Author

Chaos Labs

Overview

Chaos Labs supports listing tETH on Gearbox. Below is our analysis and recommendation for initial risk parameters.

tETH

Treehouse is a DeFi protocol that provides LSTs (called “tAssets”) and Decentralized Offered Rates (DOR), a primitive designed to create fixed-income products. The DOR is a reference rate-setting consensus mechanism, which Operators (of which Treehouse is the first) initiate and maintain. Panelists (currently subject to a whitelist) use Treehouse’s DOR software to provide interest rate data and forecasts; Delegators delegate tAssets to panelists. DOR feeds can be integrated by Referencers.

tETH is intended to generate yield in excess of native staking rewards by using interest rate arbitrage. In Version 1.0, tETH generates yield using leveraged staking, essentially arbitraging the difference between the staking rate and WETH borrow rate on borrow/lend protocols. The strategy utilizes the usual strategy: 1) stake LST; 2) borrow WETH; 3) stake borrowed WETH; 4) repeat n times, where n is dictated by LTV set by the external protocol or a lower value selected by Treehouse to maintain a buffer. In the *n-*th repetition, the LST is retained to maintain liquidity. As described in the whitepaper, a primary risk of this strategy is over-utilization of WETH, which can lead to borrow rates exceeding staking rates. However, as noted, historically, these are transitory events on Ethereum, the longest of which they studied was 2 days. During this event, tETH’s safety mechanism would have been activated, causing the strategy vault to repay part of its debt.

Technical specification

Price oracle

• tETH (0xd11c452fc99cf405034ee446803b6f6c1f6d5ed8)
  • Main: ERC4626 oracle of 0xd11c452fc99cf405034ee446803b6f6c1f6d5ed8 vault, using existing "Main wstETH" (0x3cC17FF3CA71Ebf43bF108336cC9158995f0c51B) as underlying
  • Reserve: Redstone wstETH/USD (https://app.redstone.finance/app/token/wstETH/)

Compatibility (Zero price feed):

• Balancer V2 wstETH/tETH (0x1d13531bf6344c102280ce4c458781fbf14dad140000000000000000000006df)
• Curve stable ng tETH/wstETH (0xa10d15538e09479186b4d3278ba5c979110dddb1)
• Curve stable ng tETH/weETH (0x394a1e1b934cb4f4a0dc17bdd592ec078741542f)

Trade WETH v3 pool quota parameters:

• Add tETH as quoted token with the following parameters:
  • Quota limit: 2,000
  • minRate: 0.05%
  • maxRate: 20%

Compatibility (quotaLimit:0; minRare: 0.01%; maxRate: 0.01%):

• Balancer V2 wstETH/tETH (0x1d13531bf6344c102280ce4c458781fbf14dad140000000000000000000006df)
• Curve stable ng tETH/wstETH (0xa10d15538e09479186b4d3278ba5c979110dddb1)
• Curve stable ng tETH/weETH (0x394a1e1b934cb4f4a0dc17bdd592ec078741542f)

Restaking WETH CM collateral token parameters:

• Add tETH as collateral token with the following parameters:
  • LT: 85%

Compatibility (LT: 0%):

• Balancer V2 wstETH/tETH (0x1d13531bf6344c102280ce4c458781fbf14dad140000000000000000000006df)
• Curve stable ng tETH/wstETH (0xa10d15538e09479186b4d3278ba5c979110dddb1)
• Curve stable ng tETH/weETH (0x394a1e1b934cb4f4a0dc17bdd592ec078741542f)

Adapter list: - Balancer V2 wstETH/tETH (0x1d13531bf6344c102280ce4c458781fbf14dad140000000000000000000006df) - Curve stable ng tETH/wstETH (0xa10d15538e09479186b4d3278ba5c979110dddb1) - Curve stable ng tETH/weETH (0x394a1e1b934cb4f4a0dc17bdd592ec078741542f)

Transaction log

Txn log can be found here Md5 checksum is ecd3a152a631641e1916a119a10928a6