# Chaos Labs - Launch Parameters for Liquid Staked ETH Pool on Arbitrum - 06/08/24

**URL:** <https://community.venus.io/t/chaos-labs-launch-parameters-for-liquid-staked-eth-pool-on-arbitrum-06-08-24/4514>\
**Category:** Venus - Governance Proposals\
**Created:** [August 6, 2024, 7:59pm UTC](https://community.venus.io/t/chaos-labs-launch-parameters-for-liquid-staked-eth-pool-on-arbitrum-06-08-24/4514 "2024-08-06T19:59:59Z")\
**Posts on this page:** 2\
**Page:** 1

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**Author:** ![chaoslabs](https://community.venus.io/user_avatar/community.venus.io/chaoslabs/32/2278_2.png) [@chaoslabs](https://community.venus.io/u/chaoslabs)\
**Post date:** [August 6, 2024, 7:59pm UTC](https://community.venus.io/t/chaos-labs-launch-parameters-for-liquid-staked-eth-pool-on-arbitrum-06-08-24/4514/1 "2024-08-06T19:59:59Z")

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# Summary

Chaos Labs has completed a comprehensive analysis to provide informed recommendations for the launch parameters for a new Venus isolated pool on Arbitrum. These initial recommendations aim to ensure a safe and efficient launch and are the basis for future optimization post-launch after observing usage on each pool.

# LST Pool

### Collateral Factor

- We use parameters for all assets aligned with those on other similar deployments.
- We recommend setting WETH’s collateral factor to zero to prevent farming of incentives, ensuring that liquidity can be used for LST/LRT leveraged yield strategies.

### Supply and Borrow Caps

- Derived from on-chain liquidity; specifically, 2x the current amount of liquidity available in a single swap on a DEX aggregator at the point where slippage equals liquidation incentive (2%).
- The borrow cap for weETH and WETH is derived from the supply cap, using the Kink as the optimal point for borrow amounts, and from that, calculating a borrow cap at slightly higher than the Kink.
- wstETH uses a borrow cap set to 10% of the supply cap, given limited historical borrowing demand.

### IR Curves

- WETH’s IR curve is set to allow for profitable leveraged yield strategies at the Kink.
- wstETH and weETH’s IR curves are set to allow borrowing, but are higher than WETH’s to prevent possible manipulation.

### Pricing

- The strong peg stability, as well as anticipated use case, for wstETH and weETH leads us to recommend using a calculated oracle based on their respective exchange rates.

### **Additional Parameters**

- Close Factor: 50%
- Liquidation Incentive: 2%
- minLiquidatableCollateral: 100 USD

## Recommendations

| Asset | WETH | wstETH | weETH |
| --- | --- | --- | --- |
| Collateral Factor | 0% | 93% | 93% |
| Liquidation Threshold | 0% | 95% | 95% |
| Supply Cap | 14,000 | 8,000 | 4,600 |
| Borrow Cap | 12,500 | 800 | 2,300 |
| Kink | 80% | 45% | 45% |
| Base | 0% | 0% | 0% |
| Multiplier | 3.5% | 9% | 9% |
| Jump Multiplier | 80% | 300% | 300% |
| Reserve Factor | 20% | 25% | 25% |

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<div class="post-metadata">

**Author:** ![Tomm](https://community.venus.io/letter_avatar_proxy/v4/letter/t/c0e974/32.png) [@Tomm](https://community.venus.io/u/Tomm)\
**Post date:** [August 7, 2024, 10:05am UTC](https://community.venus.io/t/chaos-labs-launch-parameters-for-liquid-staked-eth-pool-on-arbitrum-06-08-24/4514/2 "2024-08-07T10:05:21Z")

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Good proposal!! We need LST isolated pool on Arbitrum