wOETH Asset Assessment

Summary

Timeline: From 2025-06-10 To 2025-06-11

Total Issues: 1 (0 resolved)

Medium Severity Issues: 1 (0 resolved)

Overview

Origin Ether (OETH) is a liquid staking token (LST) designed to maintain a tighter peg to ETH, offer greater security, and deliver higher yields compared to other LSTs. Wrapped OETH (wOETH) is an ERC-4626 tokenized vault that accrues yield through price appreciation rather than quantity increase, providing a non-rebasing alternative that still earns yield at the same rate as standard OETH.

An asset assessment was conducted on wOETH to evaluate its suitability as a collateral asset for the WETH market on Ethereum within the Compound ecosystem.

Materials Reviewed

Material Version/Date Source
Technical Documentation As of 2025-06-10 Origin Protocol Documentation
Proposal Discussion As of 2025-06-10 Compound Community Forum
OETH Analytics As of 2025-06-10 Origin Analytics
Risk Assessment As of 2025-06-10 LlamaRisk Report

Summary of Findings

Key Concerns:

  • The only available Chainlink price feed for OETH on Ethereum is flagged as “High Market Risk”, which may result in monetary losses if not integrated with appropriate safeguards.

Positive Observations:

  • OETH and wOETH have an established presence in the DeFi ecosystem, with a strong emphasis on security through regular audits and active bug bounty programs.
  • The tokens do not pose centralization risks: upgrades are managed by a Governance contract and executed via a Timelock mechanism that enforces a 48-hour delay before any changes take effect.

Asset Information

Asset Name: wOETH

Asset Type: Wrapped LST

Created Date: March 31, 2023

Blockchain: Ethereum Mainnet

Contract Address: 0xDcEe70654261AF21C44c093C300eD3Bb97b78192

Contract Verification: Verified

Asset Standard: ERC-4626

Key Metrics

Metric Value Source Verification
Total Supply 17,718 Etherscan Verified
Market Cap 54.96M CoinMarketCap Verified
Holders 116 Etherscan Verified

Token Economics

OETH earns staking yield from the Ethereum Beacon Chain using Distributed Validator Technology (DVT). This architecture enables open and simplified validator management while allowing the protocol to capture additional incentives from DVT platforms, which are redistributed to OETH holders as supplementary yield.

Protocol earnings are funneled into a Dripper contract in the form of WETH. This mechanism introduces a delay in yield distribution to smooth out volatility and mitigate the risk of reward front-running.

OETH has no fixed emission schedule. It is minted on demand when users deposit ETH into the protocol and burned on redemption. ETH can be converted to OETH through Curve swaps or by using a convenience contract called Zapper, which automatically wraps ETH into WETH and deposits it into the OETH Vault.

To maintain a tight 1:1 peg with ETH, OETH relies on a combination of permissionless ETH withdrawals and an instant redemption mechanism via the Automated Redemption Manager (ARM).

For broader DeFi compatibility, OETH can be wrapped into wOETH and unwrapped atomically and permissionlessly. The current exchange rate between wOETH and OETH can be obtained from the wOETH smart contract or the OETH dApp. As of now, approximately 45% of all OETH is held in the form of wOETH.

Distribution

Holder Category Percentage Number of Addresses Notes
LockReleaseTokenPool Contract 86.87% 1 This contract is used by Chainlink’s CCIP.
Top 10 Holders 99.11% 10 Aside from the LockReleaseTokenPool, no individual holder controls more than 3.26% of the total token supply.

Access Control

Role Capabilities Controlled by
Governor Can perform contract upgrades and recover tokens (other than OETH) stuck in the contract. OGN holders

Asset Checklist

Token Standard Compliance

Requirement Status Notes
ERC-4626 COMPLIANT N/A

Token Security

Requirement Status Notes
Audited COMPLIANT Origin has a continuous auditing agreement with OpenZeppelin to review the OETH and wOETH smart contract changes.
No Fee-on-transfer COMPLIANT N/A
No Blocklist COMPLIANT N/A
No Delay in transfer COMPLIANT N/A

Common Vulnerabilities Check

Vulnerability Status Notes
Should Not Expose Centralization Risks COMPLIANT Token minting, redemption, and transfers are permissionless.

Medium Severity

Possible Reliance on High-Risk Chainlink Price Feed

Chainlink’s OETH / ETH price feed on Ethereum Mainnet is currently the only available price feed for OETH on that chain.

However, this feed is explicitly labeled “High Market Risk” on the Chainlink website, indicating that the reported price may be volatile or subject to uncertainty. Similar feeds have caused issues in the past—for example, the recent deUSD price spike led to over $500K in user losses from liquidations triggered by a temporary oracle distortion.

Consider actively monitoring the volatility of any high-risk price feeds used in production and implementing mitigation strategies where appropriate. These may include volatility thresholds and fallback pricing mechanisms.

Conclusion

wOETH was reviewed for its potential use as collateral in the WETH market on Ethereum Mainnet.

The primary concern identified relates to the Chainlink price feed for OETH, which is currently marked as high-risk. This risk should be carefully evaluated when considering integration into the Compound protocol. Beyond this, wOETH presents no major issues and appears suitable for use as collateral.

Risk Assessment

Risk Category Risk Level Notes
Technical Risk LOW wOETH has been thoroughly audited and is in scope for Origin’s bug bounty program.
Economic Risk LOW The asset is fully collateralized by WETH.
Operational Risk LOW The contract is upgradeable only through Governance, with a 48-hour timelock.
Price Feed Risk MEDIUM The only Chainlink price feed for OETH on Ethereum Mainnet is marked as “High Market Risk”.

Final Recommendations

The following recommendations are provided for enabling wOETH as collateral in the WETH market on Ethereum Mainnet:

  • Risk parameters suggested by Gauntlet should be reviewed by the community and potentially updated, as they were published over 10 months ago.
  • Upgrades to the OETH and wOETH token contracts via Origin’s Governance should be actively monitored to ensure no new risks are introduced to Compound.
  • The price oracle solution for wOETH must be resilient and account for the possibility of sharp price movements, especially if relying on a high-risk underlying price feed.

There is also the Tellor and Dia feeds that can be used as backups if needed

1 Like

This is accurate for wOETH but a bit misleading, as it does not include the holders of standard (unwrapped) OETH, for which there are 1,072

1 Like

If there are concerns about the OETH Chainlink oracle, I would suggest Compound adapt a CAPO approach for OETH, as was suggested with other similar LSTs earlier this year.

Both ChaosLabs and Llamarisk suggested using a CAPO for OETH within the Aave ecosystem.