SIP 9: Integrating cbETH Liquidity Market for Sonne Finance on Base Chain

Summary

This proposal, spearheaded by noe1, suggests the integration of $cbETH, a liquid staking token (LST) created and maintained by Coinbase, on Sonne Finance. cbETH represents a wrapped version of Ethereum 2 (ETH2) that has been staked through Coinbase, offering users a secure and convenient way to engage in DeFi activities on the BASE chain without liquidating their ETH holdings. By incorporating cbETH, Sonne Finance aims to boost liquidity, diversify ETH options, and attract new users to its ecosystem.

Token Details

Website: Coinbase cbETH Documentation: cbETH Whitepaper Github: https://github.com/coinbase/wrapped-tokens-os CoinGecko (Ethereum Mainnet): Listing Base cbETH Contract Address Number of Token Holders: 6,635 (as of 10/10/2023) cbETH/USD Chainlink Price Feeds

Purpose

The integration of cbETH on Sonne Finance serves the following purposes: Provide Additional Liquidity: Enhance the liquidity pool on Sonne Finance by adding a new, secure asset. Offer ETH Diversity: Diversify available assets, allowing users to engage with cbETH without liquidating their ETH holdings. Attract New Users to Sonne: Innovations and implementations with cbETH can draw new users to the Sonne Finance ecosystem.

Challenges

Value Fluctuations: Potential fluctuations in the value of cbETH compared to staked ETH (depeg). Late Market Entry: SONNE will be entering the cbETH market later than other lending protocols. Custodial Asset: cbETH is a custodial asset, which may pose concerns for some users.

Security Considerations

cbETH is a representation of securely staked Ethereum 2, backed by the underlying ETH2 tokens held in cold storage. Multiple layers of security are implemented by Coinbase, including monitoring and auditing processes.

Benefits

Convenience and Security: cbETH offers a secure way to access ETH on the BASE chain. DeFi Participation: Users can engage in DeFi activities without selling their ETH, utilizing cbETH. Liquidity Boost: cbETH provides additional liquidity to the Sonne Finance ecosystem.

Proposal

I propose that SONNE FINANCE integrate support for cbETH on the BASE chain. This integration aligns with overall goals of enhancing liquidity, providing asset diversity, and attracting new users. The security measures in place for cbETH make it a reliable and secure addition to the Sonne Finance ecosystem.

Technical Details (subject to change)

Collateral factor 65% Reserve factor 18% Borrow cap 3M Supply cap $10M Interest Rate curve - lower kink and higher multiplier than wETH Incentivisation YES using $SONNE

Voting Options

Yes - Support the addition of cbETH liquidity market No - Do not support the addition of cbETH liquidity market Abstain