The problem TorchVault solves

TorchVault: Combining yield + burning mechanics with charitable giving

The Problem and Solution: Productive ETH Burning with Yield Generation

Many protocols and L2S are committing to burning ETH from user fees, but immediate burning misses the chance to generate yield first. The TorchVault strategy lets projects commit to burning ETH while making it productive during a lockup period. Instead of burning immediately, ETH is staked into a yield-bearing protocol (e.g., RocketPool rETH), where it earns yield. After the lockup, the original ETH is burned and converted into BETH, so they receive BETH tokens proportional to their deposit as proof-of-burn. This turns a one-time burn into a productive commitment that generates value before permanent removal from the market.

The Flywheel Effect and Use Cases

The strategy creates a flywheel: ETH generates yield during the lockup, and that yield can be donated to public goods (via the dragon router) before the principal is burned. This means each burn can fund public goods, creating a positive feedback loop where more burns generate more funding.

Instead of just burning ETH and waiting for the asset to appreciate over time (hoping this remove-from-circulating-supply effect is not cancelled by other market factors), Protocols and L2s can use this to make their burn commitments productive, turning fee burns into a mechanism that supports public goods while still fulfilling their burn promise. The lockup period ensures funds remain productive for a set duration, maximizing the yield generated for public goods.

Beneficiaries (dragon router), on the other hand, can redeem their accrued shares into the Yield Bearing asset to fund their initiatives!

BETH Integration and RocketPool Implementation

BETH integration provides proof-of-burn as a transparent, composable primitive. Each BETH token represents ETH permanently removed from circulation, allowing contracts, incentives, and applications to reference verified burns without intermediaries or off-chain systems.

On this hackathon, we implemented an example using RocketPool's rETH: users deposit ETH, which is converted to rETH and staked; the strategy tracks rETH/ETH exchange rate appreciation to capture yield; after the lockup, rETH is converted back to ETH, deposited into BETH, and depositors receive BETH tokens representing their burned ETH. The dragon router can redeem their accrued shares at any time for the Yield Bearing asset. This demonstrates how any yield-bearing ETH derivative can be integrated into the productive burning framework.

Challenges I ran into

Challenges:

• Couldn't find an example of how to use and customise the YieldSkimmingStrategy.
• It was a bit tough to come up with a design that aligns with the ERC4626 standard and burns some of the deposited asset
• Couldn't complete unit tests before the submission deadline