After additional discussion with BGD and a review of Aave’s LBTC onboarding in January, we are amending a couple of factors in the eBTC onboarding—namely, the Borrow Cap and the Price Oracle.
Oracle Configuration/Pricing
Given that the eBTC Accountant’s internal rate is currently set at 1 in the absence of yield, two pricing strategies present themselves:
- Using Chainlink’s BTC/USD price feed (similarly to LBTC)
- Using a CAPO adapter that multiplies Chainlink’s BTC/USD feed with eBTC’s internal exchange rate, with
maxYearlyRatioGrowthPercentset to 0%
Although precedent has been set with LBTC to price solely using the BTC/USD price feed, we believe that the CAPO solution should be privileged for handling assets in this category (early-stage LST/LRT that have not yet begun earning yield).
This solution makes it easier to adjust the cap via Stewards once yield is activated. For all collateral types handled in this way—including LBTC and eBTC—it is imperative for service providers to monitor developments in the LST/LRT protocols and be prepared to implement CAPO once their internal RateProvider becomes active (i.e., when the protocol begins earning and distributing yield).
Borrow Cap
Failure to implement/parametetize CAPO in a timely manner may result in Aave underpricing eBTC. This is more a concern when the asset is borrowable. Given that eBTC is expected to be used primarily as collateral in looping strategies anyways, in this early stage it is more reasonable to make eBTC unborrowable. This is also a precedent set by LBTC, which was initially onboarded with an 80 LBTC borrow cap and subsequently reduced to 1 LBTC.