Summary
This publication presents the community an opportunity to expand rETH (Rocket Pool staked ETH) integration on the AAVE platform by adding rETH collateral option to the Base instance.
rETH is a trusted ETH LST which is already integrated into many Aave markets such as, ETH Core, Arbitrum, and Optimism. Further integration will facilitate further expansion for the rETH token and unlock it as collateral for Base L2 users.
Motivation
*Rocket Pool ETH has significant TVL at $2 billion. Multiple ETH LST collateral options lowers market protocol risk by diversifying LST provider risk.
-The Base Market is growing in TVL, the addition of collateral options already found on other Aave instances will increase Base Market growth.
-There is deep liquidity on Base chain for the rETH token already. Price impact of just 0.35% for $1m ETH/rETH trades using jumper.exchange on Base. This is routed through LI.FI
-Aerodrome (Base DEX) has only ~$150k in TVL in WETH/rETH concentrated liquidity. This results in significant price impact at most position sizes.
-Uniswap can handle up to $25k swaps from ETH/rETH without too much price impact.
Base has seen expansion in its TVL now surpassing Arbitrum by ~15%. Base chain is a small but significant part of total Defi TVL (all chains) of 3%.
Source: https://defillama.com/chains
Specification
Ticker: rETH
rETH L2 (Base) contract address: [0xB6fe221Fe9EeF5aBa221c348bA20A1Bf5e73624c]
https://basescan.org/address/0xB6fe221Fe9EeF5aBa221c348bA20A1Bf5e73624c
Initially proposed risk parameters will be the same as rETH on Arbitrum
Nevertheless, a potential ARFC will be updated based on Risk Service Providers parameters and feedback.