DIP056 - Add collateral support to rETH on Arbitrum and Optimism

Summary

We propose to extend collateral support to rETH on Arbitrum and Optimism.

Overview

dForce DAO has approved for onboarding Rocket Pool's rETH as a collateral asset on Ethereum through DIP044.

Rocket Pool ETH (rETH) is the Rocket Pool protocol’s liquid staking token. The rETH token represents an amount of ETH that is being staked and earning rewards within Ethereum Proof-of-Stake. As Rocket Pool node operators, stake Ethereum on Proof-of-Stake the resulting rewards increase the value of rETH relative to ETH. Rocket Pool’s liquid staking token allows holders to benefit from the returns of the Ethereum Proof-of-Stake.

rETH performs strong on Arbitrum and Optimism, with a TVL of $17m and $13m, respectively.

Motivation

There is a meaningful amount of demand for borrowing against LSDs (liquid staking derivative), and dForce has already supported Lido Finance’s wstETH on Arbitrum and Optimism (we are now the #3 holder of wstETH on Optimism).

Rocket Pools has expanded its support for rETH on L2s, including Optimism and Arbitrum. We hope to offer dForce users the choice between different LSD assets to facilitate their investment strategies.

Specification

Suggested parameters for rETH on Arbitrum & Optimism:

• Collateral enabled: Yes
• Supply cap: 1,500
• Borrow cap: 1,000
• LTV: 70%
• Borrow factor: 100%
• Reserve factor: 15%
• Close factor: 50%
• Liquidation incentive: 7%