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executedEnded 2 years ago · Onchain

Price feeds operational update Pt2 - stETH

title: Price feeds operational update Pt2 - stETH author: BGD Labs (@bgdlabs) shortDescription: Swap price adapters for stETH and wstETH to use primary rate discussions: https://governance.aave.com/t/bgd-operational-oracles-update/13213/9 created: 2023-06-13

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