[Gauntlet] - ezETH Recommendation Update
Simple Summary
Gauntlet would like to make an adjustment to the ezETH recommendations. Gauntlet suggests to hold off listing ezETH until withdrawals are enabled due to substantial WETH outflows from ezETH’s largest source of liquidity - ezETH-WETH Balancer pool
Analysis
ezETH Liquidity sources
Total TVL: $139.05mil
The balancer ezETH-WETH pool is the largest source of liquidity for ezETH, however, the composition of this pool is largely ezETH making up more than 92% of the TVL, the composition of the pool has largely trended towards ezETH accumulation post the depeg. The total WETH across all the liquidity sources amount to ~$20M currently.
ezETH/ETH Liquidity on Balancer
Apart from the above ezETH, liquidity is available in tripool of ezETH/rswETH/weETH having total TVL of $12M as ancilliary sources of liquidity. However since we are more concerned with the liquidity with respect to WETH, we only limit our sources to WETH pools.
Future Listing
Gauntlet is recommending the inclusion of LRTs within the current WETH Comet to adapt to market demand and LRT market maturation moving forward. Once ezETH is liquidity improves and whithdrawals are enabled, Gauntlet will recommend it to be included into the current WETH Comet. The rationale for including ezETH and other LRTs to the main WETH Comet is the following:
WETH Fragmentation: Creating two separate Comets for WETH could fragment liquidity, resulting in a poor user experience and reduced capital efficiency. Once Eigenlayer AVS goes live and point farming demand decreases, maintaining sufficient demand for a separate Comet may be challenging. Therefore, consolidating WETH liquidity within a single Comet is preferable.
WETH Borrowing Demand: Gauntlet aims to enhance WETH utilization within the existing WETH Comet. The WETH Comet has been experiencing low utilization recently with market demand moving towards recursive LRT strategies. Including LRTs in this Comet will help boost demand for WETH and improve overall utilization.