Summary
LlamaRisk supports the proposed addition of WETH to the wrsETH/wstETH E-Mode on Base. This reconfiguration of the E-Mode poses minimal incremental risk and provides greater flexibility for users seeking ETH liquidity against the restaking token.
Rationale
Including WETH in the wrsETH/wstETH E-Mode expands the utility of wrsETH by unlocking access to ETH liquidity. Currently, borrowing wstETH is the dominant use case, driven primarily by two wallets (Wallet 1, Wallet 2) accounting for the majority of debt against rsETH (likely utilized for profiting from the LST/LRT yield spread). wrsETH, which is backed by ETHx, stETH, and ETH staked on mainnet, currently has a supply rate of ~49% on the Base instance ($18.41M supplied of a $37.36M supply cap).
WETH’s borrow cap utilization at the time of writing stands at 75%, approximately $98M in available borrowable assets. The E-mode could attract further borrowing against ETH, generating further protocol yields given the high capital efficiency enabled by the ETH-correlated E-mode.
Source: wrsETH/WETH Swap Liquidity, DeFiLlama, November 21st, 2025
Approximately 315 wrsETH (~$898K) can be swapped for WETH within a 1% price impact. DEX liquidity is concentrated in an Aerodome wstETH/wrsETH pool, with a $1.4M TVL.
It should be noted that the 2 wallets with the highest debt positions against wstETH currently have low health factors of 1.02 ($10.55M, supplied/$9.78M borrowed) and 1.03 ($7.86M supplied/$7.23M borrowed), according to Debank data. In the event of significant volatility or price de-pegging, the current liquidity depth may impact the profitability of liquidations, potentially reducing the incentives for liquidators to participate.
Risk Considerations
We support the proposed parameters, as they align with the existing wrsETH/WETH E-Mode configuration seen on other instances, including Plasma and Arbitrum.
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.