[GIP-46] Add cbETH to Allowed List

Abstract

This is proposal to add Coinbase ETH (cbETH) as an AllowedList asset for Credit Account users, for all the current (and soon upcoming FRAX) passive pools.

Motivation

In a couple of months’ time, we will have the ETH Shanghai upgrade which will allow ETH stakers to finally withdraw the ETH they have been locking up since 2020. The amount of ETH to be unlocked is about 16% of the overall supply and a vast majority of these ETH are likely to be deployed back through LSDs (like LIDO, cbETH, rocket pool etc). Moreover, it's possible to expect even more ETH to be staked as the risk of liquidity will gradually start perishing with Shanghai settling down in scared minds.

An LSD or liquid staking derivative is where a staker is able to stake their ETH and in turn receive a “receipt” token like stETH - which then effectively offers to liquidity to their staked position. And with this, they also accumulate the yield generated on staking, which is where Gearbox comes in. Given LSDs are one of the most sustainable sources of yield, the ability to lever them up produces a great opportunity for sustainable high yields potentially over 15% at manageable risk. Further, given the size of the unlock, this also presents to us a chance to grow our own TVL. Thus this proposal aims at adding cbETH based LSD strategies to the Gearbox LLSD cohort alongside the existing stETH strategies.

Coinbase Wrapped Staked ETH (“cbETH”) is a utility token that represents Ethereum 2 (ETH2), which is ETH staked through Coinbase. Coinbase customers can wrap their locked staked ETH to receive cbETH, which is an asset that can be traded, moved on-chain, and used in DeFi and other dapps. cbETH is known as a liquid staking token because it allows holders to get the benefits of staking without lockups or unbonding periods.

cbETH is a standard ERC-20 token designed using the cToken model — a model created by Compound Finance to represent depository assets in their protocol. cbETH maintains a conversion rate that represents the amount of underlying ETH2, and Coinbase will wrap or unwrap at this rate without charging fees.

The liquidity of cbETH on DEXes is much lower than on stETH (~$19M on Uniswap and ~$8M on Curve), however, there is quite deep liquidity on Coinbase. This allows being sure that at the current scale of Gearbox protocol, the liquidators will not face a lack of liquidity. However, it is proposed to put the LT a little less than that of stETH.

Specification

The proposed parameters are:

• add cbETH (0xBe9895146f7AF43049ca1c1AE358B0541Ea49704) as allowed token to DAI, USDC, FRAX, WETH, WBTC and stETH pool's Credit Managers.
• add Curve cbETH/ETH pool contract (0x5fae7e604fc3e24fd43a72867cebac94c65b404a) as an allowed contract.
• set Liquidation Threshold as:

Token	USDC pool (%)	DAI pool (%)	WETH pool (%)	wstETH pool (%)	WBTC pool (%)	FRAX pool (%)
cbETH	80	80	85	85	80	80

Price Feed

Set price feed as ChainLink's oracle for cbETH.

References

1. https://www.coinbase.com/price/coinbase-wrapped-staked-eth
2. Whitepaper - https://www.coinbase.com/cbeth/whitepaper
3. Chailink oracle: https://data.chain.link/ethereum/mainnet/crypto-eth/cbeth-eth
4. Audit: https://blog.openzeppelin.com/coinbase-liquid-staking-token-audit/
5. Twitter - https://twitter.com/coinbase