Activate Emode for cbETH Aave Ethereum V3
01Summary
Activate emode for cbETH (Coinbase's Ethereum liquid staking derivative) on Aave V3 Ethereum, allowing leveraged strategies and loop positions with cbETH as collateral. This is a straightforward parameter change within existing conservative caps.
- Type
- parameter change
Key changes
- Activate emode for cbETH by setting emode category from 0 to 1(high)
- Enable leveraged strategies and loop positions using cbETH as collateral(medium)
Notable concerns
- Proposal does not disclose whether ACI delegate has any financial interests in cbETH or related entities, though they explicitly state no link to Coinbase
Generated by Kvorum
02Description
Simple Summary
This AIP proposal presents Aave with the opportunity to activate emode for cbETH on the Ethereum v3 Liquidity Pool.
Motivation
Supporting LSDs diversity is part of the Aave-Chan Initiative (ACI) delegate platform.
cbETH is currently the second largest ETH Liquid staking derivative of the V3 market.
Allowing the activation of emode has a clear use-case for leveraged strategies based on cbETH as collateral to both “long” cbETH currently at a small discount on secondary markets and increased staking yield via loops strategies.
With the current supply and borrowing caps, this activation can be done while keeping a conservative approach.
The ACI does not have any link nor is paid by Coinbase or any entity to present this AIP.
Specification
Ticker: cbETH
Contract Address: 0xbe9895146f7af43049ca1c1ae358b0541ea49704
| Risk Parameter | Current Value | Proposed Value |
|---|---|---|
| Emode Category | 0 | 1 |
contract AaveV3EthCBETHEmodeActivation is IProposalGenericExecutor {
address public constant CBETH = AaveV3EthereumAssets.cbETH_UNDERLYING;
uint8 public constant EMODE_CATEGORY = 1;
function execute() external {
AaveV3Ethereum.POOL_CONFIGURATOR.setAssetEModeCategory(CBETH, EMODE_CATEGORY);
}
}
References
A list of relevant links like for this proposal e.g.
Security Considerations
The proposal Payload was reviewed by Bored Ghost Developing.
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
The proposal follows the standard Aave governance pattern: a single on-chain action invoking execute() on a dedicated payload contract, whose full Solidity source is included in the description. That source unambiguously sets the eMode category for cbETH to 1, exactly matching the specification table (Current Value 0 -> Proposed Value 1) and the stated motivation of enabling eMode for cbETH. Since the decoded calldata only shows the generic execute() call (the actual logic lives in the payload contract's bytecode, which is verified against the provided source), there is no way to detect a mismatch beyond confirming the target contract and function selector align with the described payload. Given the source code transparency and single, narrow scope of the action, I find no value, target, or scope mismatches. This is a simple, single-parameter risk change consistent with typical Aave Chan Initiative proposals, and no omitted or extra actions are present.
Generated by Kvorum
04Actions
- Target
- 0x2b6d…6cbc
- Value
- 0 wei
- Function
- fallback()
- Arguments
{}- Calldata
05Tally
Summed from votes
06Voters
| Voter | Choice | % of total | Rationale | ||
|---|---|---|---|---|---|
| 320x329c…3ed4 | For | 225.7K | 35.00% | — | 4y ago |
| 070x0703…961b | For | 107.3K | 16.64% | — | 4y ago |
| 620x62a4…816a | For | 81.6K | 12.65% | — | 4y ago |
| 130x13bd…8548 | For | 80.6K | 12.49% | — | 4y ago |
| B80xb83b…cf5c | For | 80.2K | 12.43% | — | 4y ago |
| B90xb933…8dd1 | For | 41.7K | 6.46% | — | 4y ago |
| 160x1664…36d9 | For | 16.9K | 2.62% | — | 4y ago |
| EA0xea17…6676 | For | 10.6K | 1.64% | — | 4y ago |
| 300x305e…09ac | For | 300.5 | 0.05% | — | 4y ago |
| 0X0xmcfly.eth0xafd5…a0a0 | For | 88.5 | 0.01% | — | 4y ago |
| 6B0x6bac…342c | For | 21 | 0.00% | — | 4y ago |
| A40xa417…a567 | For | 12.4 | 0.00% | — | 4y ago |
| 210x2155…59aa | For | 9.2 | 0.00% | — | 4y ago |
| A00xa0ef…2d56 | For | 8.3 | 0.00% | — | 4y ago |
| A60xa647…a9b8 | For | 2 | 0.00% | — | 4y ago |
| A60xa663…f5bc | For | 1 | 0.00% | — | 4y ago |
| F00xf0c4…0b3d | For | 1 | 0.00% | — | 4y ago |
| BF0xbf4c…5a7c | For | 0.8 | 0.00% | — | 4y ago |
| FE0xfea0…f7bb | For | 0.6 | 0.00% | — | 4y ago |
| E40xe459…e666 | For | 0.5 | 0.00% | — | 4y ago |
| 010x0155…6639 | For | 0.3 | 0.00% | — | 4y ago |
| CF0xcf73…eaf5 | For | 0.3 | 0.00% | — | 4y ago |
| 7C0x7c45…6af8 | For | 0.2 | 0.00% | — | 4y ago |
| FA0xfa1f…eaae | For | 0.1 | 0.00% | — | 4y ago |
| CA0xca5d…1c2d | For | 0.1 | 0.00% | — | 4y ago |
| EF0xef60…62ba | For | 0.1 | 0.00% | — | 4y ago |
| 540x54c6…33b2 | For | 0.1 | 0.00% | — | 4y ago |
| 2A0x2af6…c1aa | For | 0 | 0.00% | — | 4y ago |
07Forum
- [ARFC] Activate emode for cbETH Aave Ethereum V3 ↗discourse · high confidence
Arguments for
- Enabling eMode for cbETH will make Aave the most competitive protocol for cbETH-collateralized leveraged and looping strategies, boosting capital efficiency and LSD adoption.— MarcZeller, ghostlyenergy, ChaosLabs, ponzinomic
- cbETH has firmly held its peg since launch and its price volatility against ETH has stabilized, making the 93% eMode liquidation threshold appropriate.— ChaosLabs
- cbETH's liquidity is highly concentrated, meaning liquidations already cluster near the 1% eMode liquidation penalty threshold, so eMode does not add outsized risk.— ChaosLabs
- Current supply and borrowing caps allow this activation to proceed in a conservative manner.— MarcZeller
- From a market risk perspective, Gauntlet supports adding cbETH to eMode.— Pauljlei
- The community should adopt an approach (Option 1) that maximizes capital efficiency for LSD/ETH positions, since that is the primary use case, while still technically allowing sophisticated traders to manage LSD/LSD positions.— ChaosLabs
Arguments against
None surfaced.
Unresolved concerns
- The risk profile of cbETH may change if eMode is enabled before the supply cap is adequately adjusted, since supply is already near the cap (~87%).— Pauljlei, ChaosLabs
- DEX slippage data shows a meaningful price impact once ~40% of the supply cap is reached, raising questions about relying on CEX liquidity depth for risk assessment.— Pauljlei
- The community has not yet formulated a clear policy on how to treat LSD/LSD positions (e.g., cbETH vs wstETH) within eMode, given that price divergence between LSDs can be more volatile than each LSD against ETH.— ChaosLabs
- Supply caps may need prudent recalibration (recommended increase to 30K cbETH) to observe borrower/supplier behavior under the new eMode configuration before further cap increases.— ChaosLabs
Notable participants
- MarcZellerProposal author (ACI) who introduced the ARFC, clarified eMode mechanics, and moved the proposal to Snapshot vote.
- ChaosLabsRisk provider who gave detailed analysis on stability, liquidity, liquidation penalty considerations, and LSD/LSD eMode policy options, and later flagged supply cap utilization.
- PauljleiRepresented Gauntlet, offering market risk perspective supporting the proposal while flagging supply cap and liquidity considerations.
- ghostlyenergyCommunity member expressing support and highlighting cbETH's peg resilience and market timing.
- ponzinomicAsked clarifying questions about eMode parameters, governance process, and next steps, expressing support for the proposal.
Generated by Kvorum
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