In response to the request from the Lido team to incorporate wstETH as collateral within the Compound v3 markets, OpenZeppelin reviewed the proposals for Base v3 WETH, Ethereum v3 USDC, and Arbitrum v3 USDC markets. We are confident that these proposals accurately integrate the specified collateral into the protocol, adhering to the parameters recommended by the Gauntlet team.
Exchange Rate vs Market Rate
Concerning the discussion on exchange rate pricing versus market rate pricing, we agree that the approach of utilizing exchange rate pricing is preferable as it enhances security by offering better protection against potential market manipulation.
Future areas of concern
One area we aim to further explore involves the dynamics between Lido’s trusted Node Operators and Compound v3 users who opt for wstETH as collateral. Essentially, this includes a review of Lido’s trust assumptions to determine whether they sufficiently safeguard v3 users from specific attack vectors that could lead to liquidations. Introducing Lido across each market increases the trust on Node Operators to act responsibly. As an example, it is important to verify that deliberate slashing by one or multiple node operators does not jeopardize the positions within Compound v3, potentially causing them to go underwater.