[NIP-37] Update rETH’s oracle and increase rETH’s supply cap (Arbitrum)

Voting ended about 2 years agoSucceeded

Summary

We propose updating Notional’s Arbitrum rETH price feed from the Chainlink rETH/ETH exchange rate oracle to the Chainlink rETH/ETH market price oracle. Additionally we propose increasing the Prime rETH supply cap from 300 Prime rETH to 1,000 Prime rETH.

Proposal

We propose updating rETH’s oracle address from the Chainlink rETH/ETH exchange rate oracle to the Chainlink rETH/ETH market price oracle. Note that this update will also be applied to the rETH/WETH Aura leveraged vault. We think that using the rETH/ETH market price is more appropriate than looking at the rETH/ETH contract exchange rate in a liquidation context as the market price of rETH could be lower or higher than the rETH/ETH exchange rate. By updating the rETH oracle to look at its actual market price vs a static exchange rate the Notional protocol will be able to better respond to potential changes in the rETH/ETH market price. Updating the oracle price for the rETH’s market price will also increase the likelihood of successful liquidations by making the oracle prices more likely to be in line with on-chain prices.

We also propose increasing the Prime rETH supply cap from 300 Prime rETH to 1,000 Prime rETH. This will allow more rETH depositors to supply rETH to the protocol. The Prime rETH supply cap was initially set lower than for other liquid staking derivatives because the rETH oracle was not capturing the asset’s market price. The current Prime rETH supply is currently 223.6 Prime rETH and is at 75% utilization. Increasing the supply cap will make the protocol more usable to end users.

Parameter	Current value	Proposed value
rETH oracle address	0xF3272CAfe65b190e76caAF483db13424a3e23dD2	0xD6aB2298946840262FcC278fF31516D39fF611eF
Prime rETH supply cap	300 Prime rETH	1,000 Prime rETH