# \[ARFC\] Onboard sUSDe, USDe and weETH to Aave v3 on zkSync **URL:** \ **Category:** Governance\ **Created:** [September 26, 2024, 5:27pm UTC](https://governance.aave.com/t/arfc-onboard-susde-usde-and-weeth-to-aave-v3-on-zksync/19204 "2024-09-26T17:27:14Z")\ **Posts on this page:** 8\ **Page:** 1
**Author:** ![ACI](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/aci/32/4780_2.png) [@ACI](https://governance.aave.com/u/ACI)\ **Post date:** [September 26, 2024, 5:27pm UTC](https://governance.aave.com/t/arfc-onboard-susde-usde-and-weeth-to-aave-v3-on-zksync/19204/1 "2024-09-26T17:27:14Z")
## **[ARFC] Onboard sUSDe, USDe and weETH to Aave v3 on zkSync** ## **Author: ACI** ## **Date: 2024-09-26** > Risk Parameters have been updated after being provided by Risk Service Providers. 2024-04-10 * * * ### **Summary** This proposal aims to onboard sUSDe, USDe, and weETH to the Aave v3 protocol on zkSync. This follows the original plans for further expansion on the network. ### **Motivation** The integration of sUSDe, USDe, and weETH into Aave v3 on zkSync is following the initial plan for the zkSync network launch. With the successful launch of Aave v3 on zkSync, and some time for monitoring, we believe it is time to start expanding from the initial asset list. These onboardings also include partnership with Ethena and EtherFi to add ZK token incentives to each market, which will contribute to Aave’s growth on zkSync. ### **Proof of Liquidity and Deposit Commitments** Aave DAO received an allocation of ZK during the network’s TGE. Ethena and EtherFi have both pledged to add additional incentives from their own ZK token allocations. These incentives will be used to grow the market with ACI acting as Emissions Manager. ### **Specification** > Risk Parameters have been provided by Risk Service Providers and this ARFC has been updated based on their assessment. 2024-10-04 | **Parameter** | weETH | USDe | sUSDe | | --- | --- | --- | --- | | Isolation Mode | No | Yes | Yes | | Borrowable | Yes | Yes | No | | Collateral Enabled | Yes | Yes | Yes | | Supply Cap | 300 | 500,000 | 400,000 | | Borrow Cap | 150 | 50,000 | - | | Debt Ceiling | - | $500,000 | $400,000 | | LTV | 72.5% | 65% | 65% | | LT | 75% | 75% | 75% | | Liquidation Bonus | 7.5% | 8.5% | 8.5% | | Liquidation Protocol Fee | 10% | 10% | 10% | | Variable Base | 0% | 0% | - | | Variable Slope1 | 7% | 9% | - | | Variable Slope2 | 300% | 75% | - | | Uoptimal | 30% | 80% | - | | Reserve Factor | 45% | 25% | 20% | | Stable Borrowing | Disabled | Disabled | Disabled | | Flashloanable | Yes | Yes | Yes | | Siloed Borrowing | Disabled | Disabled | Disabled | | Borrowable in Isolation | No | No | No | | E-Mode Category | ETH-correlated | - | - | ### **Disclaimer** This proposal is powered by Skywards. ACI is not directly affiliated with Ethena or EtherFi and did not receive compensation for creation this proposal. ACI is a delegate in EtherFi. ACI and its members hold weETH. **Next Steps** 1. If consensus is reached on this [ARFC], escalate this proposal to the Snapshot stage. 2. If the ARFC snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal ### **Copyright** Copyright and related rights waived under [CC0](https://creativecommons.org/publicdomain/zero/1.0/) ---
**Author:** ![LlamaRisk](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/llamarisk/32/12865_2.png) [@LlamaRisk](https://governance.aave.com/u/LlamaRisk)\ **Post date:** [October 3, 2024, 8:11pm UTC](https://governance.aave.com/t/arfc-onboard-susde-usde-and-weeth-to-aave-v3-on-zksync/19204/2 "2024-10-03T20:11:36Z")
## Summary Llamarisk supports onboarding USDe, sUSDe, and weETH on the zkSync market. These assets would be onboarded not only to the Aave v3 zkSync market but also to the whole network, as the liquidity for all three tokens is non-existent. Liquidity levels are expected to grow as the market is planned to be incentivized. Further market growth would then be made possible by applying the same aggressive supply cap growth methodology as Aave is currently using to bootstrap and grow other L2 markets (and networks themselves), namely Scroll and Base. This methodology has been evaluated by Llamarisk, as outlined in our recent reports: [1](https://governance.aave.com/t/arfc-increase-community-preference-for-supply-cap-limits/18614/6), [2](https://governance.aave.com/t/arfc-remove-community-preference-for-supply-cap-limits/19009/2). > **Detailed evaluation** > > ### Current state of Ethena > > After growing to $3.6B of TVL, Ethena protocol has declined these past two months. The TVL at the time of writing is now $2.6B, which is rational given current market conditions and associated lower funding rates. In addition to BTC and ETH perpetuals, Ethena introduced SOL as a perpetual futures trading asset and will [introduce](https://cointelegraph.com/news/ethena-new-stablecoin-blackrock-buidl-fund) an RWA asset (UStb collateralized by Blackrock’s BUIDL fund) to benefit during periods of weak funding conditions. This will help further diversify the risk and increase scaling opportunities regarding open interest. > > Ethena has also recently introduced an initial phase of governance, onboarding risk providers to govern different risk parameters, such as reserve fund capitalization, liquid redemption buffer, take rates, collateral allocation between different CEX, etc. LlamaRisk is also part of this risk council and has covered different pain points of the protocol in a dedicated Ethena [research](https://www.llamarisk.com/research/asset-risk-usde-addendum1). > > Given this consolidation of the project and the necessity to first introduce liquidity to the network, we believe USDe and sUSDe should be onboarded with the same set-up as in other Aave markets, only with a lower TVL as an initial measure until liquidity is bootstrapped and reaches adequate levels. > > ### weETH Considerations > > Presently, weETH liquidity on the zkSync network is notably scarce. However, a similar LST asset, wstETH, has already been onboarded to the market with conservative initial caps. > > ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/7/76e3b3fc6057c0a6de7d2c1bc65c01b351b1cb20.png) > ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/a/a01c32e423deb4a9ba265eee6a7a5b03cf32e731.png) > ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/0/0e9e34d080c6d858af68fad965ce97c565d53aaf.png) > Current market parameters for wstETH on Aave v3 zkSync. Source: [Aave](https://app.aave.com/reserve-overview/?underlyingAsset=0x703b52f2b28febcb60e1372858af5b18849fe867&marketName=proto_zksync_v3), 30th of September, 2024 > > Similar borrow/supply caps and Mainnet market parameters could be used for weETH as an initial set-up. ## Aave V3 Specific Parameters The parameters were coordinated with @chaoslabs and are the following: | Parameter | weETH | USDe | sUSDe | | --- | --- | --- | --- | | Isolation Mode | No | Yes | Yes | | Emode | ETH Correlated | No | No | | Borrowable | Yes | Yes | No | | Borrowable in Isolation | No | No | No | | Collateral Enabled | Yes | Yes | Yes | | Stable Borrowing | No | No | No | | Supply Cap | 300 | 500,000 | 400,000 | | Borrow Cap | 150 | 50,000 | n/a | | Debt Ceiling | N/A | 500,000 | 400,000 | | LTV | 72.5% | 65% | 65% | | LT | 75% | 75% | 75% | | Liquidation Bonus | 7.5% | 8.5% | 8.5% | | Liquidation Protocol Fee | 10% | 10% | 10% | | Reserve Factor | 45% | 25% | 20% | | Base Variable Borrow Rate | 0% | 0% | n/a | | Variable Slope 1 | 7% | 9% | n/a | | Variable Slope 2 | 300% | 75% | n/a | | Uoptimal | 30% | 80% | n/a | A 10% buffer between LT and LTV has been applied for USDe and sUSDe to further reduce risks during this bootstrapping phase. **Note** : This assessment follows the LLR-Aave Framework, a comprehensive methodology for asset onboarding and parameterization in Aave V3. This framework is continuously updated and [available here](https://github.com/llama-risk/aave-research/blob/main/frameworks/aave_v3_framework.md). ## Price feeds Price feeds for all these assets on the zkSync network have been created and are made available by Chainlink: 1. [USDe / USD](https://data.chain.link/feeds/zksync/zksync/usde-usd) Market Rate feed: `0x4899faF0b6c36620168D00e3DbD4CB9361244c4d` 2. [sUSDe / USDe](https://data.chain.link/feeds/zksync/zksync/susde-usde-exchange-rate) Exchange Rate feed: `0x97920183c36B022B46D6C14b9dA36c5f31A98C6A` 3. [weETH / eETH](https://data.chain.link/feeds/zksync/zksync/weeth-eeth-exchange-rate) Exchange Rate feed: `0x8D3184a992f93729b249407C33F1e78abE0d650e` ### Disclaimer This review was independently prepared by LlamaRisk, a community-led non-profit decentralized organization funded partly by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work. The information provided should not be construed as legal, financial, tax, or professional advice. ---
**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:** [October 3, 2024, 10:20pm UTC](https://governance.aave.com/t/arfc-onboard-susde-usde-and-weeth-to-aave-v3-on-zksync/19204/3 "2024-10-03T22:20:46Z")
## **Overview** Chaos Labs supports listing weETH, USDe, and sUSDe on Aave V3’s zkSync deployment. Below are our analyses and initial risk parameter recommendations. ## zkSync Liquidity ### sUSDe/USDe Using the token addresses provided in Ethena’s [documentation](https://ethena-labs.gitbook.io/ethena-labs/solution-design/key-addresses), we find that there have been just 22 transactions involving USDe on zkSync; there has been just one involving sUSDe, both according to [explorer.zksync.io](http://explorer.zksync.io). ![image - 2024-10-04T011229.871](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/3/335aaabc23f122b6940f4721d22a44adbbfd711c.png) _sUSDe_ ![image - 2024-10-04T011232.920](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e62864e537feec696625b7e9aef11d8cf8a0366d.png) _USDe_ However, we note that incentives are planned and thus supply is expected to increase rapidly. We recommend conservative parameters given the state of these assets. ### weETH Using the contract (0xc1…) provided on [Ether.fi](http://Ether.fi)’s [documentation](https://ethena-labs.gitbook.io/ethena-labs/solution-design/key-addresses), we find that weETH has 434 transactions according to zkSync’s explorer, 178 holders, and a total supply of 752 weETH according to Blockscout. ![image - 2024-10-04T011235.791](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/0/08b6a09bb8fc98f4fe15926210eafba2d8acbc8e.png) _weETH_ Its DEX liquidity is concentrated on Maverick, with significantly smaller pools available on SyncSwap. ![image - 2024-10-04T011238.738](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/0/0262c53466e3167e3de74ff9d27d759948387471.png) _Maverick_ ![image - 2024-10-04T011242.269](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/7/731039017f24538792b7f76b3a8c6688fb7304ea.png) _weETH_ ## Usage on Aave ### weETH weETH has become one of the largest assets on Aave; its primary use case is as collateral in leveraged yield farming strategies by borrowing WETH. ![image - 2024-10-04T011434.320](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/0/0cd230fbc8e4e19b4324012b6786d12ffa4f0a47.png) ### USDe USDe’s utilization has been inconsistent, though in the last month supply has grown significantly. ![image - 2024-10-04T011444.389](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/0/0e509964d60c82954812e6a7571d1ce59ab62c53.png) The asset is primarily used as collateral against USDT and USDC, while the plurality of its borrows are against weETH. ![image - 2024-10-04T011448.975](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/9/95ef373faf2f7676197f27376f7a393dc40c652b.png) ### sUSDe Utilization of sUSDe has also been inconsistent, with a sharp drop in supply in September; just $730K of its $40M debt ceiling is being used. ![image - 2024-10-04T011452.211](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/9/9af99dd945de384d92e658f71bd9c9b19ddcedb5.png) Borrows are evenly split between USDT and USDC, with DAI in a distant third. ![image - 2024-10-04T011455.666](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/d/d28776a27fda394900286ac46f094908fd4a9dc5.png) ## **LTV, Liquidation Threshold, and Liquidation Bonus** We recommend aligning weETH’s parameters with those on other deployments. For USDe and sUSDe, we recommend matching the LT on other deployments (75%) while setting the LTV lower (65%) to reduce the chance of liquidations in the early stages after listing. LTV can be raised after DEX liquidity improves. ## **Supply and Borrow Caps** Following Chaos Labs’ approach to initial supply caps, we propose setting the Supply Cap at 2x the liquidity available under the Liquidity Bonus price impact. However, this would set the initial supply cap above the current on-chain supply. As such, we recommend setting the cap to 50% of on-chain supply and anticipate that this new market will induce demand for the asset on zkSync. We are prepared to facilitate supply cap increases in this market to ensure that it grows safely. We recommend setting the borrow cap at roughly 50% of the supply cap, as we have observed some demand for borrowing weETH. For USDe and sUSDe, we align with Llama Risk’s proposed caps, finding that they are low enough to limit risk to the protocol. Additionally, we recommend not allowing sUSDe borrowing, as on Ethereum. ## Isolation Mode We recommend listing USDe and sUSDe in isolation mode, as on Ethereum, with debt ceilings set equivalent to the supply caps, as the primary function of isolation mode in this case is to ensure that volatile assets are not borrowed against USDe and sUSDe. ## Interest Rate Curve We recommend aligning the IR curve with the settings on other deployments. ## E-mode We recommend listing weETH in the ETH-correlated E-Mode category ## Pricing We recommend aligning the pricing strategy for all assets with existing listings. ## Recommendations Following the above analysis, we recommend the following parameters on zkSync. | **Parameter** | weETH | USDe | sUSDe | | --- | --- | --- | --- | | Isolation Mode | No | Yes | Yes | | Borrowable | Yes | Yes | No | | Collateral Enabled | Yes | Yes | Yes | | Supply Cap | 300 | 500,000 | 400,000 | | Borrow Cap | 150 | 50,000 | - | | Debt Ceiling | - | $500,000 | $400,000 | | LTV | 72.5% | 65% | 65% | | LT | 75% | 75% | 75% | | Liquidation Bonus | 7.5% | 8.5% | 8.5% | | Liquidation Protocol Fee | 10% | 10% | 10% | | Variable Base | 0% | 0% | - | | Variable Slope1 | 7% | 9% | - | | Variable Slope2 | 300% | 75% | - | | Uoptimal | 30% | 80% | - | | Reserve Factor | 45% | 25% | 20% | | Stable Borrowing | Disabled | Disabled | Disabled | | Flashloanable | Yes | Yes | Yes | | Siloed Borrowing | Disabled | Disabled | Disabled | | Borrowable in Isolation | No | No | No | | E-Mode Category | ETH-correlated | - | - | ---
**Author:** ![ACI](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/aci/32/4780_2.png) [@ACI](https://governance.aave.com/u/ACI)\ **Post date:** [October 4, 2024, 10:52am UTC](https://governance.aave.com/t/arfc-onboard-susde-usde-and-weeth-to-aave-v3-on-zksync/19204/4 "2024-10-04T10:52:34Z")
The current proposal has been escalated to [ARFC Snapshot](https://snapshot.org/#/aave.eth/proposal/0x6709151a1efa71370a6a0f9a7592d983ed401ac0311cce861fba347081384520), after including latest Risk Parameters provided by Risk Service Providers. Vote will start tomorrow, we encourage everyone to participate. ---
**Author:** ![ACI](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/aci/32/4780_2.png) [@ACI](https://governance.aave.com/u/ACI)\ **Post date:** [October 9, 2024, 5:53am UTC](https://governance.aave.com/t/arfc-onboard-susde-usde-and-weeth-to-aave-v3-on-zksync/19204/5 "2024-10-09T05:53:15Z")
After Snapshot monitoring, the current [ARFC Snapshot](https://snapshot.org/#/aave.eth/proposal/0x6709151a1efa71370a6a0f9a7592d983ed401ac0311cce861fba347081384520) has recently ended, reaching both Quorum and YAE as winning option, with 773K votes. Therefore the ARFC has passed. Next step will be the publication of an AIP for final confirmation. ---
**Author:** ![system](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e11637c36f45ffa158f2146f5c19438d46e0824d.svg) [@system](https://governance.aave.com/u/system)\ **Post date:** [November 8, 2024, 5:54am UTC](https://governance.aave.com/t/arfc-onboard-susde-usde-and-weeth-to-aave-v3-on-zksync/19204/6 "2024-11-08T05:54:06Z")
Closed on November 8, 2024, 5:54am UTC This topic was automatically closed 30 days after the last reply. New replies are no longer allowed. ---
**Author:** ![ACI](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/aci/32/4780_2.png) [@ACI](https://governance.aave.com/u/ACI)\ **Post date:** [November 20, 2024, 10:34am UTC](https://governance.aave.com/t/arfc-onboard-susde-usde-and-weeth-to-aave-v3-on-zksync/19204/7 "2024-11-20T10:34:04Z")
Opened on November 20, 2024, 10:34am UTC ---
**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:** [January 14, 2025, 10:22pm UTC](https://governance.aave.com/t/arfc-onboard-susde-usde-and-weeth-to-aave-v3-on-zksync/19204/8 "2025-01-14T22:22:16Z")
As an update to the aforementioned specification, we recommend leveraging the composability of Liquid E-Modes to create a weETH-WETH E-Mode instead of setting in the previously suggested ETH-correlated E-Mode. Additionally, we propose setting weETH as non-borrowable, given the limited practical use cases for borrowing this asset, coupled with removing USDe from the specification. ## Updated Specification Following the above analysis, we recommend the following parameters on ZkSync. | **Parameter** | weETH | sUSDe | | --- | --- | --- | | Isolation Mode | No | Yes | | Borrowable | No | No | | Collateral Enabled | Yes | Yes | | Supply Cap | 300 | 400,000 | | Borrow Cap | - | - | | Debt Ceiling | - | $400,000 | | LTV | 72.5% | 65% | | LT | 75% | 75% | | Liquidation Bonus | 7.5% | 8.5% | | Liquidation Protocol Fee | 10% | 10% | | Variable Base | 0% | - | | Variable Slope1 | 7% | - | | Variable Slope2 | 300% | - | | Uoptimal | 30% | - | | Reserve Factor | 45% | 20% | | Stable Borrowing | Disabled | Disabled | | Flashloanable | Yes | Yes | | Siloed Borrowing | Disabled | Disabled | | Borrowable in Isolation | No | No | | E-Mode Category | weETH-WETH | - | **weETH-WETH E-Mode** | **Parameter** | Value | **Value** | | --- | --- | --- | | Asset | weETH | WETH | | Collateral | Yes | No | | Borrowable | No | Yes | | Max LTV | 90% | - | | Liquidation Threshold | 93% | - | | Liquidation Bonus | 1% | - | # **Disclaimer** Chaos Labs has not been compensated by any third party for publishing this recommendation. # **Copyright** Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain)