[ARFC] Onboard tETH to Aave v3 Prime Instance
Author: ACI ( Aave Chan Initiative)
Date: 2025-04-21
ARFC has been updated 2025-05-05 with latest Risk Parameters provided by Risk Service Providers.
Summary
This proposal aims to onboard tETH to Aave V3 Prime Instance, after successful [TEMP CHECK] Onboard tETH to Aave v3 Prime Instance and ****TEMP CHECK Snapshot.
Motivation
Assets like tETH are designed to unify fragmented interest rate markets and optimize yield generation. Users contribute ETH and receive tETH, redeemable for their initial ETH plus additional yield. This yield comes from a dynamic strategy that balances staking rewards and interest rate arbitrage on lending protocols. For tETH, this ensures baseline yields equivalent to native ETH staking while capturing additional returns from rate inefficiencies. These assets are composable across DeFi, enabling broader usability.
By onboarding tETH to Aave V3 Prime Instance, we can:
- Enhance capital efficiency: Users can borrow against tETH, unlocking liquidity while continuing to earn restaking rewards.
- Increase protocol revenue: More borrowing activity leads to higher interest income for Aave.
- Expand Aave’s influence in restaking finance: Positioning Aave as a central lending hub for LRTs.
Specification
Risk Parameters have been updated by Risk Service Providers and ARFC has been updated accordingly. 2025-05-05
| Parameter | Value |
|---|---|
| Asset | tETH |
| Isolation Mode | N/A |
| Borrowable | No |
| Collateral Enabled | Yes |
| Supply Cap | 20,000 |
| Borrow Cap | - |
| Debt Ceiling | - |
| LTV | 0.05% |
| LT | 0.10% |
| Liquidation Penalty | 7.50% |
| Liquidation Protocol Fee | 10% |
| Variable Base | - |
| Variable Slope1 | - |
| Variable Slope2 | - |
| Uoptimal | - |
| Reserve Factor | - |
| Stable Borrowing | Disabled |
| Flashloanable | Yes |
| Siloed Borrowing | No |
| Borrowable in Isolation | No |
| E-Mode Category | tETH/wstETH |
E-Mode
| Parameter | Value | Value |
|---|---|---|
| Asset | tETH | wstETH |
| Collateral | Yes | No |
| Borrowable | No | Yes |
| Max LTV | 92.00% | - |
| Liquidation Threshold | 94.00% | - |
| Liquidation Bonus | 2.00% | - |
tETH/WETH CAPO
| maxYearlyRatioGrowthPercent | ratioReferenceTime | MINIMUM_SNAPSHOT_DELAY |
|---|---|---|
| 12.04% | monthly | 14 days |
Useful links
https://www.treehouse.finance/
https://docs.treehouse.finance/protocol/teth/introduction
Disclaimer
This proposal is directly powered by ACI (Aave Chan Initiative). ACI did not received compensation for creation of this proposal.
Next Steps
- 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.
Copyright
Copyright and related rights waived via CC0.
Off-Chain Vote
YAE
623.49K AAVE100%
NAY
2.64 AAVE0%
Abstain
0.9 AAVE0%
Timeline
May 05, 2025Proposal created
May 06, 2025Proposal vote started
May 09, 2025Proposal vote ended
Feb 03, 2026Proposal updated