Add rETH to Arbitrum Aave v3
01Summary
Add rETH (Rocket Pool's liquid staking token) to Aave Arbitrum v3 as collateral with borrowing enabled. rETH can be deposited as collateral and borrowed to enable yield-maximizing strategies. Parameters set by Gauntlet and Chaos Labs with supply cap of 325 units and borrow cap of 85 units.
- Type
- protocol addition
Key changes
- Add rETH token to Aave Arbitrum v3 as collateral with borrowing enabled and no isolation mode(high)
- Set LTV at 67% and liquidation threshold at 74% with 7.5% liquidation bonus(high)
- Implement supply cap of 325 rETH units and borrow cap of 85 rETH units(high)
- Configure variable rate model with 7% slope 1 and 300% slope 2, optimal utilization at 45%(medium)
- Enable flash loans and disable stable borrowing for rETH(medium)
Notable concerns
- Supply and borrow caps are relatively modest, potentially limiting initial liquidity
- Stable borrowing is disabled, limiting borrowing options for some users
- Relies on two oracles (Chainlink and newly deployed) for price data
Generated by Kvorum
02Description
Summary
This publication presents the community with the opportunity to add rETH to Aave Arbitrum v3.
Abstract
This proposal will add rETH to the Aave Arbtirum v3 deployment as collateral, with borrowing enabled and no isolation mode.
rETH can be used for creating a range of yield maximising and lower carry cost leveraged trading strategies. Given the typically low borrowing cost for LSTs, users are able to borrow the LST and participate in yield strategies beyond the Aave protocol.
Motivation
rETH is listed on Aave v3 Ethereum and has over $20M of deposits. Rocket Pool is expanding its support for rETH across the L2 ecosystem, first Optimism, now Arbitrum and soon Polygon. There are currently only Chainlink Oracles for Arbitrum and Ethereum. This AIP focusses on listing rETH on Arbitrum.
LST collateral types drive material borrowing revenue to Aave as users deposit the LST and borrow the corresponding network token. This is most evident on Ethereum where the LST-wETH-yield-maximising loop is the source of the vast majority of wETH borrowing demand.
By providing LST diversification, Aave presents itself as a neutral platform offering users the choice between various LSTs. An added benefit of offering a variety of LSTs is the respective communities may elect to compete for user acquisition via Aave through offering incentives. This is currently happening on Aave v3 Polygon and Aave’s TVL has meaningfully increased from a relatively small base.
Specification
The parameters shown below are the combined recommendation of Gauntlet and Chaos Labs.
Ticker: rETH
Contract Address: arbitrum: 0xec70dcb4a1efa46b8f2d97c310c9c4790ba5ffa8
Chainlink Oracle rETH/ETH 0xF3272CAfe65b190e76caAF483db13424a3e23dD2
Newly deployed Oracle rETH/ETH/USD 0x04c28D6fE897859153eA753f986cc249Bf064f71
| Parameter | Value |
|---|---|
| Isolation Mode | No |
| Borrowable | Yes |
| Collateral Enabled | Yes |
| Supply Cap | 325 units |
| Borrow Cap | 85 units |
| LTV | 67.00% |
| LT | 74.00% |
| Liquidation Bonus | 7.50% |
| Liquidation Protocol Fee | 10.00% |
| Reserve Factor | 15.00% |
| Variable Base | 0.00% |
| Variable Slope 1 | 7.00% |
| Variable Slope 2 | 300.00% |
| Uoptimal | 45.00% |
| Stable Borrowing | Disabled |
| Stable Slope 1 | 13.00% |
| Stable Slope 2 | 300.00% |
| Base Stable Rate Offset | 3.00% |
| Stable Rate Excess Offset | 5.00% |
| Optimal Stable to Total Debt Ratio | 20.00% |
| Flahloanable | Yes |
| Siloed Borrowing | No |
| Borrowed in Isolation | No |
Implementation
A list of relevant links like for this proposal:
Chaos Labs and Gauntlet both contributed to the development of the risk parameters presented above.
The proposal Payload was reviewed by Bored Ghost Developing.
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
- 0xd1b3…cfa3
- Value
- 0 wei
- Function
- execute(address)
- Arguments
{ "0": "0x15066c53340cd87480E3a33046a77EDd4063984F" }- Calldata
05Tally
Summed from votes
06Voters
| Voter | Choice | % of total | Rationale | ||
|---|---|---|---|---|---|
| 320x329c…3ed4 | For | 232.4K | 40.98% | — | 3y ago |
| 070x0703…961b | For | 108.9K | 19.21% | — | 3y ago |
| 130x13bd…8548 | For | 81.8K | 14.42% | — | 3y ago |
| B80xb83b…cf5c | For | 81.4K | 14.36% | — | 3y ago |
| B90xb933…8dd1 | For | 41.7K | 7.35% | — | 3y ago |
| 160x1664…36d9 | For | 16.9K | 2.98% | — | 3y ago |
| 180x1855…98ba | For | 3K | 0.53% | — | 3y ago |
| A00xa06c…61f7 | For | 678.8 | 0.12% | — | 3y ago |
| B70xb7c5…4e6a | For | 210.6 | 0.04% | — | 3y ago |
| EA0xea17…6676 | For | 39.6 | 0.01% | — | 3y ago |
| A00xa0ef…2d56 | For | 8.3 | 0.00% | — | 3y ago |
| 280x28eb…ab78 | For | 1.7 | 0.00% | — | 3y ago |
| D20xd2c6…158e | For | 1.7 | 0.00% | — | 3y ago |
| D90xd972…31fa | For | 1.5 | 0.00% | — | 3y ago |
| E30xe357…9615 | For | 1.5 | 0.00% | — | 3y ago |
| BF0xbf4c…5a7c | For | 0.8 | 0.00% | — | 3y ago |
| E40xe459…e666 | For | 0.5 | 0.00% | — | 3y ago |
| 100x10ae…a227 | For | 0.5 | 0.00% | — | 3y ago |
| BF0xbfec…52f2 | For | 0.2 | 0.00% | — | 3y ago |
| 330x33e8…6284 | For | 0.1 | 0.00% | — | 3y ago |
| F80xf892…75ac | For | 0.1 | 0.00% | — | 3y ago |
| 290x2944…4a16 | For | 0.1 | 0.00% | — | 3y ago |
| DF0xdf52…e458 | For | 0.1 | 0.00% | — | 3y ago |
| 8D0x8d52…6f34 | Against | 0.1 | 0.00% | — | 3y ago |
| BD0xbdbc…5dfe | For | 0 | 0.00% | — | 3y ago |
| AF0xaf60…9b92 | For | 0 | 0.00% | — | 3y ago |
| 4D0x4df1…32d2 | For | 0 | 0.00% | — | 3y ago |
| 730x73c0…36b4 | For | 0 | 0.00% | — | 3y ago |
| 790x7908…58c0 | For | 0 | 0.00% | — | 3y ago |
07Forum
- [ARFC] Add rETH to Aave V3 Arbitrum Liquidity Pool ↗discourse · high confidence
Arguments for
- Listing rETH provides Aave users on Arbitrum an additional LST option beyond wstETH, offering diversification and positioning Aave as a neutral multi-LST platform.— Llamaxyz
- LST collateral types like rETH historically drive significant borrowing revenue via yield-maximizing loop strategies, as seen with wstETH on Ethereum.— Llamaxyz
- Rocket Pool's non-custodial, trustless design reduces counterparty risk relative to other LST providers, and rETH is a non-rebasing token making integration straightforward.— Llamaxyz
- rETH has already been successfully listed on Aave v3 Ethereum with over $20M in deposits, and a new Balancer liquidity pool on Arbitrum will help bootstrap liquidity with incoming incentives.— Llamaxyz
- Growing demand for LSTs as collateral on L2s is expected given ETH withdrawals opening and high L1 gas fees pricing out users, positioning Aave to capture this flow.— gohawi8287, 3.1415r
- Risk providers Chaos Labs and Gauntlet both independently support listing rETH with conservative, aligned risk parameters mirroring Ethereum's existing rETH market.— ChaosLabs, Gauntlet
- The ACI fully supports the proposal.— MarcZeller
Arguments against
None surfaced.
Unresolved concerns
- Gauntlet recommended enabling e-mode for rETH from the outset to allow natural growth and proper risk profile capture, while the original proposal and Chaos Labs favored initializing without e-mode, creating a discrepancy in launch configuration.— Gauntlet, ChaosLabs
- rETH on Arbitrum must be bridged back to mainnet to be arbitraged against the Rocket Pool smart contract, creating potential for temporary price divergences between the Arbitrum price and the underlying ETH value.— Gauntlet
- Whether to present both Chaos Labs' and Gauntlet's differing Supply/Borrow Cap options on the Snapshot vote, or select just one, was raised but the community settled on Chaos Labs' figures without further debate.— Llamaxyz
- Desire to avoid a repeat of issues encountered with the prior wstETH listing on Polygon was mentioned but not elaborated upon or resolved in detail.— Llamaxyz
Notable participants
- LlamaxyzProposal author who drafted the initial ARFC, provided risk parameters, and shepherded the proposal through Snapshot voting and peer review.
- ChaosLabsRisk service provider who conducted liquidity/market analysis and recommended specific risk parameters, later proposing convergence with Gauntlet's figures.
- GauntletRisk service provider who provided independent risk parameter recommendations and strongly advocated for enabling e-mode at launch.
- MarcZellerRepresented the ACI and gave a brief unconditional endorsement of the proposal.
- gohawi8287Community member expressing support based on anticipated L2 LST demand.
- 3.1415rCommunity member expressing support and requesting a similar listing on Optimism next.
Generated by Kvorum
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