Aave

[ARFC] Onboard ezETH to Aave V3 Lido Instance

Author: Renzo Protocol & ACI (Aave Chan Initiative)

Date: 2024-08-02

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ARFC has been updated with Risk Parameters provided by Risk Service Providers 2024-08-12.

Summary

This is an ARFC to continue to gauge community sentiment for adding borrow/lend support for Renzo Protocol and its Liquid Restaking Token (LRT) ezETH on AAVE V3 Ethereum, after the successful TEMP CHECK.

To align best with goals of all relevant stakeholders, this proposal suggests onboarding ezETH to Lido’s Aave v3 instance.

Motivation

As productive assets, staking tokens are high quality collateral to borrow against. ezETH is one of the largest liquid restaking tokens. With withdraw feature now enabled and the peg holding steady over the near term, we believe it is time to consider adding ezETH as a collateral asset.

The onboarding of ezETH will consequently create increased ezETH demand and increased revenues for both Aave and Renzo Protocol, whilst also bolstering the liquidity and peg stability of ezETH.

Adding ezETH to the Lido Aave v3 instance brings additional synergies for all stakeholders.

ezETH will add additional demand for wstETH borrowing, making the wstETH looping more favorable for the main users. Incentives from Renzo can bring additional ETH liquidity to the Lido instance, bolstering the existing liquidity mining campaigns.

Chain to be deployed/listed

Aave v3 Lido instance on Ethereum

Proof of Liquidity and Deposit Commitments

Renzo will be providing 3X points multiplier for ezETH deposits, which will be the highest points multiplier available for comparable protocols.

Specification

ezETH: 0xbf5495Efe5DB9ce00f80364C8B423567e58d2110

Risk Parameters:

Initial Risk Parameters haven been provided by Risk service providers during the ARFC phase and ARFC has been updated 2024-08-12.

Parameter	Value
Isolation Mode	No
Borrowable	Yes
Collateral Enabled	Yes
Supply Cap	7,000
Borrow Cap	700
Debt Ceiling	-
LTV	72%
LT	75%
Liquidation Penalty	7.5%
Liquidation Protocol Fee	10.00%
Variable Base	0.0%
Variable Slope1	7.00%
Variable Slope2	300.00%
Uoptimal	45.00%
Reserve Factor	15.00%
Stable Borrowing	Disabled
Flashloanable	Yes
Siloed Borrowing	No
Borrowable in Isolation	No
E-Mode Category	ETH-correlated

CAPO

We recommend a maxYearlyRatioGrowthPercent of 7.39% for ezETH, with a MINIMUM_SNAPSHOT_DELAY of 7 days. This recommendation is based on the frequent occurrence of rate distributions and relatively minimal rate variance observed over time.

maxYearlyRatioGrowthPercent	ratioReferenceTime	MINIMUM_SNAPSHOT_DELAY
7.39%	monthly	7 days

Useful Links

Renzo Protocol

Documentation

Github

Audits

Chainlink Data Feed

Composable Stable Pool

TEMP CHECK

TEMP CHECK Snapshot

Disclaimer

This proposal is powered by Skywards. The Aave Chan Initiative is not directly affiliated with Renzo Protocol and did not receive compensation for creation this proposal.

Next Steps

1. Publication of a standard ARFC, collect community & service providers feedback before escalating proposal to ARFC snapshot stage.
2. 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.