Overview
Chaos Labs supports listing wstETH on Venus’s ZkSync Core pool. Below we provide our analysis and recommendations.
wstETH
wstETH is one of the most popular collateral assets in DeFi and is already deployed on multiple Venus pools; we recently recommended listing the asset on the Base Core pool.
As discussed in that recommendation, Chaos Labs supports a shift in strategy by listing wstETH in Core pools on Venus’s various deployments. While the protocol may still face difficulties in attracting leveraged yield seekers because of its lower CF and LT relative to other protocols that can use E-Mode, listing in Core will give wstETH depositors access to greater liquidity, including stablecoins.
Market Cap and Liquidity on ZkSync
There are currently 2,504 wstETH on ZkSync, with 1,628 deposited on Aave. The asset’s on-chain DEX liquidity has improved significantly since the start of January, coinciding with the ZK Ignite incentive program.
Supply and Borrow Caps
We recommend setting the supply cap equivalent to 2x the liquidity available at a price impact equivalent to the pool’s Liquidation Penalty. This leads to a recommendation of 350 wstETH. We recommend setting the borrow cap to 10% of this value given the limited demand for borrowing of yield-accruing assets.
Other Parameters
We recommend setting the asset’s collateral parameters more conservatively than on Arbitrum, with a CF of 71% and LT of 76%. This is because the asset’s liquidity is still significantly lower than on other networks and may decrease rapidly at the conclusion of the ZK Ignite program. We recommend aligning all other parameters with those of its existing Arbitrum listing.
Specification
| Parameter | Value |
|---|---|
| Asset | wstETH |
| Chain | ZkSync |
| Pool | Core |
| Collateral Factor | 71.00% |
| Liquidation Threshold | 76.00% |
| Supply Cap | 350 |
| Borrow Cap | 35 |
| Kink | 45% |
| Base | 0.0 |
| Multiplier | 0.09 |
| Jump Multiplier | 3.0 |
| Reserve Factor | 25% |
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this recommendation.
Copyright
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