Onboard ezETH to Lido Instance
01Summary
Onboard Renzo Protocol's ezETH token to Aave v3 Lido Instance as collateral with conservative risk parameters, create two new E-Mode categories (LRT Stablecoins main and LRT wstETH main) to enable leveraged staking strategies, increase wstETH borrow cap from 100 to 14,000, and disable wstETH borrowing in ETH Correlated E-Mode.
- Type
- protocol addition
Key changes
- Onboard ezETH token to Aave v3 Lido Instance as collateral only (not borrowable) with supply cap of 15,000 and borrow cap of 100(high)
- Increase wstETH borrow cap on Ethereum Lido Market from 100 to 14,000(high)
- Create LRT Stablecoins main E-Mode (Category 2) with ezETH as collateral (75% LTV) and USDS as borrowable asset(high)
- Create LRT wstETH main E-Mode (Category 3) with ezETH as collateral (93% LTV) and wstETH as borrowable asset (1% liquidation penalty)(high)
- Disable wstETH from being borrowable in ETH Correlated E-Mode (Category 1), allowing existing positions to remain but preventing new borrow exposure(medium)
- Set ACI multi-sig (0xac140648435d03f784879cd789130F22Ef588Fcd) as emission admin for ezETH and corresponding aToken(medium)
Notable concerns
- Low LTV (0.05%) and LT (0.1%) for ezETH in base parameters restrict use to E-Modes only
- Conservative borrow cap of 100 ezETH configured for extra safety
- Major increase in wstETH borrow cap (140x increase) requires careful monitoring
- Price oracle relies on CAPO adapter with maximum yearly growth cap of 10.89%
- Disabling wstETH in ETH Correlated E-Mode changes existing market dynamics
Generated by Kvorum
02Description
Simple Summary
The proposal aims to onboard Renzo Protocol's ezETH and increase wstETH borrow caps on Aave v3 Lido Instance.
Motivation
Liquid Restaking tokens (LRTs) have proven to be popular collateral assets on Aave. ezETH is an LRT reward-bearing token, exchange-rate based, where users can deposit native ETH and LSTs (currently stETH) in exchange for ezETH.
Given LRTs high correlation to ETH, they are commonly used as collateral to borrow ETH and engage in yield leveraged staking, with several communities having built products that automate such strategies on top of Aave. The inclusion of ezETH in E-Mode enables these strategies to maximize the yield potential of the recursive strategy. The onboarding of ezETH will consequently create increased ezETH demand and increased revenues for both Aave and Renzo Protocol, whilst also bolstering the liquidity and peg stability of ezETH.
With the listing of ezETH and the introduction of an LRT wstETH E-Mode, Chaos Labs anticipates that ezETH’s primary use case will be as collateral for borrowing wstETH to leverage ezETH’s yield. And with the borrow cap currently reached for wstETH, we aim to increase its borrow cap.
The risk parameters have been provided by Chaos Labs, and positive technical evaluation of ezETH is done by BGD Labs, all of which including LlamaRisk's qualitative assessment, can be found on the forum.
Specification
The table below illustrates the configured risk parameters for ezETH
| Parameter | Value |
|---|---|
| Collateral Enabled | true |
| Borrowable | false |
| Supply Cap (ezETH) | 15,000 |
| Borrow Cap (ezETH) | 100 |
| Debt Ceiling | USD 0 |
| LTV | 0.05 % |
| LT | 0.1 % |
| Liquidation Bonus | 7.5 % |
| Liquidation Protocol Fee | 10 % |
| Reserve Factor | 15 % |
| Base Variable Borrow Rate | 0 % |
| Variable Slope 1 | 7 % |
| Variable Slope 2 | 300 % |
| Uoptimal | 45 % |
| Flashloanable | false |
| Siloed Borrowing | false |
| Isolation Mode | false |
| Borrowable in Isolation | false |
| Oracle | 0x68C9c7Bf43DBd0EBab102116bc7C3C9f7d9297Ee |
| E-Modes | LRT Stablecoins main, LRT wstETH main |
Please Note: Low LTV, LT values have been configured to only allow for collateral use of ezETH on E-Modes. Additionally low borrow cap has been configured as a matter of extra safety as borrow cap of 0 represents no cap at all.
The borrow for wstETH on Lido Instance has been increased, more info on the forum.
| Chain | Asset | Current Borrow Cap | New Borrow Cap |
|---|---|---|---|
| Ethereum Lido Market | wstETH | 100 | 14,000 |
With liquid eModes live on all instances, we now configure two new E-Mode categories: LRT Stablecoins main, LRT wstETH main and add the respective assets to these categories.
E-mode Category: LRT Stablecoins main
| Parameter | Value | Value |
|---|---|---|
| Category Id | 2 | 2 |
| Asset | ezETH | USDS |
| Collateral | Yes | No |
| Borrowable | No | Yes |
| LTV | 75% | 75% |
| Liquidation Threshold | 78% | 78% |
| Liquidation Penalty | 7.5% | 7.5% |
E-mode Category: LRT wstETH main
| Parameter | Value | Value |
|---|---|---|
| Category Id | 3 | 3 |
| Asset | ezETH | wstETH |
| Collateral | Yes | No |
| Borrowable | No | Yes |
| LTV | 93% | 93% |
| Liquidation Threshold | 95% | 95% |
| Liquidation Penalty | 1% | 1% |
CAPO parameters configuration:
| Parameter | Value |
|---|---|
| min snapshot delay | 14 days |
| snapshot ratio | 1019883708003361006 |
| snapshot timestamp | 1727172839 (Sep-24-2024) |
| max yearly growth (%) | 10.89% |
The price capo adapter has been verified by Certora (more info on forum), validating that the price cap adapter is robust against donation-based price manipulation and poses no risk to the protocol.
wstETH on the Lido Instance has been disabled from being borrowable in the ETH Correlated E-Mode (categoryId: 1). Users current positions will remain intact, but borrow exposure of wstETH in ETH Correlated E-Mode cannot be increased.
Additionally 0xac140648435d03f784879cd789130F22Ef588Fcd (ACI multi-sig) has been set as the emission admin for ezETH and the corresponding aToken.
References
- Implementation: AaveV3EthereumLido
- Tests: AaveV3EthereumLido
- Snapshot
- Discussion ezETH Onboarding
- Discussion wstETH Cap Change
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
A calldata-vs-description analysis is not generated yet. Review the decoded actions →
04Actions
- Target
- 0x8c5b…ac55
- Value
- 0 wei
- Function
- fallback()
- Arguments
{}- Calldata
05Tally
Summed from votes
06Voters
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07Forum
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