Crypto Gloss

Raft

Raft is an Ethereum CDP protocol purpose-built for wstETH collateral, issuing the R stablecoin at up to 90% LTV — significantly higher than competing LSD-backed CDP protocols — using flash-loan-powered “one-step leverage” to help users build leveraged staking positions in a single transaction.

Overview

Launched in 2023, Raft differentiated itself in the crowded LSDfi CDP space through two key parameters: higher LTV (90% versus Lybra’s 62.5% or MakerDAO’s lower wstETH ratios) and its one-step leverage feature. By accepting only wstETH as collateral (focused design rather than multi-asset complexity), Raft could calibrate its risk parameters precisely around Lido’s stETH stability and Ethereum’s underlying security. The R stablecoin targets $1 USD peg using redemption mechanics borrowed from Liquity’s model.

R Stablecoin

R is Raft’s USD-pegged stablecoin:

Issuance:

  • Users deposit wstETH as collateral
  • Borrow R at up to 90% LTV (minimum 111% collateral ratio)
  • One-time minting fee (no ongoing interest — borrowing is effectively free while collateral grows)

Peg mechanisms:

  • Redemption floor — R is always redeemable for $1 of wstETH at face value, preventing R from trading below $1
  • Hard liquidations — positions below minimum collateral ratio are liquidated at favorable prices, restoring system health
  • Stability pool — R holders can deposit into the Stability Pool to absorb liquidations at a discount (similar to Liquity’s Stability Pool model)

wstETH yield dynamics:

  • Because wstETH accrues staking yield, the debt-to-collateral ratio improves naturally over time for unchanged R debt
  • Borrowers effectively get partially self-repaying loans (stETH yield offsets the static R debt value)

One-Step Leverage

Raft’s signature UX feature:

Without one-step leverage, building a leveraged wstETH position requires:

  1. Deposit wstETH → borrow R
  2. Convert R to ETH/USDC on a DEX
  3. Convert ETH to stETH, wrap to wstETH
  4. Deposit new wstETH → borrow more R
  5. Repeat multiple times to achieve target leverage

With Raft one-step leverage:

  1. User specifies desired leverage (e.g., 5× wstETH exposure)
  2. Raft uses a flash loan to borrow the full required USDC/ETH in one transaction
  3. Converts to stETH → wstETH in one step
  4. Opens the full CDP position at target leverage
  5. Repays flash loan from the CDP’s borrowed R
  6. User has a leveraged wstETH position in one click

This dramatically reduces gas costs and execution complexity for leveraged staking strategies.

Stability Pool

Raft’s Stability Pool follows Liquity’s design:

  • R holders voluntarily deposit into the Stability Pool
  • When positions are liquidated, the Stability Pool absorbs the bad debt (R is burned) and receives the liquidated wstETH at a discount (~10% below market value at liquidation)
  • Stability Pool participants earn from this discount, effectively buying wstETH below market price during liquidations
  • Additionally, Stability Pool participants earn RAFT token incentives

RAFT Token

RAFT is the protocol’s governance token:

  • Governance — RAFT holders vote on collateral parameters, stability fee adjustments, and protocol upgrades
  • Staking — RAFT stakers earn from protocol fee revenue
  • Incentives — RAFT distributed to Stability Pool depositors and R liquidity providers

Sources

  1. Raft Protocol Documentation — Raft Labs, 2023. Describes wstETH CDP mechanics, R stablecoin with 90% LTV design, one-step leverage using flash loans, Stability Pool absorption mechanics, and RAFT token economics.
  1. “LSDfi Protocols: Leverage on Staked ETH” — Delphi Digital, 2023. Analyzes the LSDfi CDP landscape including Raft, Prisma, and Lybra, focusing on leverage mechanics and LTV differences across protocols, evaluating the risk trade-offs of Raft’s 90% LTV versus more conservative competing protocols.
  1. “One-Step Leverage in DeFi: Flash Loan Composition” — Bankless Research, 2023. Explains how flash loan-powered one-step leverage works in CDP protocols including Raft, analyzing gas efficiency compared to manual multi-step leverage loops, smart contract risk, and MEV considerations for leveraged staking positions.
  1. “Stability Pool Design: Liquity vs. Successors” — Atis Elsts, 2023. Compares Liquity’s original Stability Pool design with implementations in Raft, Prisma, and other Liquity-fork protocols, analyzing whether the Stability Pool model scales to LSD-backed assets where liquidation events are less frequent due to higher minimum collateral ratios.
  1. Raft Protocol Community and Governance Updates — Raft DAO, 2023. Governance discussions covering R stablecoin Curve pool incentives, RAFT token distribution epochs, one-step leverage user experience improvements, and collateral ratio parameter governance.

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