KVORUM
aaveSource: Aave governance v3 · #238

Prime Instance - wstETH Borrow Rate + rsETH Supply Cap Update

executedFeb 2, 2025, 11:49 AM UTCby570x57ab…2922

01Summary

AISummary by Kvorumclaude-haiku-4-5

Proposal to reduce wstETH Slope1 parameter from 1.75% to 0.75% on Aave v3 Prime instance to boost LRT deposits and improve competitiveness, and increase rsETH Supply Cap from 10,000 to 65,000 to support larger deposits and leveraged yield strategies.

Type
parameter change

Key changes

  • Reduce wstETH Slope1 from 1.75% to 0.75% to lower borrow rates and align with market conditions(high)
  • Increase rsETH Supply Cap from 10,000 to 65,000 to enable larger deposits and support leveraged LRT/LST yield strategies(high)

Notable concerns

  • Lowering Slope1 reduces fee generation per unit borrowed despite expected increased borrow volume
  • Significant rsETH supply cap increase may concentrate risk if not fully utilized
  • Expected outcomes ($300M additional deposits, 72% increase in LRT deposits) are projections based on team feedback and not guaranteed
ContractsAaveV3EthereumLido
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
Read the description ↗

02Description

399 words

Simple Summary

This publication proposes reducing the wstETH Slope1 and increasing the rsETH Supply Cap.

Motivation

The Prime instance of Aave v3 on Ethereum has experienced significant growth since its launch in Q3 2024, attracting over $2 billion in user deposits.

To support continued growth, this proposal suggests lowering the wstETH Slope1 parameter to align the borrow rate with market conditions. Based on feedback from the Renzo and Kelp teams, this adjustment is expected to drive an additional $300 million in user deposits to the Prime instance.

Expected Benefits of Reducing the Slope1 Parameter:

  • ~72% increase in LRT deposits.
  • ~50% increase in the wstETH Deposit Rate to 60 bps.
  • ~50% increase in wstETH Borrow Rate fee generation.
  • ~35% increase in the native wETH Deposit Rate.

Lowering the Slope1 parameter will encourage new LRT deposits, boosting the LRT/LST yield-generating strategy, which is projected to outperform the LST/wETH strategy. With LRT deposit incentives, this strategy further enhances Prime’s appeal.

As utilisation of wETH reserves across Core, Spark, and Prime approaches Uoptimal, the Prime instance of Aave v3 offers the highest native yield for LST/wETH yield strategies. The improved wstETH deposit rate solidifies Prime’s competitive position in the market.

rsETH Supply Cap

rsETH has shown strong growth on the Core instance of Aave v3, while the Prime market has yet to attract rsETH deposits due to the lower wstETH Borrow Rate on Core and a small supply cap.

Lowering the wstETH Borrow Rate on Prime would make borrowing wstETH more attractive. Feedback from the Kelp team suggests strong demand for rsETH beyond the current supply cap’s capacity.

To support leveraged LRT/LST yield strategies, this proposal recommends a significant increase to the rsETH supply cap, enabling larger deposits to scale effectively, optimize returns, and reduce reliance on incentives.

Specification

wstETH Reserve

ParameterCurrent ValueProposed Value
Uoptimal90.00%90.00%
Base0.00%0.00%
Slope11.75%0.75%
Slope285.00%85.00%

rsETH Supply Cap

ParameterCurrent ValueProposed Value
Supply Cap10,00065,000

References

Copyright

Copyright and related rights waived via CC0.

03Mismatch analysis

AIMismatch analysis by Kvorumlow confidenceclaude-sonnet-5
Consistent

placeholder

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
0x1d75…caa9
Value
0 wei
Function
fallback()
Arguments
{}
Calldata

05Tally

Summed from votes

Voters0
VP participating0
Outcome (current)—
Current support—

06Voters

0 total

No votes recorded yet.

07Forum

No forum thread is confidently linked to this proposal.