Nov 22, 2024
This is an archive of our post on Aave governance forum. Read the full thread here.
LlamaRisk supports the onboarding of rsETH as collateral on the Lido instance. rsETH is currently being onboarded on the main Aave V3 instance where it will be part of a rsETH/wstETH/ETHx liquid E-mode. The 19k rsETH supply cap is already maxed out, which indicates strong borrowing demand against rsETH.
On the Aave V3 Lido instance, we believe rsETH could be part of three existing liquid E-modes:
ETH correlated, as collateral only to borrow WETH.
LRT stablecoins main, as collateral only to borrow stablecoins.
LRT wstETH main, as collateral only to borrow wstETH.
rsETH is currently backed by ETH (59.5%), ETHx from Stader (32.5%), and wstETH from Lido (8%). wstETH deposits are capped, currently sitting at 19,682/200k (approximately 10%), giving ample room for growth. When it comes to WETH, there is no limit on deposits. Including rsETH into E-modes containing ETH and wstETH offers both KelpDAO and Aave significant growth opportunities.
Since our last review, KelpDAO has implemented a bug bounty program of $250k on Immunefi. Liquidity has decreased since our previous assessment on July 24th, 2024, with 4,950 rsETH available within 7.5% of the impact price as of November 22nd, 2024. The usual supply cap methodology yields a recommended 10k supply cap and a 1k borrow cap. This liquidity should be able to accommodate liquidations from both the main instance and the Lido instance.
Previous research:
Comprehensive collateral assesment, July 24th, 2024
Aave V3 collateral assesment, July 25th, 2024
Disclaimer
This review was independently prepared by LlamaRisk, a community-led non-profit decentralized organization funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.
The information provided should not be construed as legal, financial, tax, or professional advice.