# \[ARFC\] Reduce Reserve Factor on wstETH

**URL:** <https://governance.aave.com/t/arfc-reduce-reserve-factor-on-wsteth/18044>\
**Category:** Governance\
**Created:** [June 24, 2024, 8:43am UTC](https://governance.aave.com/t/arfc-reduce-reserve-factor-on-wsteth/18044 "2024-06-24T08:43:18Z")\
**Posts on this page:** 5\
**Page:** 1

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**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:** [June 24, 2024, 8:43am UTC](https://governance.aave.com/t/arfc-reduce-reserve-factor-on-wsteth/18044/1 "2024-06-24T08:43:18Z")

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## [ARFC] Reduce Reserve Factor on wstETH

## Author: ACI ( Aave Chan Initiative)

## Date: 2024-06-24

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## **Summary**

For further alignment with the upcoming Lido Alliance proposals, this proposal will reduce the reserve factor for wstETH to 5%.

## **Motivation**

Aave and Lido have historically seen symbiotic growth, with stETH being one of the premier collaterals on Aave and leveraged staking being one of the most profitable use cases for both Aave DAO and Lido users.

As part of the recently passed [TEMP CHECK proposal](https://governance.aave.com/t/temp-check-deploy-a-lido-aave-v3-instance/17930) to create an isolated instance for wstETH borrowers, a number of other parameter changes were proposed to align Lido and Aave.

This proposal implements the agreed reserve factor change for wstETH to 5%.

## **Specification**

On all networks, change wstETH Reserve Factor to 5%.

## Disclaimer

The ACI is not presenting this ARFC on behalf of any third party and is not compensated for creating this ARFC.

## 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 via [CC0](https://creativecommons.org/publicdomain/zero/1.0/).

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<div class="post-metadata">

**Author:** ![TokenLogic](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/tokenlogic/32/8248_2.png) [@TokenLogic](https://governance.aave.com/u/TokenLogic)\
**Post date:** [June 24, 2024, 5:14pm UTC](https://governance.aave.com/t/arfc-reduce-reserve-factor-on-wsteth/18044/2 "2024-06-24T17:14:07Z")

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With the emergence of the alliance between Lido and Aave, we are supportive of reducing the Reserve Factor (RF) across all instances of Aave v3 where wstETH is listed.

By improving the wstETH deposit rate, the wstETH/wETH recursive loop becomes more economical and more generally, using wstETH as collateral also becomes more attractive.

We support this initiative.

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<div class="post-metadata">

**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:** [July 1, 2024, 8:04am UTC](https://governance.aave.com/t/arfc-reduce-reserve-factor-on-wsteth/18044/3 "2024-07-01T08:04:01Z")

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The current proposal has been escalated to [ARFC Snapshot](https://snapshot.org/#/aave.eth/proposal/0x7ef3a8d68fa8a1b69d298aceddfafe9d2a24eefb19365d995c839b1cd1b0b97d).

Vote will start tomorrow, we encourage everyone to participate.

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<div class="post-metadata">

**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:** [July 5, 2024, 8:08am UTC](https://governance.aave.com/t/arfc-reduce-reserve-factor-on-wsteth/18044/4 "2024-07-05T08:08:28Z")

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The current [ARFC Snapshot](https://snapshot.org/#/aave.eth/proposal/0x7ef3a8d68fa8a1b69d298aceddfafe9d2a24eefb19365d995c839b1cd1b0b97d) has just ended, reaching both Quorum and YAE as winning option, with 682K votes.

Therefore the ARFC Snapshot has passed. Next step will be the publication of an AIP for final confirmation and enforcement of the proposal.

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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:** [August 4, 2024, 8:08am UTC](https://governance.aave.com/t/arfc-reduce-reserve-factor-on-wsteth/18044/5 "2024-08-04T08:08:33Z")

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