# \[ARFC\] Add rETH Aave v3 Optimism **URL:** \ **Category:** Governance\ **Created:** [June 24, 2023, 1:14pm UTC](https://governance.aave.com/t/arfc-add-reth-aave-v3-optimism/13795 "2023-06-24T13:14:29Z")\ **Posts on this page:** 7\ **Page:** 1
**Author:** ![Llamaxyz](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/llamaxyz/32/2044_2.png) [@Llamaxyz](https://governance.aave.com/u/Llamaxyz)\ **Post date:** [June 24, 2023, 1:14pm UTC](https://governance.aave.com/t/arfc-add-reth-aave-v3-optimism/13795/1 "2023-06-24T13:14:29Z")
* * * title: [ARFC] Add rETH Aave v3 Optimism shortDescription: Add rETH to Aave v3 Optimism author: @Llamaxyz - @TokenLogic created: 2023-06-24 * * * # Summary Add rETH to Aave v3 Optimism as collateral and to the ETH correlated eMode. # Abstract 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. # Motivation 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. # Specification Ticker: rETH Contract Address: `Optimism:0x9Bcef72be871e61ED4fBbc7630889beE758eb81D` rETH/ETH exchange rate: `Optimism: 0x22F3727be377781d1579B7C9222382b21c9d1a8f` | Parameter | Value | | --- | --- | | Isolation Mode | No | | Borrowable | Yes | | Collateral Enabled | Yes | | Supply Cap | 6,000 units | | Borrow Cap | 720 units | | LTV | 67.00% | | LT | 74.00% | | Liquidation Bonus | 7.50% | | Liquidation Protocol Fee | 10.00% | | Reserve Factor | 15.00% | | Variable Base | 0.00% | | Variable Slope 1 | 7.00% | | Variable Slope 2 | 300.00% | | Uoptimal | 45.00% | | Stable Borrowing | Disabled | | 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% | | Flahloanable | Yes | | Siloed Borrowing | No | | Borrowed in Isolation | No | Optimism - Ethereum Correlated eMode Category Add rETH to Category 1 eMode | Parameter | Value | | --- | --- | | Category | 1 (ETH Correlated) | | Assets | wstETH, wETH,rETH | | Loan to Value | 90.00% | | Liquidation Threshold | 93.00% | | Liquidation Bonus | 1.00% | Reference: [[ARFC] Optimism Create ETH E-Mode](https://governance.aave.com/t/arfc-optimism-create-eth-e-mode/13144) # Copyright Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/). ---
**Author:** ![jengajojo](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/jengajojo/32/5403_2.png) [@jengajojo](https://governance.aave.com/u/jengajojo)\ **Post date:** [June 26, 2023, 7:42am UTC](https://governance.aave.com/t/arfc-add-reth-aave-v3-optimism/13795/2 "2023-06-26T07:42:37Z")
In favor of this proposal, thanks @Llamaxyz ---
**Author:** ![MarcZeller](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/marczeller/32/7124_2.png) [@MarcZeller](https://governance.aave.com/u/MarcZeller)\ **Post date:** [June 26, 2023, 8:12am UTC](https://governance.aave.com/t/arfc-add-reth-aave-v3-optimism/13795/3 "2023-06-26T08:12:27Z")
the ACI supports this proposal, LST diversity on L2s is important and supported by our delegate platform ---
**Author:** ![ChaosLabs](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/chaoslabs/32/6850_2.png) [@ChaosLabs](https://governance.aave.com/u/ChaosLabs)\ **Post date:** [June 29, 2023, 2:58pm UTC](https://governance.aave.com/t/arfc-add-reth-aave-v3-optimism/13795/4 "2023-06-29T14:58:32Z")
Thanks @Llamaxyz for putting forward this proposal. We support the addition of rETH to Aave V3 Optimism. Utilizing the same framework and analysis as for the [addition of rETH on Arbitrum](https://governance.aave.com/t/arfc-add-reth-to-aave-v3-arbitrum-liquidity-pool/12810/2), we support the proposed parameters with a modification of the borrow cap. Based on our observations, the utilization rate for LSDs has been relatively low. Therefore, we recommend a more conservative approach and to set the borrow caps at 720 rETH. If there is a significant increase in demand and utilization, we will reassess the caps according to the utilization pattern. ---
**Author:** ![Llamaxyz](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/llamaxyz/32/2044_2.png) [@Llamaxyz](https://governance.aave.com/u/Llamaxyz)\ **Post date:** [July 4, 2023, 6:39pm UTC](https://governance.aave.com/t/arfc-add-reth-aave-v3-optimism/13795/5 "2023-07-04T18:39:02Z")
Hi Everyone, A Snapshot has been created for this proposal. [https://snapshot.org/#/aave.eth/proposal/0xb112684943ef900f2918ccbc4de3bb3091869eaeb6b3c15cc26805c17cb6a9f6](https://snapshot.org/#/aave.eth/proposal/0xb112684943ef900f2918ccbc4de3bb3091869eaeb6b3c15cc26805c17cb6a9f6) Thank you to all those that vote in advance. ---
**Author:** ![Gauntlet](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/gauntlet/32/4064_2.png) [@Gauntlet](https://governance.aave.com/u/Gauntlet)\ **Post date:** [July 8, 2023, 5:41am UTC](https://governance.aave.com/t/arfc-add-reth-aave-v3-optimism/13795/6 "2023-07-08T05:41:13Z")
## Gauntlet’s Recommendations We support the addition of rETH to Aave v3 Optimism under the parameters proposed. One thing to note is that unlike on Ethereum mainnet, where users can mint and burn rETH in exchange for ETH via the Rocket Pool smart contract - on L2, the quickest option to convert back to ETH is [to swap on a DEX such as Uniswap](https://docs.rocketpool.net/guides/staking/via-l2.html#staking-via-a-decentralized-exchange-on-layer-2) for ETH. Otherwise, rETH on Optimism, like on Arbitrum, needs to be bridged back to mainnet in order to be arbitraged against the smart contract, which creates the possibility of temporary divergences between the rETH price on Optimism and the underlying ETH contained in the pool. We look forward to community alignment on [killswitches](https://governance.aave.com/t/gauntlet-synchronicity-price-adapter-killswitch-functionality-for-lst-emode/13224/8) for LSTs that can drive further capital efficiency for rETH. ---
**Author:** ![system](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e11637c36f45ffa158f2146f5c19438d46e0824d.svg) [@system](https://governance.aave.com/u/system)\ **Post date:** [August 7, 2023, 5:41am UTC](https://governance.aave.com/t/arfc-add-reth-aave-v3-optimism/13795/7 "2023-08-07T05:41:34Z")
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