[Gauntlet] wstETH and ezETH Asset Listing

Simple Summary

If the community decides to list the following assets, Gauntlet recommends the below risk parameters:

WETH Comet on BASE

Asset Collateral Factor Liquidation Factor Liquidation Penalty Supply Cap
wstETH 90% 93% 2.5% 1200
ezETH 80% 85% 10% 500

USDC Comet on BASE

Asset Collateral Factor Liquidation Factor Liquidation Penalty Supply Cap
wstETH 80% 85% 10% 700

USDC Comet on Arbitrum

Asset Collateral Factor Liquidation Factor Liquidation Penalty Supply Cap
wstETH 80% 85% 10% 1,500

USDC Comet on Ethereum

Asset Collateral Factor Liquidation Factor Liquidation Penalty Supply Cap
wstETH 82% 87% 8% 15,000

Analysis


wstETH was recommended within this forum post approximately 7 months ago to be listed on WETH Comet on BASE and USDC Comets on Ethereum and Arbitrum. Gauntlet would like to push these recommendations on-chain with updated parameters while including adding ezETH to the BASE WETH Comet and wstETH to the BASE USDC Comet. Gauntlet is recommending listing the assets again in order to improve capital efficiency, especially within the BASE WETH Comet that currently has one collateral asset,cbETH.

Liquidity

wstETH → USDC Liquidty Profile

Chain 25% Slippage
Ethereum 29k ($100M)
Arbitrum 2.8k ($9.8M)
BASE 1.4k ($4.8M)

ezETH → WETH Liquidty Profile

Chain 25% Slippage
BASE 1.9k ($5.7M)

The Aerodrome pools are overweighted with WETH to allow for high liquidity for ezETH relative to the circulating supply on BASE.

Use of Exchange Rate Oracles

As mentioned in the [Franklin DAO] Request for comment on: Market pricing vs. exchange rate pricing for LSTs and potential oracle implementations post, Gauntlet supports exchange rate oracles for wstETH and ezETH within the correlated WETH Comet if the community decides to pursue this strategy. The exchange rate-based risk parameters could facilitate higher caps and Liquidation Factors along with more conservative Liquidation Penalties.

As shown in the chart below, the market rate of ezETH has regained its peg to the exchange rate since the introduction of withdrawals.

Yield Risk

The yield from staking ETH and earning ezETH can be volatile and is influenced by various factors such as validator performance, network conditions, and staking competition. Yield rates can fluctuate, and there is no guarantee of consistent returns. Gauntlet would like to flag this potential risk to the community.

Next Steps

  • Welcome Community Feedback
1 Like

Thank you @Gauntlet for the recommendations. wstETH and ezETH are popular assets that will help to increase borrowing avenues for their holders. wstETH has been a dominant collateral asset on top lending protocols. The Growth program supports this initiative and will put developer resources behind this to expedite the deployment of these.

Additionally, I would also like to suggest listing ezETH as collateral on the

  • USDC Comet on Arbitrum
  • WETH comet on Arbitrum
  • USDC Comet on Optimism.
  • USDT Comet on Optimism

We aim to start coding on these assets in the coming weeks and push them for community vote. Look forward to any feedback on the action items

An Update, Coding has already been completed by Lido team for

  • wstETH on Base ETH Market
  • wstETH on Arbitrum USDC market
  • wstETH on Mainnet USDC Market

Community members can find more details here

The deployments have been blocked due to Exchange rate conversation. Thanks to @Gauntlet revisiting these assets and giving refreshed parameters, this will help a lot in expediting the launch of the assets.

We will keep the community updated on the launch of these assets

Add wstETH to cUSDCv3 on Arbitrum

PR - Add wstETH as collateral to USDC market on Arbitrum by MishaShWoof · Pull Request #883 · compound-finance/comet · GitHub

Actions

  1. Run Slither. Fails. :x:. Add wstETH as collateral to USDC market on Arbitrum · woof-software/comet@9ef28b4 · GitHub
  2. Forge test. Success.:white_check_mark: Add wstETH as collateral to USDC market on Arbitrum · woof-software/comet@9ef28b4 · GitHub
  3. Gas Profiler. Success.:white_check_mark: Add wstETH as collateral to USDC market on Arbitrum · woof-software/comet@9ef28b4 · GitHub
  4. Scan. Success.:white_check_mark: Add wstETH as collateral to USDC market on Arbitrum · woof-software/comet@9ef28b4 · GitHub
  5. arbitrum-usdc Scenario. Success.:white_check_mark: Add wstETH as collateral to USDC market on Arbitrum · woof-software/comet@9ef28b4 · GitHub
  6. Unit tests. Success.:white_check_mark: Add wstETH as collateral to USDC market on Arbitrum · woof-software/comet@9ef28b4 · GitHub
  7. Eslint. Success.:white_check_mark: Add wstETH as collateral to USDC market on Arbitrum · woof-software/comet@9ef28b4 · GitHub
  8. Contract linter. Success.:white_check_mark: Add wstETH as collateral to USDC market on Arbitrum · woof-software/comet@9ef28b4 · GitHub
  9. Prepare migration. Success.:white_check_mark: Prepare Migration · woof-software/comet@9ef28b4 · GitHub
  10. Enact migration with impersonate. Success.:white_check_mark: Enact Migration · woof-software/comet@9ef28b4 · GitHub

Description we use:

Add wstETH as collateral into cUSDCv3 on Arbitrum\n\n

Proposal summary\n\n

Compound Growth Program [AlphaGrowth] proposes to add wstETH into cUSDCv3 on Arbitrum network. This proposal takes the governance steps recommended and necessary to update a Compound III USDC market on Arbitrum. Simulations have confirmed the market’s readiness, as much as possible, using the Comet scenario suite. The new parameters include setting the risk parameters based off of the recommendations from Gauntlet.\n\n

Further detailed information can be found on the corresponding proposal pull request and forum discussion.\n\n\n

Proposal Actions\n\n

The first proposal action adds wstETH to the USDC Comet on Arbitrum. This sends the encoded addAsset and deployAndUpgradeTo calls across the bridge to the governance receiver on Arbitrum.

Thanks for the refreshed parameters @Gauntlet ! Looking forward to having these as collaterals on the markets

(post deleted by author)

Add ezETH to cWETHv3 on Base

PR - Add ezETH as collateral to WETH market on Base by MishaShWoof · Pull Request #888 · compound-finance/comet · GitHub

Actions

  1. Run Slither. Fails. :x: Add ezETH as collateral to WETH market on Base · woof-software/comet@d0155c1 · GitHub
  2. Forge test. Success.:white_check_mark: Add ezETH as collateral to WETH market on Base · woof-software/comet@d0155c1 · GitHub
  3. Gas Profiler. Success.:white_check_mark: Add ezETH as collateral to WETH market on Base · woof-software/comet@d0155c1 · GitHub
  4. Scan. Success.:white_check_mark: Add ezETH as collateral to WETH market on Base · woof-software/comet@d0155c1 · GitHub
  5. base-weth Scenario. Success.:white_check_mark: Add ezETH as collateral to WETH market on Base · woof-software/comet@d0155c1 · GitHub
  6. Unit tests. Success.:white_check_mark: Add ezETH as collateral to WETH market on Base · woof-software/comet@d0155c1 · GitHub
  7. Eslint. Success.:white_check_mark: Add ezETH as collateral to WETH market on Base · woof-software/comet@d0155c1 · GitHub
  8. Contract linter. Success.:white_check_mark: Add ezETH as collateral to WETH market on Base · woof-software/comet@d0155c1 · GitHub
  9. Prepare migration. Success.:white_check_mark: https://github.com/woof-software/comet/actions/runs/997732757
  10. Enact migration with impersonate. Success.:white_check_mark: Enact Migration · woof-software/comet@d0155c1 · GitHub
  11. Enact migration for delegator. Enact Migration · woof-software/comet@d0155c1 · GitHub

Description we use:

Add ezETH as collateral into cWETHv3 on Base\n\n

Proposal summary\n\n

Compound Growth Program [AlphaGrowth] proposes to add ezETH into cWETHv3 on Base network. This proposal takes the governance steps recommended and necessary to update a Compound III WETH market on Base. Simulations have confirmed the market’s readiness, as much as possible, using the Comet scenario suite. The new parameters include setting the risk parameters based off of the recommendations from Gauntlet.\n\n

Further detailed information can be found on the corresponding proposal pull request and forum discussion.\n\n\n

Proposal Actions\n\n

The first proposal action adds ezETH to the WETH Comet on Base. This sends the encoded addAsset and deployAndUpgradeTo calls across the bridge to the governance receiver on Base.

Add wstETH to cWETHv3 on Base

PR - Add wstETH as collateral to WETH market on Base by MishaShWoof · Pull Request #887 · compound-finance/comet · GitHub

Actions

  1. Run Slither. Fails. :x: Add wstETH as collateral to WETH market on Base · woof-software/comet@233f2b7 · GitHub
  2. Forge test. Success.:white_check_mark: Add wstETH as collateral to WETH market on Base · woof-software/comet@233f2b7 · GitHub
  3. Gas Profiler. Success.:white_check_mark: Add wstETH as collateral to WETH market on Base · woof-software/comet@233f2b7 · GitHub
  4. Scan. Success.:white_check_mark: Add wstETH as collateral to WETH market on Base · woof-software/comet@233f2b7 · GitHub
  5. base-weth Scenario. Success.:white_check_mark: Add wstETH as collateral to WETH market on Base · woof-software/comet@233f2b7 · GitHub
  6. Unit tests. Success.:white_check_mark: Add wstETH as collateral to WETH market on Base · woof-software/comet@233f2b7 · GitHub
  7. Eslint. Success.:white_check_mark: Add wstETH as collateral to WETH market on Base · woof-software/comet@233f2b7 · GitHub
  8. Contract linter. Success.:white_check_mark: Add wstETH as collateral to WETH market on Base · woof-software/comet@233f2b7 · GitHub
  9. Prepare migration. Success.:white_check_mark: Prepare Migration · woof-software/comet@233f2b7 · GitHub
  10. Enact migration with impersonate. Success.:white_check_mark: Enact Migration · woof-software/comet@233f2b7 · GitHub
  11. Enact migration for delegator. Enact Migration · woof-software/comet@233f2b7 · GitHub

Description we use:

Add wstETH as collateral into cWETHv3 on Base\n\n

Proposal summary\n\n

Compound Growth Program [AlphaGrowth] proposes to add wstETH into cWETHv3 on Base network. This proposal takes the governance steps recommended and necessary to update a Compound III WETH market on Base. Simulations have confirmed the market’s readiness, as much as possible, using the Comet scenario suite. The new parameters include setting the risk parameters based off of the recommendations from Gauntlet.\n\n

Further detailed information can be found on the corresponding proposal pull request and forum discussion.\n\n\n

Proposal Actions\n\n

The first proposal action adds wstETH to the WETH Comet on Base. This sends the encoded addAsset and deployAndUpgradeTo calls across the bridge to the governance receiver on Base.