pETH
pETH is the native yield-bearing asset of Polaris. It serves as the collateral for every pAsset but also forms the economic foundation on which the whole ecosystem is built.
Unlike wrapped ETH, pETH is not designed to track the price of ETH on a 1:1 basis. It is a native asset built on ETH reserves whose value evolves with the Polaris economy.
This distinction is important because Ethereum already offers several ways to hold ETH onchain. Liquid staking tokens generate yield by securing the network, while other assets rely on custodians that exist offchain. Those approaches work well for the goals they were designed for, but Polaris follows a different model.
The protocol generates yield entirely from onchain activity and is designed to operate independently of custodians and external yield sources. Its collateral asset is based on the same design principles, serving as the protocol’s shared reserve asset while supporting the liquidity and yield mechanisms that power it.
Unlike liquid staking tokens, pETH does not generate yield from validator rewards. Its yield comes from activity taking place inside Polaris. Swap fees generated through the bonding curve, interest paid by pAsset minters, token conversions and applications built on top of Polaris all contribute to the same yield engine, supporting the growth of pETH over time.
When these flows are routed through the bonding curve, they strengthen the pETH floor and create demand at the pETH spot price.
As the ecosystem grows, that activity strengthens that same reserve asset supporting the whole protocol, enabling new markets and applications to build on acommon foundation without the need to introduce different collaterals.
A Native Market
pETH is created whenever ETH enters the Polaris bonding curve. The deposited ETH contributes to the reserve underlying pETH, while the user receives the corresponding amount of pETH.
When pETH is exchanged back for ETH, the process simply runs in reverse, with the returned pETH burned and the corresponding ETH released from the bonding curve.
This gives pETH protocol-native liquidity from the moment it is created. Users can always move between ETH and pETH through the bonding curve without depending on external liquidity providers deciding whether to supply capital. As more ETH enters the system, the liquidity available through the curve grows alongside it, making pETH instantly convertible back into ETH at the bonding curve price.
The bonding curve plays a central role in Polaris, but understanding pETH does not require understanding how the curve works internally. A complete explanation of its pricing mechanism and behavior is available in the dedicated Bonding Curve section.
Using pETH
Holding pETH is the starting point for interacting with Polaris. Users can deposit it as collateral to mint USDp, GOLDp and the other pAssets supported by the protocol, or simply hold it as exposure to the protocol’s economic activity and the yield it generates.
Users can also deposit pETH into a pAsset market without minting immediately. These collateral-only positions support the market’s collateral base and can participate in market-level fees and safety-rate flows.
Because every pAsset is backed by the same shared collateral, new assets can be introduced by Polaris or issued by third parties without requiring separate collateral systems. This allows the ecosystem to expand while continuing to build on the same underlying asset.
As Polaris grows, the role of pETH extends beyond collateral. The same asset can be used across additional Polaris primitives introduced throughout this documentation.
As more activity takes place across the ecosystem, the value generated by that activity flows back into the same yield engine that supports pETH. This enables Polaris to scale around a single collateral asset, with every new product or asset expanding the same foundation.
Floor Price
Unlike most ETH-denominated assets, pETH has both a market price and a mathematically guaranteed floor price.
The market price is determined by supply and demand and can fluctuate over time, while the minimum amount of ETH backing each pETH determines the floor price. As Polaris grows, part of the value generated across the protocol is designed to strengthen that backing over time. Under the protocol rules, the pETH floor can only rise; it cannot fall.
Since the market price and the floor price are separate, pETH can trade above its floor while the floor itself continues to reflect the minimum ETH backing beneath the asset.
The floor and premium can also be separated through the fpETH and vpETH primitives, which are explored in their dedicated sections.
