Date: 2025-5-9
Author: Jonny Huxtable (LinkPool)
Summary
stake.link (https://www.stake.link) proposes adding wstLINK as a collateral asset in Aave’s Ethereum V3 market. wstLINK is a wrapped liquid staking token that enables users to earn LINK staking rewards and additional returns through DeFi strategies for stLINK and wstLINK. Its growing adoption, deep liquidity, and robust security measures make wstLINK a strong candidate to enhance Aave’s asset offerings, increase utilization of existing LINK liquidity and attract additional liquidity.
Background
wstLINK is the wrapped liquid staking token stLINK of stake.link, the only permissionless liquid staking protocol built for LINK staking. By leveraging stake.link users can participate in LINK staking and profit from a higher reward rate as well as composability and faster withdrawals.
Key highlights of wstLINK, stLINK and stake.link include:
- Secure: Audited by industry-leading experts, maintaining the high standards set by Chainlink Labs:
- Decentralized: Powered by 15 major Chainlink Node Operators, handling over 57% of network activity (https://prism.dextrac.com/chainlink)
- Liquid - Instant Withdrawals, No Cooldown:
- Priority Pool: Withdraw instantly as long as there’s LINK (amount can be viewed here) (The Priority Pool is a holding zone that users can deposit their LINK into that automatically stakes their LINK into Chainlink Staking Contracts whenever a LINK Staker withdraws their LINK).
- Native Withdrawals: Withdraw LINK natively within at least 7 days. 25% of the entire LINK pool will be unbonded at any point via stake.link, there’s some edge cases but that’s generally what will be the norm. Withdrawal requests will run in a 7 day queue, if you send a withdrawal request 4 days into the queue it’ll only take 3 days etc.)
- Ecosystem Participant:
- Chainlink Labs as ecosystem participant owning roughly 7.7% of SDL supply
- High Adoption and TVL:
- stake.link holds over $74 million (~4.4m LINK) in total value locked (TVL) within its ecosystem integrated across DeFi platforms like Curve, Beefy, and Uniswap
- stake.link has established approximately $5 million pool of stLINK on Curve.fi with an a-coefficient of 500 enabling liquidations on par or with significant upside for the liquidator
- Another $3 million of liquidity is still to migrate to the new pool
- The new pool features a very innovative incentive by using 3% of the generated fees by the protocol (stLINK) that are distributed as LP tokens ensuring a steady growth of the pool over time with sustainable reward rate.
Benefits for Aave
First-Mover Advantage: Aave would become the first lending protocol to offer LINK LST, securing its position as the leading DeFi platform for yield-generating staking assets.
Yield Opportunities: By listing wstLINK, Aave users can earn LINK staking rewards in addition to traditional borrowing and lending income. This enhances capital efficiency and provides a competitive advantage over other lending platforms
Increase aLINK Utilization: Currently, a significant amount of the LINK tokens on the Aave Core Instance (13 million <> $190m) is currently underutilized (5.61% Utilization) and could be staked via stake.link and wrapped for wstLINK due to the increased yield potential compared to low interest potential. This would entail a considerable benefit to Aave, Aave users and stake.link. At Yield Equilibrium (Borrow APY = Staking APY) the Revenue from Reserve Factor is roughly 11x compared to the Current Situation.
| Current Situation | Yield Equilibrium | Optimal Utilization | |
|---|---|---|---|
| Aave Borrow Reserve | 13,000,000 LINK | 13,000,000 LINK | 13,000,000 LINK |
| Aave Rewards | 42,900 LINK | 559,000 LINK | 910,000 LINK |
| Revenue from Reserve Factor | 8,580 LINK | 111,800 LINK | 182,000 LINK |
| Revenue from Reserve Factor | $137,280 | $1,788,800 | $2,912,000 |
| Assumptions | |||
| Borrow APY | 0.33% | 4.30% | 7% |
| Utilization | 2.10% | 27% | 45% |
| Reserve Factor | 20% | 20% | 20% |
| LINK Price | $16 | $16 | $16 |
Security and Transparency:
stake.link’s advanced security measures and transparent on-chain operations ensure a high level of trust and reliability for borrowers and lenders.
Specification
Risk Parameters and analysis will be provided by Risk Service Providers and ARFC will be updated accordingly.
Token Contracts:
- wstLINK on Ethereum: 0x911D86C72155c33993d594B0Ec7E6206B4C803da
Liquidity Pools:
- Curve stLINK-LINK stablepool: 0x7e13876b92f1a62c599c231f783f682e96b91761
- LINK Priority Pool: 0xddc796a66e8b83d0bccd97df33a6ccfba8fd60ea
Docs:
Next Steps
- If consensus is reached on this TEMP CHECK, escalate this proposal to the Snapshot stage.
- If the Snapshot outcome is YAE, escalate to ARFC stage, requesting ACI’s assistance to write the ARFC.
- 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.
Disclaimer
Current proposal has been created by the Lead Core Contributor of stake.link and the founder and CEO of LinkPool, and is involved in the management of wstLINK. No compensation has been received for this proposal.
Copyright
Copyright and related rights waived under CC0.