Add rETH to Aave v3 Optimism as collateral and to the ETH correlated eMode.
rETH is currently listed on Aave v3 Ethereum and Arbtirum. This publication proposes adding rETH to Aave v3 Optimism network.
ETH correlated asset make up over half of Aave’s TVL on Optimism. By adding rETH and providing LST diversification, Aave presents itself as a neutral platform offering users the choice between various LSTs.
A Chainlink exchange rate oracle is now available and there is suitable liquidity across several DEX pools to support an rETH listing.
rETH is listed on Aave v3 Ethereum and has over $58M of deposits. Rocket Pool is expanding its support for rETH across the L2 ecosystem and recently, a Chainlink oracle was published enabling rETH to be added to Aave Protocol. With the release of this oracle, this publication proposes adding rETH to Aave v3 on Optimism.
LST collateral types drive material borrowing revenue to Aave as users deposit the LST and borrow the corresponding network token. This is most evident on Ethereum where the LST-wETH-yield-maximising loop is the source of the vast majority of wETH borrowing demand.
An added benefit of offering a variety of LSTs is the respective communities may elect to compete for user acquisition via Aave through offering incentives. This is currently happening on Aave v3 Polygon and Aave’s TVL has meaningfully increased from a relatively small base.
rETH/ETH exchange rate:
|Supply Cap||6,000 units|
|Borrow Cap||720 units|
|Liquidation Protocol Fee||10.00%|
|Variable Slope 1||7.00%|
|Variable Slope 2||300.00%|
|Stable Slope 1||13.00%|
|Stable Slope 2||300.00%|
|Base Stable Rate Offset||3.00%|
|Stable Rate Excess Offset||5.00%|
|Optimal Stable to Total Debt Ratio||20.00%|
|Borrowed in Isolation||No|
Optimism - Ethereum Correlated eMode Category
Add rETH to Category 1 eMode
|Category||1 (ETH Correlated)|
|Loan to Value||90.00%|
Reference: [ARFC] Optimism Create ETH E-Mode
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