Price feeds operational update Pt2 - stETH

Simple Summary

This proposal further updates price feeds of LSTs (in this case stETH/wstETH) to be priced based on the so-called exchange rate, and not on the secondary market (e.g. DEXes). The changes are the following:

• The feed of stETH on Aave v2 Ethereum will be a custom adapter, which will return 1:1 stETH / ETH value, as with stETH being a rebasing asset, that represents the stETH/ETH exchange rate.
• The feeds for wstETH on Aave v3 Ethereum, Optimism, and Arbitrum will be custom adapters too (CL synchronicity), using the wstETH / stETH exchange rate and ETH / USD feed

Motivation

We assume the price of the stETH to be in the ration 1 to 1 to the price of the ETH, but the current price feed for stETH currently uses stETH / ETH feed, which is based on secondary market and can introduce additional unnecessary volatility of the asset. The same issue applies to the wstETH adapters, which are whether using a stETH / ETH or a stETH / USD feed inside.

To address the issue for stETH we are substituting the usage of the stETH / ETH feed by using the custom adapter, which returns constant 1:1 ratio.

For the wstETH adapters we are removing the usage of intermediate stETH / ETH feed or substituting stETH / USD for ETH / USD feed.

An update for wstETH on Aave v3 Polygon will be done in the close future to apply the same pricing strategy, once Chainlink provides a wstETH/stETH exchange rate feed.

Specification

Upon execution, the proposal will:

• call ORACLE.setAssetSources([0xae7ab96520DE3A18E5e111B5EaAb095312D7fE84], [0xADE6CBA6c45aa8E9d0337cAc3D2619eabc39D901]) to replace the price source for stETH on Aave v2 Ethereum
• use Config Engine to update wstETH price feed to 0x8B6851156023f4f5A66F68BEA80851c3D905Ac93 on Aave v3 Ethereum
• use Config Engine to update wstETH price feed to 0x945fD405773973d286De54E44649cc0d9e264F78 on Aave v3 Optimism
• use Config Engine to update wstETH price feed to 0x80f2c02224a2E548FC67c0bF705eBFA825dd5439 on Aave v3 Arbitrum

Security and additional considerations

Custom price adapters are already widely used in the system for price-correlated assets and were reviewed by the auditors.

• stETH / ETH Historical Comparison: Comparing the ratio between stETH and ETH on the secondary market for the last half of a year:

  • 30.96% of results differ for less than 0.1%
  • 66.16% have between 0.1% and 0.5% difference
  • 2.88% is between 0.5% and 1%

The same pattern applies to the deviation between new and existing wstETH / USD adapters.

Previously there were two major depeg events for the stETH:

• In November 2022 difference was ~2% due to the FTX events and then got back to normal in about a month
• In June 2022 deviation was about ~7% due to Terra events + withdrawals were not allowed yet at the moment

References

Tests: Ethereum V2, Ethereum V3, Optimism, Arbitrum

Proposal payload implementation: Ethereum V2, Ethereum V3, Optimism, Arbitrum

Price Adapters: stETH Ethereum v2, wstETH Ethereum v3, wstETH Optimism, wstETH Arbitrum

Copyright

Copyright and related rights waived via CC0.