[TEMP CHECK]: Onboarding swBTC to Aave V3 Ethereum

Title: [TEMP CHECK]: Onboarding swBTC to Aave V3 Ethereum Author: zKilian_Swell Date: 10-09-2024 Summary Swell is seeking community support for adding swBTC 3 to Aave V3 Ethereum. swBTC 2 allows holders to earn native yield from restaking platforms while simultaneously utilizing swBTC across the DeFi ecosystem.

Motivation The aim of this proposal is to give Aave users access to the growing ERC-20 BTC market to improve asset diversity and increase liquidity in the ecosystem. Users seeking exposure to BTC price action and restaking yield will be able to use swBTC on Aave as a collateral asset to borrow WBTC and Stablecoins.

Swell believes that all roads lead back to Ethereum, and we believe that the ERC-20 BTC market will grow rapidly over the coming years. We built swBTC with this in mind, including some keys features:

swBTC is a permissionless restaking product with a clear risk profile for WBTC users It offers liquidity for users who want to stake their WBTC in protocols like Symbiotic, EigenLayer, or Karak without locking up their WBTC. Benefits for Aave users A swBTC integration would be beneficial to Aave in a few ways:

Most of the WBTC in Aave is underutilised, by integrating swBTC, it creates a demand driver for WBTC utilisation and will result in more fees for Aave protocol. Users can earn restaking yield while still holding exposure to WBTC, which is a significant market for Aave Risk mitigation swBTC has been audited by Nethermind and ChainSecurity

Withdrawals are live and can be made at any time. Withdrawing swBTC currently takes 3 days. Enabling arbitrage in the unlikely event of a depeg.

Tokenomics & Governance swBTC is a yield bearing ERC-20 Liquid Restaking Token that offers liquidity for users who want to stake their WBTC in protocols like Symbiotic, EigenLayer, or Karak without locking up their WBTC. As of 10/09/2024, approximately 560.72 WBTC has been deposited into swBTC.

Swell protocol is governed by Swell DAO, the DAO is capable of funding the development and upgrade of the protocol from the DAO token treasury, along with other management activities. Service fees accumulated from Swell are directed towards insurance and development funds, which are distributed by the DAO.

On-chain Metrics As of 10/09/2024 Total Value Locked (TVL): $31 460 000 (560.72 WBTC) Unique swBTC holders: 754 swBTC pools: Curve 2, PancakeSwap You can view additional swBTC stats on Dune 1.

Oracles Swell will deploy Aave’s CSPA adapter that will directly read swBTC pricePerShare() x underlying asset’s Price Feed (WBTC).

Protocols on Ethereum mainnet can directly read from swBTC contract’s pricePerShare x Chainlink’s WBTC-BTC x BTC-USD feed to derive swBTC/USD or swBTC/BTC.

The WBTC-BTC and BTC-USD feeds are very widely used by protocols on mainnet currently.

Important Links Contract Address 1

Architecture 1

Reward distribution mechanism 1

Next Steps 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