# \[ARFC\] Onboarding wstETH to Aave V3 on Base Network

**URL:** <https://governance.aave.com/t/arfc-onboarding-wsteth-to-aave-v3-on-base-network/15510>\
**Category:** Governance\
**Created:** [November 13, 2023, 3:05pm UTC](https://governance.aave.com/t/arfc-onboarding-wsteth-to-aave-v3-on-base-network/15510 "2023-11-13T15:05:07Z")\
**Posts on this page:** 7\
**Page:** 1

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**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:** [November 13, 2023, 3:05pm UTC](https://governance.aave.com/t/arfc-onboarding-wsteth-to-aave-v3-on-base-network/15510/1 "2023-11-13T15:05:07Z")

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> Proposal updated following risk service providers feedback

**Title:** [ARFC] Onboarding wstETH to Aave V3 on Base Network

**Author:** @marczeller - Aave Chan Initiative

**Date:** 2023-11-12

* * *

## Summary

This ARFC proposes the addition of wstETH (wrapped staked ETH) From Lido to the Aave V3 Base Network to enrich the diversity of the ecosystem’s liquid staking solutions.

## Motivation

The onboarding of wstETH will give Aave users more options for earning staking rewards on their collateral, reinforcing Aave’s position as a diverse and inclusive DeFi protocol.

## Specification

- **Contract Address:** wstETH - 0xc1CBa3fCea344f92D9239c08C0568f6F2F0ee452

The proposed risk parameters for wstETH are similar to wsETH implementation in other “youngs” Aave L2 markets:

## Aggressive parameters:

| Risk Parameter | Value |
| --- | --- |
| emode | Eth-Correlated |
| Isolation Mode | No |
| Borrowable in Isolation | No |
| Stable Borrow | No |
| Enable Borrow | Yes |
| Enable Collateral | Yes |
| Loan To Value (LTV) | 71% |
| Liquidation Threshold | 76% |
| Liquidation Bonus | 6% |
| Reserve Factor | 15% |
| Liquidation Protocol Fee | 10% |
| Supply Cap | 4000 wstETH |
| Borrow Cap | 400 wstETH |
| Debt Ceiling | N/A |
| uOptimal | 45% |
| Base | 0% |
| Slope1 | 7% |
| Slope2 | 300% |

## Conservative parameters

| Risk Parameter | Value |
| --- | --- |
| Isolation Mode | No |
| Borrowable in Isolation | No |
| Stable Borrow | No |
| Enable Borrow | Yes |
| Enable Collateral | Yes |
| Loan To Value (LTV) | 67% |
| Liquidation Threshold | 74% |
| Liquidation Bonus | 6% |
| Reserve Factor | 15% |
| Liquidation Protocol Fee | 10% |
| Supply Cap | 100 wstETH |
| Borrow Cap | 10 wstETH |
| Debt Ceiling | N/A |
| uOptimal | 45% |
| Base | 0% |
| Slope1 | 7% |
| Slope2 | 300% |

## Next Steps

1. Solicit feedback from the Aave community.
2. If community sentiment is favorable, proceed with the ARFC snapshot.
3. Success in the snapshot leads to the development of an AIP.

## Disclaimer

This proposal is powered by Skywards.

This proposal is independently crafted by the Aave Chan Initiative, with no direct financial incentive from Lido or related entities.

## Copyright

Copyright and related rights waived under [CC0](https://creativecommons.org/publicdomain/zero/1.0/).

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<div class="post-metadata">

**Author:** ![0xkeyrock.eth](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/0xkeyrock.eth/32/6082_2.png) [@0xkeyrock.eth](https://governance.aave.com/u/0xkeyrock.eth)\
**Post date:** [November 13, 2023, 5:15pm UTC](https://governance.aave.com/t/arfc-onboarding-wsteth-to-aave-v3-on-base-network/15510/2 "2023-11-13T17:15:27Z")

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We support this listing.

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**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:** [November 14, 2023, 11:08pm UTC](https://governance.aave.com/t/arfc-onboarding-wsteth-to-aave-v3-on-base-network/15510/3 "2023-11-14T23:08:45Z")

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We support the listing of wstETH on Base, following its launch on the network.  
As liquidity is still building up on the network, we recommend launching with conservative parameters which can be later optimized.  
Given the currently low liquidity levels (~320 wstETH) and leaning on past recommendations for other networks, we recommend the following launch parameters:

| Risk Parameter | Value |
| --- | --- |
| Isolation Mode | No |
| Borrowable in Isolation | No |
| Stable Borrow | No |
| Enable Borrow | Yes |
| Enable Collateral | Yes |
| Loan To Value (LTV) | 71% |
| Liquidation Threshold | 76% |
| Liquidation Bonus | 8% |
| Reserve Factor | 15% |
| Liquidation Protocol Fee | 10% |
| Supply Cap | 100 wstETH |
| Borrow Cap | 10 wstETH |
| Debt Ceiling | N/A |
| uOptimal | 45% |
| Base | 0% |
| Slope1 | 7% |
| Slope2 | 300% |

Chaos Labs will update the recommendations prior to the publication of the AIP to account for up-to-date liquidity.

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**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:** [November 15, 2023, 1:37am UTC](https://governance.aave.com/t/arfc-onboarding-wsteth-to-aave-v3-on-base-network/15510/4 "2023-11-15T01:37:35Z")

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Should the community wish to list wstETH on Base v3, Gauntlet recommends the following parameters.

- We recommend enabling ETH-correlated emode for wstETH.
- Given liqudiity profile of wstETH on Base, we do not recommend higher LT/LTV compared to cbETH.

| Risk Parameter | Value |
| --- | --- |
| Emode | ETH-correlated |
| Isolation Mode | No |
| Borrowable in Isolation | No |
| Stable Borrow | No |
| Enable Borrow | Yes |
| Enable Collateral | Yes |
| Loan To Value (LTV) | 67% |
| Liquidation Threshold | 74% |
| Liquidation Bonus | 6% |
| Reserve Factor | 15% |
| Liquidation Protocol Fee | 10% |
| Supply Cap | 100 wstETH |
| Borrow Cap | 10 wstETH |
| Debt Ceiling | N/A |
| uOptimal | 45% |
| Base | 0% |
| Slope1 | 7% |
| Slope2 | 300% |

---

<div class="post-metadata">

**Author:** ![Deepcryptodive](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/deepcryptodive/32/2740_2.png) [@Deepcryptodive](https://governance.aave.com/u/Deepcryptodive)\
**Post date:** [November 15, 2023, 11:13am UTC](https://governance.aave.com/t/arfc-onboarding-wsteth-to-aave-v3-on-base-network/15510/5 "2023-11-15T11:13:11Z")

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Very much in favor of adding wstETH to Aave on Base.  
In response to @Gauntlet: I generally agree with the analysis except for lowering the LTV compared to what was originally proposed. I don’t see the need to bring this down to 67% from 71%.

If the reason is to not have a higher LT/LTV compared to cbETH - which I agree is a very sensible approach - then there are other options. Specifically, **I’d suggest to increase the LTV of cbETH rather than lower that of wstETH** versus what was suggested in the OP.

Why?

- The liquidity for wstETH is rapidly improving. This trend is expected to continue as more LP rewards are being directed to Base like Aerodrome. User adoption is also expected to pick up due to the inherent advantages of wstETH for the end user compared to cbETH (i.e. higher yield).

Liquidity snapshot as of now:  
 ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e2079bf7e4608fbbc7fa7e1f5874a395e47a8a3c.png)

- Last week, Moonwell (a Compound v3 clone) has supported wstETH with 75% LTV, based on [Gauntlet’s recommendations](https://moonwell.fi/governance/proposal/moonbeam?id=58). _Indicating that a 71% LTV would still be within reason_.

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<div class="post-metadata">

**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:** [November 20, 2023, 7:10am UTC](https://governance.aave.com/t/arfc-onboarding-wsteth-to-aave-v3-on-base-network/15510/6 "2023-11-20T07:10:24Z")

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this proposal has been escalated to the [Snapshot](https://snapshot.org/#/aave.eth/proposal/0x9cf4ba743e0363f77fbbd1bf0d3946b06154abd57cd4bc897c23cdfcdb3bcbeb) stage :

Voting starts tomorrow.

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<div class="post-metadata">

**Author:** ![system](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e11637c36f45ffa158f2146f5c19438d46e0824d.svg) [@system](https://governance.aave.com/u/system)\
**Post date:** [December 20, 2023, 7:11am UTC](https://governance.aave.com/t/arfc-onboarding-wsteth-to-aave-v3-on-base-network/15510/7 "2023-12-20T07:11:07Z")

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Closed on December 20, 2023, 7:11am UTC

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