This is a TEMP CHECK to gauge community sentiment for adding borrow/lend support for StakeWise’s new over-collateralized staked ETH token, osETH, on AAVE V3 Ethereum.
Motivation
Liquid staking tokens (LSTs) have proven to be popular collateral assets on Aave, with Lido’s stETH the largest Reserve across all Aave deployments and rETH quickly reaching its supply caps. As productive assets, LSTs are high quality collateral to borrow against. Given their high correlation to ETH, LSTs 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.
osETH in particular is overcollateralized by design, providing in-built slashing protection and consequently an increased level of protection for the Aave protocol…
As StakeWise V3 provides solo stakers to ability to mint osETH against their own nodes, on-boarding osETH will benefit Aave, StakeWise, and the Ethereum ecosystem as a whole, and be an important step in the pursuit to diversify Ethereum staking and encourage staking from home.
The onboarding of osETH will consequently create increased osETH demand and increased revenues for both Aave and StakeWise protocols, whilst also bolstering the liquidity and peg stability of osETH.
The Aave-chan Initiative is not presenting this TEMP CHECK on behalf of any third party and is not compensated by Stakewise for creating this proposal.
Next Steps
If consensus is reached on this [TEMP CHECK], escalate this proposal to the Snapshot stage.
If the Snapshot outcome is YAE, this proposal will be escalated to ARFC stage
Publication of a standard ARFC, collect community & service providers feedback before escalating proposal to ARFC snapshot stage
If the ARFC snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal
As you pointed out osETH is really a game changer with their built in slashing protection, which makes it an ideal staked collateral for the Aave protocol.
With the ability to mint osETH open to anyone, osETH becomes (one of) the most decentralized LSTs around, which indeed benefits the Ethereum ecosystem as a whole. Expanding to more decentralized staked tokens is something that the Aave community should definitely encourage.
I have been staking on Stakewise, and staked in the Aave security module for over 2 years, so it thrills me to see these two protocols and communities finally come together.
Thank you to the ACI for kickstarting this temp check! We are super excited to finally be releasing StakeWise V3 (and osETH) to the public. If you are not familiar with StakeWise V3, I encourage you to read the initial announcement article to get a solid overview of the innovations that the V3 upgrade brings to the ETH staking space. osETH is not just ‘another liquid staking token’…
Solo/home stakers will be able to access DeFi for the first time by minting osETH against their own nodes. Liquid staking will no longer sacrifice the decentralization of the network, and key integrations like Aave will ensure that solo stakers have tier 1 DeFi protocols to utilize their staked capital.
It’s not just solo stakers who will benefit… rehypothecation of staked ETH is a common theme amongst the clients of leading commercial operators. These institutional/large clients are looking to test the waters of DeFi, with StakeWise V3 and osETH allowing them to do so in a regulatory secure manner.
Aave itself will consequently benefit from onboarding osETH as it opens up the Aave protocol to large new target markets. osETH will also contribute to increasing the diversity of staked assets onboarded to the protocol.
