Listing tETH (Arbitrum) as collateral for Compound Arbitrum

Proposals
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Treehouse Protocol proposes to list tETH (Arbitrum) as collateral-only on Compound V3 Arbitrum in the USDC, USDT, and ETH base markets. tETH is already listed on Compound v3’s Ethereum markets and has contributed to collateral and asset diversification. By listing tETH (Arbitrum), borrowing utility is further unlocked for tETH holders while they continue to earn tETH yield.

About Treehouse

Treehouse Protocol, the decentralized arm of Treehouse Labs, is leading the charge in revolutionizing the decentralized fixed income market. Focused on building the fixed income layer for digital assets, Treehouse introduces innovative fixed income products and primitives.

Key Offerings

  • tAssets: These tokens aim to unify fragmented on-chain interest rate markets for Proof of Stake (PoS) chains. tAssets provide holders with real yield beyond just the native network rewards through interest rate arbitrage on lending platforms. The first iteration, tETH, is a liquid staking token that addresses fragmentation in Ethereum’s interest rate market. tETH allows users to participate in the convergence of Ethereum interest rates while maintaining flexibility for DeFi activities. By borrowing ETH against wstETH (wrapped Lido Staked ETH), tETH amplifies potential yields by increasing the overall staked position. Since our last proposal to list tETH on Ethereum, tETH has since seen tremendous growth surpassing a TVL of $400M, and has over 40K users.

  • Decentralized Offered Rates (DOR):
    DOR is a consensus-based benchmark system for setting reference rates in the fixed income space. It mirrors the role of benchmarks like LIBOR (London InterBank Offered Rate) and SOFR (Secured Overnight Financing Rate) in traditional finance, but with a key difference: DOR is fully transparent and objective. Traditional rates were prone to manipulation, as they relied on subjective inputs from a small panel of banks. DOR, however, leverages decentralized mechanisms to ensure accuracy and transparency in rate-setting.

Motivation

  • User demand: Treehouse is collaborating with Upshift and MEV Capital through the gtETH vault, which allocates capital across multiple chains to maximize vault yield. Enabling tETH as collateral on Arbitrum lets gtETH and other users to borrow against their tETH positions. Especially with the ongoing Arbitrum DRIP campaign, substantial borrowing demand is expected via tETH collaterals.

  • Protocol value: More collateral diversity broadens borrower demand and increases interest income for Compound. Listing tETH as collateral would let holders unlock stablecoin and ETH liquidity without unwinding their tETH positions, attracting Arbitrum users who are already holding tETH, and strengthen Compound’s presence on the network. It also improves risk dispersion by reducing reliance on its existing collateral types and supports healthier utilization across Comet markets.

Asset Overview

Useful Links

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