[ARFC] Onboard stcUSD to Aave V3 MegaETH

Governance New Asset
1

Simple Summary

This ARFC proposes onboarding stcUSD to the Aave V3 MegaETH instance.

stcUSD was included in the original MegaETH asset review scope but was deferred from the initial launch while technical and risk reviews continued. LlamaRisk has now published its technical assessment of cUSD and stcUSD. The corresponding risk assessment and recommended Aave V3 parameters, along with an updated technical assessment will be provided following this ARFC.

Motivation

Aave V3 is now live on MegaETH, and the market has moved beyond the initial launch configuration. The next step is to expand coverage for assets that can grow stablecoin and yield-bearing collateral usage on the instance.

stcUSD is the staked, yield-bearing component of Cap Protocol. Users mint stcUSD by staking cUSD, with yield generated from the underlying cUSD collateral and protocol-level yield mechanisms.

As of June 1, 2026, Cap reports $399.42M in total TVL, 113.17M cUSD in circulation, 81.69% of cUSD staked into stcUSD, and a 5.26% stcUSD 7-day APY. This places stcUSD in a competitive range relative to base stablecoin supply rates currently visible on Aave.

Supplying stcUSD as collateral lets users retain exposure to the stcUSD yield profile while borrowing stablecoins from Aave for looping or other strategies across MegaETH DeFi. This can create incremental borrowing demand for existing stablecoins on the MegaETH market, making the instance more attractive for stablecoin suppliers over time.

Onboarding stcUSD would give Cap users a direct Aave venue on MegaETH and give Aave V3 MegaETH a yield-bearing stablecoin collateral type with existing protocol usage. LlamaRisk has already provided the technical assessment for cUSD and stcUSD. The risk assessment and recommended Aave V3 parameters will follow this ARFC.

Specifications

This ARFC proposes to onboard stcUSD as a collateral asset to the Aave V3 MegaETH market.

  • Market: Aave V3 MegaETH

  • Asset: stcUSD

  • Token Address: 0x88887bE419578051FF9F4eb6C858A951921D8888

  • Reference Asset: cUSD

  • cUSD Token Address: 0xcCcc62962d17b8914c62D74FfB843d73B2a3cccC

Risk parameters will be provided by LlamaRisk

Next Steps

  1. Collect community and service provider feedback on the proposed onboarding of stcUSD to Aave V3 MegaETH.

  2. LlamaRisk will provide the asset risk assessment and recommended Aave V3 parameters.

  3. If consensus is reached, proceed to ARFC Snapshot.

  4. If the ARFC Snapshot passes, proceed to AIP for final DAO approval and execution.

Disclaimer

Aave Labs is presenting this proposal as a service provider to the Aave DAO under the budget approved by the Aave Will Win framework. Aave Labs is contributing this proposal as part of its approved scope of work in support of DAO operations.

Copyright

Copyright and related rights waived via CC0.

3 Likes
2

For bringing this ARFC forward.

I have a few security and risk-related questions that I believe the community should consider before moving to Snapshot:

  1. MegaETH-Specific Audit:
    Has stcUSD’s deployment on MegaETH been independently audited? The Certora and Sherlock audits covered Ethereum mainnet and EigenLayer integration — but MegaETH is a newly launched chain (Frontier mainnet, December 2025). Are there any MegaETH-specific contract audits available?

  2. Circular Dependency Risk (Aave ↔ Cap Protocol):
    Over 80% of Cap Protocol’s reserves (~$360M+) are already deployed on Aave V3 Core Ethereum, and 90%+ of stcUSD yield comes from Aave. Now stcUSD is being proposed as collateral on Aave MegaETH. This creates a circular dependency — if Aave experiences a major exploit or liquidity crisis, Cap Protocol would be directly impacted, which in turn affects stcUSD’s value as collateral on Aave itself. How does the team plan to mitigate this systemic contagion risk?

  3. Oracle Infrastructure on MegaETH:
    What price feed solution will be used for stcUSD on MegaETH? Is Chainlink or a similar battle-tested oracle available on MegaETH for this asset? Given the yield-bearing nature of stcUSD, exchange rate manipulation is a real concern.

  4. Liquidation Bot Readiness:
    MegaETH is a high-performance, real-time chain. Are liquidation bots and keepers already deployed and tested on MegaETH for stcUSD? Thin liquidity + an immature chain could lead to failed liquidations and bad debt for Aave.

  5. LlamaRisk Parameters Timeline:
    The ARFC mentions that risk parameters will be provided by LlamaRisk “following this ARFC.” Can we get an estimated timeline for when these parameters will be shared, so the community has adequate time to review before the Snapshot vote?

Support the direction of this proposal but believe these security clarifications are essential before proceeding.

2 Likes
3

I am generally supportive of onboarding stcUSD on MegaETH, but only with a conservative risk posture at launch.
stcUSD is more complex than a plain stablecoin because its value and utility depend on Cap’s protocol design, yield mechanics, and exit liquidity.
The proposal is coherent from a product perspective, but it should remain conditional on a full review of the oracle path, governance controls, and redemption robustness.
I would recommend low initial caps, conservative collateral parameters, and a gradual scale-up rather than broad exposure from day one.
The main risk is not only depeg, but also the correlation between yield, liquidity, and looping behavior on a still-young market.
If LlamaRisk confirms conservative parameters and no material weaknesses are found in Cap, I would consider the integration acceptable under enhanced monitoring.
As it stands, I would not support a launch with no limits or a material initial exposure.