Escrow Staking

How will Escrow Staking (Phase I) work and how is $brktETH allocated?

Users can deposit supported LSTs and LRTs into Escrow on either the Ethereum or Arbitrum networks. In Phase II when escrow breaks, users will receive an equivalent value of newly minted $brktETH based on the collateral's value at the time escrow breaks.

A user may withdraw at any time during Escrow with no penalty and will keep any Bracket [BARS] that have accrued. A partial withdrawal may continue to accrue points on the remaining amount. If a user does not want to participate in Phase II and receive $brktETH, they must withdraw their collateral prior to Phase II escrow break. The user will receive back exactly the tokens the deposited.

The mechanics of how the Escrow contract functions is detailed in the Phase I section. At the time of escrow break, $brktETH will have an initial $brktETH to $ETH conversion rate of exactly 1.0. All escrowed assets will be valued at their conversion rate to $ETH at that time, based on the LST protocol's official conversion rate. For example, if a deposit of 2.0 wstETH was made and each wstETH is worth 1.3 $ETH at time of escrow break, then the user would be allocated 2.6 $brktETH at a 1:1 conversion rate with $ETH. This initial 1:1 conversion rate will then begin to rise overtime as $brktETH's value grows due to the LST/LRT treasury's growing in value. There will be a one-time lock period for up to 7 days to allow time for the Arbitrum funds to bridge to Ethereum mainnet. The block rewards on $brktETH will continue to accrue during that time. At the end of that short lock period, one $brktETH will be worth slightly more than 1.0 $ETH, and can then be invested in strategies or redeemed.

How will $brktETH be allocated by the smart contract after Escrow Staking?

After Escrow Staking (i.e. Phase II), users can deposit supported LSTs and LRTs and receive an equivalent value of $brktETH immediately. New $brktETH can only be allocated or redeemed on Ethereum.