Aave

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Title: [ARFC] Onboard osETH to Aave V3 on Ethereum Author: ACI (Aave Chan Initiative) Date: 2024-03-11

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Summary

This is a ARFC proposal for adding borrow/lend support for StakeWise’s new over-collateralized staked ETH token, osETH, on AAVE V3 Ethereum.

Motivation

Liquid staking tokens (LSTs) have proven to be popular collateral assets on Aave, with Lido’s stETH the largest Reserve across all Aave deployments and rETH quickly reaching its supply caps. As productive assets, LSTs are high quality collateral to borrow against. Given their high correlation to ETH, LSTs are commonly used as collateral to borrow ETH and engage in yield leveraged staking, with several communities having built products that automate such strategies on top of Aave. The introduction of eMode only made such strategies more popular.

osETH in particular is overcollateralized by design, providing in-built slashing protection and consequently an increased level of protection for the Aave protocol…

As StakeWise V3 provides solo stakers to ability to mint osETH against their own nodes, on-boarding osETH will benefit Aave, StakeWise, and the Ethereum ecosystem as a whole, and be an important step in the pursuit to diversify Ethereum staking and encourage staking from home.

The onboarding of osETH will consequently create increased osETH demand and increased revenues for both Aave and StakeWise protocols, whilst also bolstering the liquidity and peg stability of osETH.

Chain to be deployed/listed

Ethereum mainnet

Specification:

osETH contract address:

0xf1C9acDc66974dFB6dEcB12aA385b9cD01190E38

Risk Parameter	Value
Emode	No
Isolation Mode	No
Borrowable in Isolation	No
Stable Borrow	No
Enable Borrow	Yes
Enable Collateral	Yes
Loan To Value (LTV)	71%
Liquidation Threshold	76%
Liquidation Bonus	10%
Reserve Factor	15%
Liquidation Protocol Fee	10%
Supply Cap	15000 osETH
Borrow Cap	1000 osETH
Debt Ceiling	N/A
uOptimal	45%
Base	0%
Slope1	7%
Slope2	300%

Useful Links

TEMP CHECK

Snapshot

Website

V3Litepaper

Audits

Github

Twitter Discord Forum

Disclaimer

The Aave-chan Initiative is not presenting this ARFC on behalf of any third party and is not compensated by Stakewise for creating this proposal.

Next Steps

1. Collect community & service providers feedback before escalating proposal to ARFC snapshot stage
2. If consensus is reached on this ARFC escalate this proposal to the Snapshot stage.
3. If the Snapshot outcome is YAE, this proposal will be escalated to AIP stage
4. If the ARFC snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal

Copyright

Copyright and related rights waived under CC0.