XG177

[TEMP CHECK] Onboard tETH to Aave v3 Prime Instance

Voting ended 11 months agoSucceeded

[TEMP CHECK] Onboard tETH to Aave v3 Prime Instance

Author: ACI ( Aave Chan Initiative)

Date: 2025-03-25

Summary

This proposal aims to onboard tETH to Aave V3 Prime Instance.

ETH is a liquid staking token (LST) from Treehouse that converges the fragmented on-chain ETH interest rates market. Holders of tETH earn real yield in excess of Ethereum’s Proof-of-Stake (PoS) rewards through interest rate arbitrage while still being able to use tETH for DeFi activities. tETH is also foundational to supporting the implementation of Decentralized Offered Rates (DOR).

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 will be updated by Risk Service Providers at ARFC stage, and ARFC will be updated accordingly.

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

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.

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Discussion

[TEMP CHECK] Onboard tETH to Aave v3 Prime Instance

Timeline

Apr 15, 2025Proposal created

Apr 15, 2025Proposal vote started

Apr 18, 2025Proposal vote ended

Feb 12, 2026Proposal updated

Summary

This proposal aims to onboard tETH to Aave V3 Prime Instance.

Motivation

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.

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.