KVORUM
aaveSource: Aave governance v3 · #189

wstETH Slope1 & Uoptimal Update

executedOct 22, 2024, 02:22 PM UTCby570x57ab…2922

01Summary

AISummary by Kvorumclaude-haiku-4-5

This proposal optimizes the wstETH reserve on Aave v3's Lido instance by increasing the Uoptimal parameter from 45% to 80% and reducing Slope1 from 3.50% to 2.25%. These changes aim to improve capital efficiency and prepare the reserve for upcoming Liquid Restaking Token integrations and new eModes.

Type
parameter change

Key changes

  • Increase wstETH Uoptimal from 45.00% to 80.00% to improve capital efficiency and allow larger portions of wstETH to be borrowed(high)
  • Reduce wstETH Slope1 from 3.50% to 2.25% to make wstETH borrowing more attractive and align with demand expectations in the 2.00-2.50% range(high)
  • Preparation for integration of Liquid Restaking Tokens and new eModes on the Lido instance(medium)

Notable concerns

  • Market conditions are not sufficiently buoyant to support the current Slope1 parameter, justifying the reduction
  • Future proposal may be needed to fine-tune wETH and wstETH Slope1 parameters based on market conditions
  • Implementation depends on successful integration of new eModes in a separate proposal
Contracts0x0c8ed72f00abaa98d4e980e4f4c3464ce8d6737b
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
Read the description ↗

02Description

439 words

Simple Summary

This publication proposes improving the capital efficiency of the wstETH Reserve on the Lido instance of Aave v3 on Ethereum by increasing Uoptimal from 45.00% to 80.00% and reducing the Slope1 from 3.50% to 2.25%.

Motivation

This proposal recommends revising the wstETH borrow rate ahead of the introduction of Liquid Restaking Tokens (LRTs) and the creation of several new eModes on the Lido instance of Aave v3 on Ethereum.

The upcoming Liquid eModes upgrade will allow a single asset to be included in multiple eModes. As we onboard various LRTs, our goal is to promote the use of wstETH as a debt asset to enhance the returns of the wstETH/wETH yield strategy.

By increasing the Uoptimal of the wstETH reserve, we can significantly improve its capital efficiency. Strategists using LRTs as collateral and borrowing wstETH to generate yield will be able to borrow a larger portion of the wstETH that in turn generates a wstETH deposit yield.

The wstETH deposit yield will offset the wETH borrowing costs. Depending on market conditions, this could lead to a future proposal that fine-tunes the wETH and wstETH Slope1 parameters to balance the wETH deposit yield, revenue, and the performance of the wstETH/ETH yield strategy. Optimizing these parameters is expected to significantly reduce the payback period on the Lido instance and improve the DAO’s overall return on investment.

A separate proposal will provide details on the new eMode configurations being introduced to the Lido instance of Aave v3. This publication focuses specifically on optimizing the wstETH Uoptimal to improve capital efficiency in preparation for LRT onboarding.

Whilst several teams are expected to offer incentives for strategies involving LRT collateral and wstETH debt, general market conditions are not sufficiently buoyant to support retaining the current 3.50% Slope1 parameter.

Whilst we expect strong demand for wstETH debt from users wanting to leverage farm LRT point incentives. Our research indicates sufficient demand emerges when the Slope1 is within the 2.00% to 2.50% range. As a result, this publication proposes reducing the Slope1 from 3.50% to 2.25%.

By revising the Slope1 and Uoptimal configuration for the wstETH reserve, we expect LRT deposits to drive significant AUM growth for the Lido instance.

Specification

The Lido instance wstETH Slope1 and Uoptimal are to be revised as follows:

DescriptionCurrentProposedChange
Slope13.50%2.25%-1.25%
Uopitimal45.00%80.00%35.00%

References

Copyright

Copyright and related rights waived via CC0.

03Mismatch analysis

AIMismatch analysis by Kvorumlow confidenceclaude-sonnet-5
Consistent

The decoded on-chain action is a single generic execute() call to what appears to be an Aave governance payload contract (address ending in the standard payload pattern). This is the typical pattern for Aave v3 governance proposals, where the actual interest rate strategy parameter changes (Uoptimal, Slope1) are encoded inside the payload contract's bytecode/logic, which is referenced via the linked GitHub implementation contract (AaveV3EthereumLido_WstETHSlope1UoptimalUpdate) rather than being visible as structured calldata arguments in this single decoded action. Because the decoded calldata provides no granular parameter data (no reserve address, no rate strategy values) to compare against the specific percentages claimed in the description (Uoptimal 45%->80%, Slope1 3.50%->2.25%), I cannot directly verify or refute these specific numeric claims from the calldata alone. This is standard for Aave governance proposals structured this way, so I am not flagging a discrepancy, but confidence is low because the verification is inherently limited by the coarse-grained decoding of a single execute() call. There is no evidence of a target mismatch, extra actions, or omitted actions beyond what a single payload execution implies, and the description's narrative aligns with the typical structure of such a proposal (interest rate curve parameter update via a dedicated payload contract).

Generated by Kvorum
model: claude-sonnet-5
provider: anthropic
profile: anthropic-strong-v1
prompt: v1.0
generated: 2mo ago
Review the decoded actions ↗

04Actions

1 total
#0fallback()chain 0x1
Target
0x0c8e…737b
Value
0 wei
Function
fallback()
Arguments
{}
Calldata

05Tally

Summed from votes

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VP participating0
Outcome (current)—
Current support—

06Voters

0 total

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07Forum

No forum thread is confidently linked to this proposal.