under normal liquidity conditions.
2. Fast Track Redemption
Fast Redemption enables instant redemption of tETH, up to a certain available limit.
- Underlying wstETH is withdrawn directly from the Strategy Vault
- Redeemed wstETH is sent immediately to the user’s wallet
- A flat 2% fee is applied
- Fee is directed to the Treehouse treasury
This mechanism allows users to access liquidity instantly, while maintaining protocol health for processing expedited withdrawals and ensuring sustainable liquidity management.
3. Normal Track Redemption
For larger redemptions above the Redemption Band:
- Users may burn tETH directly with Treehouse
- Receive underlying asset at the prevailing tETH:wstETH exchange rate displayed on the dApp
- Subject to a withdrawal period of approximately 7 days
The delay allows the protocol sufficient time to unwind underlying LST positions back into native ETH without creating slippage or liquidity stress in the tETH/wstETH liquidity pools.
Currently, the minimum direct redemption size is 200 wstETH.
Motivation
Community feedback has identified two primary concerns:
- The 2% Fast Track redemption fee being prohibitively high
- The 200 wstETH minimum Normal Track redemption amount being inaccessible for many users
While the existing structure was designed to protect protocol liquidity and treasury sustainability during earlier growth phases, the ecosystem has matured in liquidity depth and treasury stability.
Reducing friction around redemption is expected to:
- Improve user confidence in tETH’s liquidity
- Enhance capital efficiency
- Increase accessibility for small to mid-sized holders
- Strengthen trust in Treehouse’s fixed income infrastructure
This proposal balances user experience improvements with responsible liquidity management.
Specification
If approved, the following parameter adjustments will be implemented:
1. Fast Redemption Fee Adjustment
- Current fee: 2%
- Proposed fee: 0.5% (50 bps)
2. Minimum Normal Track Redemption Adjustment
- Current minimum: 200 wstETH
- Proposed minimum: 50 wstETH
The DAO retains the authority to revise these parameters via future governance proposals if market conditions materially change.
Implementation Plan
If approved:
- Fast Track redemption fee and minimum Normal Track redemption threshold parameters will be updated within the redemption logic.
- Treehouse’s front-end dApp interface will be updated to reflect the new values.
No structural changes to redemption mechanics are proposed.
Next Steps
- Gather community feedback on the Governance Forum
- Escalate to Snapshot for formal vote
- Implement parameter adjustments upon approval