What you are voting for?

• Extending 500,000 XAI of Credit to the cbETH silo

Proposal

cbETH Credit Line

Basics

Name: Coinbase Wrapped Staked ETH

Ticker: $cbETH

Contract Address: 0xbe9895146f7af43049ca1c1ae358b0541ea49704

Description: cbETH is Coinbase’s liquid staking derivative for ETH. It is an indexed version of Lido’s stETH.

Absolute Parameters

Oracle: Chainlink cbETH/ETH price feed

Liquidation: Silo’s liquidation engine can liquidate cbETH collateral efficiently.

Protocol-Wide Parameters

As discussed in the original Risk Framework, no individual silo will receive a credit line extension exceeding 2,348,150 $XAI (1,643,705 $XAI after application of liquidity buffer).

Silo-Specific Parameters

$cbETH has significant liquidity on Uniswap v3 (~14.5m cbETH/WETH), Curve (~6m cbETH/WETH), and Balancer v2 (~10m wstETH/cbETH).

Simulating sales on Matchaswap indicate that swapping 6,000 $cbETH (~$9.8m USD) to $ETH would only incur around 0.7% slippage.

As such, the binding constraint for a credit line to $cbETH is our Protocol-wide Parameters (i.e. $XAI on-chain liquidity) rather than $cbETH itself.

Recommendation

The cbETH silo is our second highest performing silo with $2.32m in assets supplied and $0.62m in assets borrowed. There is currently a ~280k $XAI credit line extended to the silo with total $XAI utilization at around 56%.

Given that on-chain liquidity of $cbETH is abundant and utilization is high, we recommend the expansion of the current credit line to 500k $XAI. This will allow for increased borrowing activity by bringing utilization rates down and additional revenue to the DAO due to added interest. If utilization rates continue to increase, a future governance proposal may be created to expand credit lines as necessary to meet incoming demand.

We recommend continued assessment of on-chain liquidity of both $cbETH and $XAI to ensure that it remains within a safe range that will allow liquidations to occur as normal.