Summary

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[DSLA-IP11] is a proposal to add support for ETH LSD tokens to DSLA Protocol in advance of Ethereum’s Shanghai Upgrade. These tokens include rETH, cbETH, sfrxETH and wstETH.

Abstract

Adding support for various LSD tokens will expand the potential market for the Peg Parity SLA. Ethereum’s Shanghai Upgrade also has the potential to bring volatility for ETH and all LSD tokens, making it a perfect time to present the benefits of Peg Parity SLAs, powered by DSLA.

In addition to allowing for Peg Parity SLA’s for each of these LSD assets, adding protocol support for them would allow them to be used as collateral on any other SLA, such as NFT Floor Price Protection.

Rationale

Peg Parity SLA Support

The Peg Parity SLA use case is live on DSLA, adding support for these LSD assets will broaden the market of assets that can be covered by Peg Parity SLAs.

Additional Collateral

Aside from expanding the potential market for Peg Parity SLAs, supporting theses LSD assets will allow them to be used as collateral in any other DSLA use case, including the recently launched NFT Floor Price Protection use case.

Limitations

Rebasing tokens like Lido’s standard stETH are supported as collateral by DSLA Protocol for technical reasons.

Risks

As LSD assets represent ETH staked in different protocols, there are risks that are inherent that should be noted. The main risk is the risk of devaluation if the underlying protocols suffer an exploit.

Any risk associated with one LSD asset suffering an exploit should be contained and not pose a systemic risk to DSLA, since each SLA is isolated and collateralized independently. A devaluation of one LSD used as collateral would not present a contagion risk to other SLA pools or the protocol as a whole.

Assets

Rocket Pool ETH (rETH)

Ethereum Address: 0xae78736cd615f374d3085123a210448e74fc6393

Holders: 10k

ETH Staked: 411k

Coinbase Wrapped Staked ETH (cbETH)

Ethereum Address: 0xbe9895146f7af43049ca1c1ae358b0541ea49704

Holders: 7K

ETH Staked: 1.1m

Staked Frax ETH (sfrxETH)

Ethereum Address: 0xac3e018457b222d93114458476f3e3416abbe38f

Holders: 1K

ETH Staked: 100k

Wrapped Lido Staked ETH (wstETH) on Arbitrum

Arbitrum Address: 0x5979d7b546e38e414f7e9822514be443a4800529

Holders: 18k

wstETH Bridged to Arbitrum: 24k

Proposal

1. Add support for Rocket Pool ETH (rETH)
2. Add support for Coinbase Wrapped Staked ETH (cbETH)
3. Add support for Staked Frax ETH (sfrxETH)
4. Add support for Wrapped Lido Staked ETH (wstETH)