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:

• Governance Forum Discussion
• Snapshot
• Test Cases
• Payload Implementation

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.