Summary
Llamarisk supports the proposal to add WETH to the rsETH LST E-Mode on the Core instance. Given the correlation between the two assets, the available borrow capacity and protocol revenue opportunity, this proposal aligns with established WETH/rsETH E-mode configurations. Minimal incremental risk has been identified; therefore, it would be sensible and beneficial for Aave to implement.
Rationale
The addition of WETH to the liquid restaking token’s LST E-mode would expand its supported assets, representing an established rsETH/WETH E-Mode configuration seen on other instances, including Arbitrum, Linea, and Plasma. rsETH, which is backed by ETHx, stETH, and ETH, currently has a supply cap utilization of ~33.7% on the Core instance (~$494M of a $1.47B supply cap). The E-mode could expand the supply of rsETH by encouraging LPs to deposit and directly engage in LRT/WETH looping, offering them another strategy on Core to generate higher yields.
WETH’s borrow cap utilization at the time of writing stands at 71% (~$2.4B), representing significant underutilized capacity that, with its addition to the rsETH LST E-Mode, would benefit the protocol by increasing revenue from the WETH pool as utilization rises. Particular risk considerations would be akin to those observed in existing rsETH E-modes on other instances.
Source: rsETH/WETH Swap Liquidity, DeFiLlama, November 21st, 2025
Approximately 3088 rsETH (~$8.9M) can be swapped for WETH within a 1% price impact.
Mainnet rsETH liquidity is concentrated in 3 pools, with 2 pools representing the majority of the available supply:
- Uniswap rsETH/wstETH: has a TVL of $9.6M (1,067 rsETH, ~$3.13M), with 4 LPs supplying the pool.
- Fluid rsETH/WETH: has a TVL of $6.1M (1,240 rsETH, ~$3.64M), with 38 LPs supplying the pool (mainly centered around 12 addresses).
- Balancer rsETH/hgETH: has a TVL of $194.4K (30 rsETH, ~$91.34K), with 2 holders accounting for the majority of the liquidity.
E-Mode Parameters
We support the proposed parameters, as they align with the existing rsETH E-Mode parameters on instances highlighted above.
Disclaimer
This review was independently prepared by LlamaRisk, a DeFi risk service provider funded in part 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.