[TEMP CHECK] Onboard LsETH to Aave V3 Core Instance
Author: ACI
Date: 2025-08-06
Summary
This is a TEMP CHECK to gauge community sentiment for onboarding Liquid Collective’s LsETH on Aave V3 Core.
Motivation
LsETH is an Ether liquid staking token. It’s unique in that it meets the security and compliance standards needed to serve both individual and institutional participants, and LsETH has recently gained traction with the Ethereum Treasury Company market.
Over the past two months TVL has rapidly increased as the Crypto Treasury Company sector has gained traction, with TVL currently sitting around $1.3bn. We believe this sector will continue to see growth and present a set of new users to introduce to Aave.
Chain to be deployed/listed
Aave v3 Core instance on Ethereum mainnet.
Proof of Liquidity and Deposit Commitments
$200m of LsETH deposits are committed in the first 3 months after onboarding.
0.25-1% of token is committed to Aave incentives post-TGE.
We are generally supportive of introducing additional liquid staking tokens like LsETH to Aave V3, as they can enhance capital efficiency and attract new users.
That said, we are particularly interested in reviewing the risk assessment by the Risk Service Providers, especially regarding the on-chain liquidity profile and potential concentration risks associated with LsETH. We look forward to engaging further during the ARFC stage.
Onboarding Liquid Collective’s ETH Liquid Staking Token (LST) on Aave provides institutional borrowers with a new, high-quality collateral option to borrow stablecoins and, when rates permit, WETH for leveraged staking strategies.
With over $200 million in committed deposits and a $1.3 billion market cap, this integration is estimated to generate $109,000-160,000 monthly in protocol revenue within the first quarter, with future revenue growth expected. Alongside this, onboarding LsETH will strengthen Aave’s position in the growing Digital Asset Treasury sector.
ACI supports this onboarding and will be voting FOR at TEMP CHECK.
Planned expansion in the Digital Asset Treasury market
Use-cases of Aave onboarding
Collateral for borrowing stablecoins, and WETH when rates allow. This LST is aimed towards institutional users who have expressed demand for stablecoin borrow in particular. If WETH borrow rates reduce, LsETH may also be attractive for borrowing WETH against for the leveraged yield trade.
Yield mechanism
Staking yield
Previous adverse events
None
Borrow assets
Stablecoins: USDT, USDC, GHO
Commercial information
Attribute
Answer
Current marketcap
$1.3bn
Committed Aave deposits
$200m
Expected Aave deposits
>$200m
Expected monthly revenue
Assuming 1.5 health factor on $200m deposits with borrow composition of 45% USDT, 45% USDC, 10% GHO monthly revenue would be $109-160k.
Aave incentives budget
Once TGE occurs, 0.25-1% of token supply is earmarked for Aave incentives.
I am supportive of this TEMP CHECK.
LsETH seems to be a good asset from an economical and growth perspective to the DAO but also gives Aave user another LST asset they can choose from, expanding the selection we already offer.
Secondly I would like to thank @ACI for this perfect business and growth analysis.
This is really helpful to make a proper decision already at TEMP CHECK stage and should help other delegates as well on deciding if it makes sense to proceed with a TEMP CHECK at all.