Add rETH as Collateral to WETHv3 on Mainnet

New Markets
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Proposal–Add rETH as Collateral to WETHv3 on Mainnet

To the Compound community: On behalf of the Rocket Pool community, we would like to propose adding rETH to Compound. Due to it’s consistent value performance and low risk profile, rETH would be an ideal collateral asset for Compound users. rETH has been successfully integrated into the AAVE ecosystem, and has provided their users with more liquid staking options. Details here: [ARC] Onboard rETH (rocket pool ETH) to Aave V3 ethereum market - Governance - Aave.

Compound Asset Listing – Checklist

Token Asset Name Rocket Pool Ethereum (rETH)

The Rocket Pool team have been in the staking space since its inception in 2016.

The Rocket Pool protocol went live on 9th November 2021. It was a staged rollout with full unlimited opening on 22 November 2021.

Rocket Pool is the most experienced, trusted Liquid Staking Protocol in existence. It is the base layer protocol for decentralised permissionless, and trustless Ethereum staking.

rETH is a Liquid Staking token representing staked ETH. rETH is fully composable in the wider DeFi landscape, while accruing value from ETH earned through staking.

Benefits to Compound Community

rETH is a productive asset. It appreciates in value over time based on the rewards generated by Rocket Pool decentralised permissionless node operators.

rETH is an attractive collateral since it accrues the staking reward in addition to the underlying ETH value.

rETH is a standard ERC-20 token and does not rebase.

Resources (Website, Social Media Links and docs)

Website: https://rocketpool.net/

Documentation: https://docs.rocketpool.net/

Twitter: @Rocket_Pool

Token Contract: 0xae78736cd615f374d3085123a210448e74fc6393

The proposal author their contact info

Social channels Metrics:

  • Twitter 43k+ followers
  • Discord 20k+ members

Market Risk Assessment

Market Cap of the token

US$960m

The largest exchanges where the token is listed and its respective liquidity.

https://dune.com/drworm/rocketpool

  • Balancer ~80% approx. 30k
  • Uniswap ~12% approx. 4.5k
  • Curve ~7% approx. 1k

Indicate the volatility of the token, defined as the Standard Deviation of log-returns for specific time frames by Gauntlet.

  • Underlying asset is ETH-volatility is directly related.

Total supply

477,608

Emission schedule.

rETH is minted when ETH are staked, there is not schedule per se.

Decentralization

How is this asset distributed amongst token holders? List the top 10 holders, the percentage of each holder, and tag any of them if they are known.

  • Note: There was no rETH Pre-mine. All rETH in existence have been minted directly from ETH

List all of the privileged roles in the token contract. This can include whitelisted EOAs, Multi-sigs or DAOs.

Does it have a blacklist?

  • No

Smart contract risks

Codebase & On-chain Activity:

Provide a test suite with code coverage.

  • The github repository linked above includes a test suite.

Provide Etherscan links with verified contracts

Give the age of the token in days

Given the number of transactions in the contract to date

  • 73,908

Security Posture:

Audits and Bounty system details here: Rocket Pool - Decentralised Ethereum Staking Protocol

Sigma Prime

Consensys Diligence

Trail of Bits

Does the project have an active bug bounty program?

Provide emergency contacts with their responsiveness levels and response availabilities

  • Core team are available on Discord Support Channel Discord

List additional security and formal verification tools used in development.

  • Rocket Pool uses a comprehensive test suite and a devnet that act as a staging area for any upgrades.

List all monitoring services used by the token, if any.

  • None.

Smart contract Behavior:

Does the token have more than one address?

Does the token use a compiler version greater than 0.8.0 or the SafeMath? If not, explain how the protocol deals with possible overflows and underflows.

Compiler version is <0.8.0, but it does use SafeMath.

During the execution of the token’s functions, does the token execute external code chosen by the caller or receiver? If so, please explain the reasoning behind this decision.

  • No.

How much does the token contract deviate from a standard implementation of ERC20? Any additional features that the Compound DAO should know about?

It is a standard ERC20 implementation.

Is it burnable?

Yes. Users are permitted to burn via Rocket Pool protocol to retrieve ETH from being staked.

Does it have a fixed supply? If no, who can mint?

As a LST anyone can mint rETH as soon as ETH is deposited.

Is it a rebasing token?

No

Does the token charge fees on transfers?

No

Is the contract performing arbitrary delegatecalls? If the answer is yes, indicate who can make these calls and to what contracts.

No

Is it flash mintable? If yes, please provide more information on this feature.

No

Is it flash loanable? If yes, please indicate who offers the service.

It is technically possible, however we are unaware of anyone who offers this service.

Upgradability:

Is it upgradeable?

No–The rETH contract is immutable. However, the rETH contract makes some calls to upgradable contracts for specific information. E.g. it calls the Network Balances contract.

Who is authorized to make an upgrade?

oDAO

Can an upgrade happen instantaneously or is there a time-lock delay?

Delay for voting-seven days

Which components are upgradable?

Nothing in the rETH contract itself. However the rETH contract refers to the Rocket Network balance contract, and the Rocket Network Deposit Pool contract which are both upgradable to affect minting and burning exclusively.

How does the upgradeability design work?

As above, the reference contracts are upgradable via eternal storage contract pattern. Upgradable Solidity Contract Design | by David Rugendyke | Rocket Pool | Medium

Who manages it and are how upgrades performed?

Upgrades are infrequent (once or twice a year) and fully audited. The Rocket Pool core team prepare an upgrade.

Code is audited by professional security auditors.

Audit reports are made public.

The upgrade is verified publicly by the community and the oDAO.

The oDAO raise a proposal.

Seven-day delay to enable the oDAO and community to assess the upgrade.

Vote takes place after seven days; requires 51% consensus.

If successful, the upgrade is executed and applied.

Does it emit an event when the implementation is updated?

Yes. Events are emitted when contracts are upgraded.

Conclusion

The addition of rETH represents tremendous value, utility, and flexibility for Compound users. rETH is a trusted asset with a rapidly growing user base. Because it’s value is intrinsically related to ETH, rETH carries a low risk profile. This would provide current Compound users more options, and would also entice more borrowers to the Compound ecosystem.

8 Likes
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Thanks @Grant for starting this discussion. I support this proposal and think it’s a great idea to start listing more LSTs as collateral assets in the cWETHv3 market.

rETH is one of the largest LSTs right now and offers one of the most decentralized validator sets in the space. Supporting rETH as a collateral asset on Compound will not only create more utility for the cWETHv3 market, but also help to avoid staking concentration, which is becoming a real concern for Ethereum right now.

Disclaimer: As of the time of this post, I do not hold any rETH or RPL, nor am I an ambassador of Rocket Pool.

4 Likes
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Thank you for your post and beginning the discussion! Looking forward to insights and feedback from the community.

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We support listing rETH as collateral. Rocket Pool is the third-largest liquid staking service provider, with its market share expanding from an initial 5% earlier this year to nearly 8% in recent times.

Given the success of launching rETH with e-mode on AAVE v3, this integration aligns with the evolving market trends and reinforces our commitment to harnessing top-tier technology for Compound’s user base.

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Gauntlet Initial Parameter Recommendations: Ethereum Compound v3 WETH Comet

Simple Summary

Gauntlet provides the following initial parameters for listing rETH on the Ethereum Compound v3 WETH comet.

Parameter Value
Collateral Factor 90%
Liquidation Factor 93%
Storefront Price Factor 100%
Liquidation Penalty 2.5%
Supply Cap 30,000 ($60M)

Analysis

Rocket pool ETH (rETH) is a significant LST for staked ETH. With 500K tokens in circulating supply, rETH is one of the biggest LSTs on Ethereum. Given the asset’s sufficient liquidity on-chain, circulating supply, and user adoption, Gauntlet suggests the above risk parameters for initial asset listing.

We give supply cap recommendations based on the assets circulating supply, liquidity, and daily volume. rETH’s supply cap, set at 30,000 ($60M), is calculated using estimated liquidity available in depegging events and market depth in normal conditions. Given the asset’s significant liquidity, the supply cap can be increased as supply increases on this comet. We will monitor rETH supply growth of rETH and suggest increasing the cap as the market evolves.

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The on-chain proposal is now live:

3 Likes