What are you voting for?

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

wstETH Credit Line

Basics

Name: Lido Wrapped Staked ETH

Ticker: $wstETH

Contract Address: 0x7f39c581f595b53c5cb19bd0b3f8da6c935e2ca0

Description: wstETH is Lido’s wrapped and staked liquid staking derivative for $ETH.

Absolute Parameters

Oracle: A custom oracle using Chainlink SETH/ETH price feed.

Liquidation: Silo’s liquidation engine can liquidate via the stETH/ETH Curve Pool and other pools.

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

$wstETH is an indexed version of $stETH and as such can be unwrapped to redeem its underlying $stETH. On Silo, liquidations are hard-coded to route through the stETH/ETH Curve Pool which has ~$1.3b worth of liquidity.

Simulating sales on Curve indicate that sales of 200,000 stETH (~$330m USD) would only incur around 1.4% slippage.

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

Recommendation

The wstETH silo has minimal activity with a modest credit line of ~50k $XAI currently extended of which 22% is currently utilized. Given the success of the cbETH silo in attracting borrowing activity, we believe that by expanding credit lines to the wstETH silo we can generate similar interest in the market. We believe that the $ETH liquid staking derivative narrative is extremely powerful in the near-term and will continue to strengthen over time. Given our protocol’s ability to maintain isolated lending markets, a credit line to $wstETH allows us to further Silo’s growth strategy.

$wstETH on-chain liquidity is extremely high and well in excess of our own Protocol-Wide Parameters. As such, we recommend expanding $XAI credit lines to the wstETH silo to 500k $XAI which will allow us to assess utilization with deeper lend-side liquidity.

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