Core & Base - BTC Correlated Asset Update
01Summary
This proposal enhances Bitcoin asset liquidity on Aave by onboarding LBTC (Lombard's Bitcoin LST) to Base and creating leverage loop opportunities through new eMode pairs on Core (LBTC/cbBTC and LBTC/tBTC) and Base (LBTC/cbBTC). It also adjusts borrowing parameters for cbBTC and tBTC to support increased utilization.
- Type
- protocol addition
Key changes
- Onboard LBTC on Base instance with supply cap of 400 LBTC, LTV of 68%, and LT of 73%(high)
- Create LBTC/cbBTC eMode on Core instance with Max LTV of 84% and Liquidation Threshold of 86%(high)
- Create LBTC/tBTC eMode on Core instance with Max LTV of 84% and Liquidation Threshold of 86%(high)
- Create LBTC/cbBTC eMode on Base instance with Max LTV of 82% and Liquidation Threshold of 84%(high)
- Amend cbBTC borrow rate Uoptimal from 45% to 80% on Core, with Slope2 reduced from 300% to 60% and Reserve Factor increased from 20% to 50%(high)
- Amend tBTC borrow rate Uoptimal from 45% to 80% on Core, with Slope2 reduced from 300% to 60% and Reserve Factor increased from 20% to 50%(high)
- Amend cbBTC borrow rate Uoptimal from 45% to 80% on Base, with Slope2 reduced from 300% to 60% and Reserve Factor increased from 20% to 50%(medium)
Notable concerns
- LBTC borrowing on Base is capped at only 1 LBTC, significantly limiting borrow functionality for that asset on Base
- Parameter changes (Uoptimal, Slope2, Reserve Factor) are being applied to multiple BTC wrapper assets simultaneously, which could affect borrowing costs and incentives across the protocol
- Proposal is subject to review and feedback from Risk Service Providers, indicating parameters may not be final
Generated by Kvorum
02Description
Simple Summary
This proposal focuses curating LBTC for growth across Core and Base instances of Aave v3. Several initiatives are included:
- Onboard LBTC on Base;
- Create LBTC/cbBTC eMode on Core instance;
- Create LBTC/tBTC eMode on Core instance;
- Create LBTC/cbBTC eMode on Base instance; and;
- Amend cbBTC Borrow Rate.
Motivation
Lombard has demonstrated consistent growth, surpassing $1.8B in TVL, and has established itself as the leading BTC LST in the market. Its initial onboarding, coupled with the first liquid eMode alongside WBTC, quickly reached supply caps, highlighting strong demand for leverage loops between LBTC and BTC wrappers.
On Aave’s Core instance, cbBTC is the second-largest BTC wrapper. While it experienced strong growth post-listing, the absence of borrowing opportunities has limited its potential. The onboarding of LBTC introduces a new growth avenue for both LBTC, cbBTC and tBTC. The new liquid eModes will allow users to loop LBTC exposure while offering attractive deposit rates for cbBTC holders, incentivizing them to supply liquidity and fuelling this strategy.
To support this growth strategy, the optimal utilization rate (Uoptimal) for cbBTC should be increased from 45% to 80%, aligning them with wBTC. The initial Uoptimal was set when cbBTC had minimal borrowing demand, but the introduction of this liquid eMode is expected to significantly boost cbBTC borrowing activity, warranting this adjustment.
Additionally, Base has emerged as the second-largest platform for cbBTC growth. Onboarding LBTC to Base will replicate this successful dynamic, with LBTC users leveraging existing cbBTC liquidity. For Lombard, Base is already the third-largest ecosystem (after Mainnet and Berachain), with over $117M in TVL, making it an ideal environment to extend this growth strategy.
Specification
Core Instance
Amend cbBTC Borrow rate Uoptimal
| Description | Current | Proposed | Change |
|---|---|---|---|
| Borrow Rate Uoptimal | 45% | 80% | +35% |
| Slope2 | 300% | 60% | -240% |
| Reserve Factor | 20% | 50% | 30% |
Amend tBTC Borrow rate Uoptimal
| Description | Current | Proposed | Change |
|---|---|---|---|
| Borrow Rate Uoptimal | 45% | 80% | +35% |
| Slope2 | 300% | 60% | -240% |
| Reserve Factor | 20% | 50% | 30% |
Liquid E-modes
| Parameters | Value | Value | Value |
|---|---|---|---|
| Asset | LBTC | cbBTC | tBTC |
| Collateral | Yes | No | No |
| Borrowable | No | Yes | Yes |
| Max LTV | 84% | - | - |
| Liquidation Threshold | 86% | - | - |
| Liquidation Bonus | 3.00% | - | - |
Base Instance
Onboarding of LBTC
The table below illustrates the configured risk parameters for LBTC
| Parameter | Value |
|---|---|
| Isolation Mode | false |
| Borrowable | DISABLED |
| Collateral Enabled | true |
| Supply Cap (LBTC) | 400 |
| Borrow Cap (LBTC) | 1 |
| Debt Ceiling | USD 0 |
| LTV | 68 % |
| LT | 73 % |
| Liquidation Bonus | 8.5 % |
| Liquidation Protocol Fee | 10 % |
| Reserve Factor | 50 % |
| Base Variable Borrow Rate | 0 % |
| Variable Slope 1 | 4 % |
| Variable Slope 2 | 300 % |
| Uoptimal | 45 % |
| Flashloanable | ENABLED |
| Siloed Borrowing | DISABLED |
| Borrowable in Isolation | DISABLED |
| Oracle | 0x64c911996D3c6aC71f9b455B1E8E7266BcbD848F |
Liquid E-modes
| Parameters | Value | Value |
|---|---|---|
| Asset | LBTC | cbBTC |
| Collateral | Yes | No |
| Borrowable | No | Yes |
| Max LTV | 82% | - |
| Liquidation Threshold | 84% | - |
| Liquidation Bonus | 3.00% | - |
The above is to be reviewed with feedback from Risk Service Providers to be incorporated.
Amend cbBTC Borrow rate Uoptimal
| Description | Current | Proposed | Change |
|---|---|---|---|
| Borrow Rate Uoptimal | 45% | 80% | +35% |
| Slope2 | 300% | 60% | -240% |
| Reserve Factor | 20% | 50% | 30% |
References
- Implementation: AaveV3Ethereum, AaveV3Base
- Tests: AaveV3Ethereum, AaveV3Base Snapshot
- Discussion
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
The proposal description is highly detailed, listing specific numeric changes (Uoptimal, Slope2, Reserve Factor, LTV, LT, supply/borrow caps, etc.) across Core and Base Aave instances. However, the decoded calldata contains only a single action: a bare execute() call (decoded as fallback()) to one contract address on Ethereum mainnet, with no decoded arguments. This is the standard pattern for Aave Governance v3 proposals, where a 'Payload' contract encapsulates all the granular configuration logic (rate updates, eMode creation, listing parameters) internally, and the DAO only votes to call execute() on it — with cross-chain effects (e.g., Base instance changes) typically relayed via the CrossChainController from this same mainnet transaction. Because the calldata does not expose any of the specific parameters described in the prose, there is no way to directly verify or contradict the numeric claims (e.g., 45%→80% Uoptimal, LTV/LT figures, supply caps) against on-chain data at this decoding level. I found no explicit contradiction between the description and the single decoded action — the execute() call is consistent with the expected mechanism for implementing exactly this kind of multi-parameter, multi-chain update. However, because the calldata offers essentially no granular visibility to cross-check the many specific values claimed in the description, confidence in a full verification is low. No red flags such as target mismatches, unexpected fund transfers, or role grants are evident from what is decoded.
Generated by Kvorum
04Actions
- Target
- 0xc6af…6c19
- Value
- 0 wei
- Function
- fallback()
- Arguments
{}- Calldata
05Tally
Summed from votes
06Voters
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07Forum
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