[Temp Check] Add Support for cbETH for Aave V3

Voting ended about 3 years agoSucceeded

Title: [ARC] Add Support for cbETH Author: @Fig Lead Governance Contributor at Flipside Crypto, with additional support from @AndrewA, a Protocol Specialist at Coinbase Created: 10/27/2022

This Snapshot vote is a temp check to add support for Coinbase Wrapped Staked ETH (cbETH) to Aave v3 on Ethereum mainnet, once live.

v3 offers unique features such as isolation mode, capped supply & borrowing, and e-mode which affords the community more optionality.

If passed, and once v3 is live on Ethereum, this will trigger a formal risk review by Gauntlet and Chaos Labs. Parameters will be set leading up to an AIP based on the findings of the risk managers.

Summary

This is a proposal to add Coinbase Wrapped Staked ETH (cbETH) to the Aave protocol on Ethereum mainnet. cbETH is an ERC-20 compliant token on Ethereum that represents underlying staked ETH on the Coinbase platform.

Motivation

cbETH is a liquid staking token for ETH created by Coinbase with a goal of facilitating a more competitive liquid-staked ETH landscape.

There is a meaningful amount of demand for borrowing against liquid-staked ETH. Liquid-staked assets (such as cbETH) make for efficient collateral with underlying margins typically improving over time.

Specifications

What is the link between the author of the AIP and the Asset?

@Fig is a Governance Contributor at Flipside Crypto, a leading delegate on Maker, Aave, Optimism, and Hop. Additional support provided by @AndrewA, who is employed by Coinbase. Andrew and Fig also help review grants as part of the Aave Grants DAO. 2. Provide a brief high-level overview of the project and the token

Coinbase is supporting liquid staking for its ETH stakers with Coinbase Wrapped Staked ETH (cbETH), where the staked asset is Ether (ETH), and the staking provider and token issuer is Coinbase. With cbETH, Coinbase aims to contribute to the broader crypto ecosystem by supporting high-utility wrapped tokens and open sourcing smart contracts. cbETH follows the cToken model, which allows it to be ERC-20 compliant and easier to integrate with DeFi more broadly. cbETH can be unwrapped for staked ETH plus accrued rewards net of Coinbase staking fees and any network-imposed penalties. Rewards and penalties affecting Coinbase staked ETH change the conversion rate between cbETH and underlying staked ETH.

Explain positioning of the token in the AAVE ecosystem. Why would it be a good borrow or collateral asset?

With maturing volumes, integration of cbETH would allow those that have staked their ETH with Coinbase to borrow against their locked positions while continuing to earn rewards on the underlying staked ETH. The introduction of cbETH into the Aave ecosystem could bring a new wave of retail users who learn about Aave through Coinbase and holding the cbETH token. Many of these new customers may become regular users of the Aave protocol.

Provide a brief history of the project and the different components: DAO, is it live? Products, are they live? How did it overcome some of the challenges it faced?

Coinbase, Inc. (Parent company NASDAQ: COIN) is a prominent cryptocurrency trading platform in the United States. As of 6/30/2022, the company and its global affiliates had 103M+ verified users, $96B assets on platform, and offered services in 100+ countries [source 1]. Coinbase is allowing customers who stake ETH to wrap it for an ERC20 utility token called Coinbase Wrapped Staked ETH (“cbETH”), which is a liquid representation of their staked-ETH. Coinbase’s mission is to increase economic freedom in the world. In pursuit of this mission, Coinbase builds products to improve access to economic freedom, cbETH being one of these projects. With ETH staked on Ethereum being illiquid and unstaking not being available until post-Shanghai, liquid staking solutions have been a natural development.

How is the asset currently used?

cbETH allows users who have staked with Coinbase to sell or transfer the ownership of their staked ETH. cbETH is currently traded on Uniswap, Curve, and the Coinbase trading platform.

Emission schedule

There is no emissions schedule. Customers who have staked ETH with Coinbase can wrap their staked ETH to obtain the cbETH token.

Token (& Protocol) permissions (minting) and upgradability. Is there a multisig? What can it do? Who are the signers?

Key roles of the contract: 1. oracle - updates the conversion rate for the token. Coinbase controls the oracle's address and updates the ‘exchangeRate’ every 24 hours at 4pm UTC. This update cadence may be changed in the future. 2. master Minter - can assign minters and their limits 3. minter - can mint and burn tokens 4. pauser - can pause all transfers, mints, and burns for the contract 5. blacklister - can blacklist an address from transferring, minting, and burning 6. owner - can assign all roles except the admin’s 7. admin - can upgrade the contract, and re-assign itself All privileged keys are controlled by Coinbase using best practices

[Please forum for the full proposal - note that this deployment is for v3]