OpenZeppelin reviewed the following collateral assets provided by the WOOF! team:
- wsuperOETHB on WETH Base
- tETH on the Ethereum mainnet
- SKY on the Ethereum mainnet
Our review focused on assessing the risks associated with using these assets as collateral in the protocol. The analysis included factors such as the asset’s capitalization, market liquidity, custom functionalities (e.g., pause mechanisms and fees), prior audits, and the potential for price manipulation.
The review of each asset will include a checklist covering the risks and concerns about adding them as collateral assets. If you want to analyze the complete review process carried out, visit the Compound Forum post on “Asset Listing”.
Assets Review
wsuperOETHB
wsuperOETHb is an ERC-4626 tokenized vault designed to accrue yield in price rather than in quantity. When users wrap superOETHb, they receive a fixed number of wsuperOETHb tokens which remains constant over time. However, the underlying superOETHb balance to which these tokens can be unwrapped increases as wsuperOETHb accrues yield, ensuring that holders benefit from the same yield rate as standard superOETHb.
OpenZeppelin has reviewed the liquidity, capitalization, and functionalities of wsuperOETHb and found no risks to the protocol beyond the standard trust assumptions regarding the token’s owners.
Review Results:
- The token does not incorporate fees in transfers.
- The token does not have delays in transfers.
- The token does not have blocklist/allowlist functionalities
- The token must have good capitalization (about $100M) and market liquidity.
- If the token is a wrapped/vault token, long lockup periods must not be required to redeem the underlying asset.
- The token must have undergone an audit.
- The token must not expose centralization risks.
- The token must be ERC-20 compliant
- The token should avoid having EOA holders with significant ownership (e.g., 20%-50% of the total supply).
Status: Adding this asset as collateral would not present new risks beyond what is currently manageable and acceptable.
tETH
tETH is a yield-bearing ERC-4626 tokenized vault designed to optimize staking rewards and interest rate arbitrage within the Ethereum ecosystem. As part of the Treehouse Protocol’s suite of tAssets (Liquid Staking Tokens 2.0), tETH allows users to stake ETH while simultaneously capturing additional yields. Unlike traditional staking tokens, tETH maximizes capital efficiency without sacrificing liquidity, making it an attractive asset for lending and borrowing within DeFi. The token accrues yield in price appreciation rather than in quantity, ensuring that the holders maintain a fixed number of tETH tokens while the underlying value increases over time.
Following OpenZeppelin’s review of tETH’s liquidity, market capitalization, and smart contract behavior, no major risks were identified beyond the usual considerations for yield-bearing tokens. As with similar assets, certain trust assumptions remain concerning token owners. However, no issues were noted that would pose an immediate threat to the protocol’s integrity.
Review Results:
- The token does not incorporate fees in transfers.
- The token does not have delays in transfers.
- The token does not have blocklist/allowlist functionalities
- It has a blocklist, but it is not in use at the moment
- The token must have good capitalization (about $100M) and market liquidity.
- If the token is a wrapped/vault token, long lockup periods must not be required to redeem the underlying asset.
- The token must have undergone an audit.
- The token must not expose centralization risks.
- The token must be ERC-20 compliant
- The token should avoid having EOA holders with significant ownership (e.g., 20%-50% of the total supply).
Status: Adding this asset as collateral would not present new risks beyond what is currently manageable and acceptable.
SKY
The SKY Governance Token is an update and rebrand of the MakerDAO governance token (MKR). MKR tokens can be converted to SKY tokens at a fixed rate of 24000 SKY per 1 MKR. This conversion can be done through a dedicated MkrSKy contract which enables a two-way conversion. This frictionless conversion allows the SKY token to share liquidity with the MKR token.
OpenZeppelin has reviewed the liquidity, capitalization, and functionalities of the SKY token. No risks to the protocol were identified beyond the standard trust assumptions regarding accounts with minting authority for the SKY token.
Review Results:
- The token does not incorporate fees in transfers.
- The token does not have delays in transfers.
- The token does not have blocklist/allowlist functionalities
- The token must have good capitalization (about $100M) and market liquidity.
- If the token is a wrapped/vault token, long lockup periods must not be required to redeem the underlying asset.
- The token must have undergone an audit.
- The token must not expose centralization risks.
- The token must be ERC-20 compliant
- The token should avoid having EOA holders with significant ownership (e.g., 20%-50% of the total supply).
Status: Adding this asset as collateral would not present new risks beyond what is currently manageable and acceptable.
Conclusion
OpenZeppelin has conducted a comprehensive review of the three proposed collateral assets: wsuperOETHb, tETH, and SKY. Our analysis focused on liquidity, market capitalization, custom smart contract functionalities, and potential security risks.
Following our assessment, we have not identified any new or critical risks beyond those that are already manageable and accepted under standard trust assumptions.