[TEMP CHECK] Onboard ezETH to Aave V3 Ethereum

Governance New Asset
1

[TEMP CHECK] Onboard ezETH to Aave V3 Ethereum

Author: Renzo Protocol & ACI (Aave Chan Initiative)

Date: 2024-03-28

Summary

This is a TEMP CHECK to gauge community sentiment for adding borrow/lend support for Renzo Protocol and its Liquid Restaking Token (LRT) ezETH on AAVE V3 Ethereum.

Motivation

The motivation for this proposal is to introduce a new asset class LRT (Liquid restaking tokens) to Aave and add to the diversity of LST/ LRT category.

Liquid Restaking tokens (LRTs) have proven to be very popular lately and can be great collateral assets on Aave. As productive assets, staking tokens are high quality collateral to borrow against.

Given their high correlation to ETH, LRTs are commonly used as collateral to borrow ETH and engage in yield leveraged staking, with several communities having built products that automate such strategies on top of Aave. The introduction of eMode only made such strategies more popular.

The onboarding of ezETH will consequently create increased ezETH demand and increased revenues for both Aave and Renzo Protocol, whilst also bolstering the liquidity and peg stability of ezETH.

Chain to be deployed/listed

Ethereum mainnet.

Relevant KPI & Points Rewards

Renzo awards ezPoints and EigenLayer Restaked Points based on users’ ezETH holdings. Every user that deposits ezETH as collateral in Aave will also be awarded ezPoints and EigenLayer points 1:1.

As relevant KPI for the Protocol:

  • Total Value Locked: $1.9 billion

  • Total supply: 526K+ Renzo Restaked ETH

  • 24H trading volume: $80,203,780

Useful Links

Renzo Protocol

Documentation

Github

Audits

Chainlink Data Feed

Composable Stable Pool

Disclaimer

The Aave-chan Initiative is not presenting this TEMP CHECK on behalf of any third party and is not compensated by Renzo Protocol for creating this proposal.

Next Steps

  1. If consensus is reached on this [TEMP CHECK], escalate this proposal to the Snapshot stage.
  2. If the Snapshot outcome is YAE, this proposal will be escalated to ARFC stage
  3. Publication of a standard ARFC, collect community & service providers feedback before escalating proposal to ARFC snapshot stage
  4. 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 under CC0.

5 Likes
2

The current proposal has been escalated to TEMP CHECK Snapshot.

Vote will start tomorrow. We encourage everyone to participate.

1 Like
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The LRT market has a lot of demand at the moment and it’s great to see Aave beginning to support relevant markets.

But we would like to see some caution with selecting which assets will be listed. ezETH is a protocol with $2.3b in TVL and a single audit from Halborn and does not offer native withdrawals, meaning $2.3b worth of ezETH relies on a $72M Balancer pool to facilitate its redemption of ETH.

In comparison, weETH (EtherFi) has 6 audits with native withdrawals.

We will be abstaining from voting in the temp check and if passed, we will wait for bdglabs & chaos labs analysis at the AFRC stage. However, we are inclined to vote no unless conservative caps are imposed.

5 Likes
4

I will vote YES to bring this to the ARFC stage, but I totally agree with @WintermuteGovernance here. We should be cautious with the parameter if this asset is going to be listed on Aave.
I would like to see risk analyzing it and then decide if its worth it to vote YES on ARFC stage again or not and wait a little bit more. ( for example for another audit, more withdrawal alternatives, etc.)

3 Likes
5

I’m still yet to be convinced both the Renzo & kelp “index” pricing models are safe.

As the main use case for this is usage as collateral, I don’t think the risk-reward is there.

That said, I think there’s some added value to pushing this one to ARFC and benefit from the deep feedback of specialized service providers such as Bgd & Chaos.

1 Like
6

Following Snapshot monitoring, the current TEMP CHECK Snapshot recently ended, reaching both Quorum and YAE as winning option, with 491K votes. Therefore TEMP CHECK Snapshot has passed.

Next step will be a publication of an ARFC to continue gathering feedback from community, but specially from Service Providers, in order to move forward.