shortDescription: Add LDO to Ethereum Aave v3 deployment as collateral, with borrowing enabled. author: Token Logic via Llama dated: 2023-03-26

Summary

This ARFC presents the community with the opportunity to add LDO to the Ethereum V3 Liquidity Pool.

Abstract

LDO would be the first Ethereum liquid staking protocol governance token to be listed on Aave. Aave would benefit from being the first major lending market to list LDO. Users will be able to express various trading views on LDO’s price outlook in the lead up to Shanghai.

The risk parameters have been provided by Gauntlet and Chaos Labs, with this post using the parameters agreed between the two service providers.

Motivation

Lido is a suite of software protocols that facilitates liquid staking across multiple blockchains. The Lido DAO is a decentralised autonomous organisation. The LDO token is used to vote on the use of the DAO treasury associated with the protocols, research and development, and incentive programs.

The Lido DAO is an Aragon organization. The LDO token was created using an Aragon Minime contract. Since Aragon provides a full end-to-end framework to build DAOs, Lido DAO uses its standard tools.

LDO Token Ethereum Address: 0x5a98fcbea516cf06857215779fd812ca3bef1b32

LDO is a Top 50 token by market cap, currently ranked 36th by Coingecko. Lido Protocol is the largest minter of liquid staked ETH tokens with 4,917,554 ETH staked.

Making LDO available on Aave v3 would make Aave V3 the first major lending market to do so and would benefit from the first mover advantage.

Currently, stETH is listed on Aave v2 and wstETH is listed on the Aave v3 Ethereum liquidity pools. wstETH has also been approved by Aave Governance for being listed on the Optimism, Arbitrum and hopefully the Polygon v3 liquidity pools. Lido DAO would like to also propose to include the Lido governance token, LDO.

Add wstETH on v3 Optimism Add wstETH on v3 Arbitrum Add wstETH on v3 Polygon

Specification

This section presents the risk parameters and interest rates parameters as discussed on the governance forum.

The parameters shown below are a combined recommendation of Gauntlet and Chaos Labs. It can be found here, here.

Parameter	Value
Isolation Mode	Yes
Borrowable	Yes
Collateral Enabled	Yes
Supply Cap (LDO)	6,000,000
Borrow Cap (LDO)	3,000,000
Debt Ceiling	$7,500,000
LTV	40.00%
LT	50.00%
Liquidation Bonus	9.00%
Liquidation Protocol Fee	10.00%
Variable Base	0.00%
Variable Slope1	7.00%
Variable Slope2	300.00%
Uoptimal	45.00%
Reserve Factor	20.00%
Stable Borrowing	Disabled

If an LDO/USD oracle is required for v3, then a Chainlink Synchronicity Price Adapter could be used.

The below details the two relevant Chainlink oracles:

LDO/ETH: 0x4e844125952D32AcdF339BE976c98E22F6F318dB

ETH/USD: 0x5f4eC3Df9cbd43714FE2740f5E3616155c5b8419

Copyright

Copyright and related rights waived via CC0.