SavETH is the minted share of a validator on the consensus layer when a KNOT is created in the Stakehouse registry. To mint the savETH shares, the Balance Reporter must be ran to ensure the validator is eligible and has a full 32+ ETH. savETH ensures granular level traceability and accountability between the execution layer dETH and the underlying validator. It enables full fungibility for dETH at the universal level while users can retain ownership of their specific validator’s yield. The amount of savETH never goes up. The amount of corresponding dETH starts 1:1 with savETH, but the rate will increase as the validator earns staking rewards. Multiple KNOTs’ savETH can be curated into a single index or bundled as a portfolio for easier asset management.
savETH tokens are the communication between dETH tokens and the underlying validator.
How does savETH earn rewards?
As a validator earns staking rewards a user can run the Balance Reporter to ask Stakehouse to check a node for the balance of the underlying validator. If the validator has earned staking rewards and the balance of the underlying ETH has gone up, then the exchange rate of 24 savETH to the value of the underlying validator has gone up. The user who holds the savETH could then mint additional dETH tokens.
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