Proposal for Listing pufETH on Venus

[puffer]

Summary:

Puffer Finance proposes the addition of pufETH to Venus’ Core Lending Markets on BSC and Ethereum. pufETH is a liquid restaking token that allows users to earn both Ethereum staking rewards and additional returns through restaking on the EigenLayer. With its significant adoption and security measures, pufETH presents an attractive option for enhancing Venus’ market offerings.

Governance Incentives for Compound Voters:

Voters who support the listing of pufETH on Venus will be rewarded with Puffer Points, which will be redeemable for Puffer’s PUFI governance token. This reward incentivizes voter participation and engagement with Puffer Finance’s governance, while also offering long-term benefits for those contributing to the ecosystem’s growth.

Background:

pufETH is the liquid staking token of Puffer Finance, a protocol built on Ethereum that supports restaking through the EigenLayer. By allowing users to participate in Ethereum’s Proof of Stake (PoS) with as little as 1 ETH, Puffer lowers the barrier to entry while also mitigating slashing risks with its Secure-Signer technology. The project has quickly gained traction, amassing over $1.39 billion in TVL within its ecosystem, with an additional $641 million integrated across DeFi platforms such as Pendle, Curve, and others​.

Puffer Finance has also established a $120 million pufETH-wstETH pool on Curve, providing deep liquidity and expanding its DeFi presence. The project has been thoroughly audited by 10 different firms, ensuring strong security measures are in place, further boosting its credibility in the DeFi space.

Benefits for Venus:

Passive Income:

By listing pufETH, Venus users can earn yields from Ethereum staking and restaking rewards simultaneously. This allows for increased capital efficiency and higher returns for both borrowers and lenders on the platform.

Security and Transparency:

Puffer Finance employs robust security measures, including anti-slashing mechanisms and Secure-Signer technology, to protect its stakers and validators. The protocol’s operations are fully transparent, with real-time on-chain data on staking, restaking, and liquidity​.

Diversification and Growth Opportunities:

Adding pufETH allows Venus to diversify beyond traditional assets like USDT and USDC, introducing a liquid asset that can be used in various DeFi applications. Puffer’s DeFi integrations are expanding rapidly, meaning more opportunities for Venus to grow its TVL and volume.

Incentives:

To support pufETH’s listing on Venus, the Puffer Finance Foundation will provide pufETH (ETH) & PUFI (puffer gov. token) over the first few months to incentivize user participation, helping to seed liquidity and borrowing activity​.

Token Contracts:

Ethereum: 0xd9a442856c234a39a81a089c06451ebaa4306a72

BSC: 0x64274835D88F5c0215da8AADd9A5f2D2A2569381

[Xvs_Believer]

Would know , for people who delegated to community wallet and for people supporting it , but had partially on Ethereum chain vault

Otherwise ,this vip I’m very eager to see it online , cause there is real incentive to supply and we kinda have first mover advantage

Let’s go

[DomVSPM]

I don’t see any reason why can’t this proposal pass so just put it on.

[Debbie]

We are all looking for new yield opportunities, so it is a yes from me

[Tomm]

Amazing! I think it time to introduce pufETH on BSC and Ethereum. Venus needs more LRT tokens to enrich our ecosystem.

[Frayst]

Very supportive of this proposal!

[mopgawka]

is a great opportunity for every Venus user, let’s do it.

[chaoslabs]

Overview

Chaos Labs supports listing pufETH on Venus Protocol’s Ethereum deployment as part of the Liquid-Staked ETH pool. Below are our analysis and recommendations for initial risk parameters.

Ethereum Liquidity

The current supply of pufETH on Ethereum is 518,000, with 57K holders and 492K transfers. Its DEX liquidity is primarily paired against wstETH and WETH, with its two most liquid pairs being on Curve.

Currently, holding, supplying, and LPing pufETH is incentivized with points, adding a speculative element to pufETH’s on-chain supply and liquidity.

pufETH Volatility

Relative to ETH, pufETH demonstrated sustained volatility and poor peg stability. We measured a 30-day annualized volatility of 7.15%, compared to 18.4% since March.

Its maximum price drop relative to ETH was 2.47% over the past 180 days.

Collateral Factor, Liquidation Threshold, and Liquidation Bonus

Given the asset volatility and frequent asset discount to its underlying, we recommend setting conservative parameters of 80% CF, 85% LT, and a 2% Liquidation Bonus.

Interest Rate Curve

As pufETH is an interest-bearing asset, we do not expect high borrow demand. Hence, we recommend aligning the Interest Rate to similar assets in the pool and setting the Kink at 45%.

Supply and Borrow Cap

Given the ongoing speculation and lack of withdrawal function, setting the initial supply cap at 2x the liquidity available under the Liquidation Bonus would result in a high recommendation that may become excessive when the points program ends. Thus, we recommend setting an initial supply cap of 3000 pufETH.

Being pufETH an interest-bearing asset and not expecting a high borrow demand, we recommend setting a conservative initial borrow cap of 300 pufETH.

Pricing pufETH

Given pufETH’s lack of an active withdrawal function and the sustained depeg from its underlying, we recommend using a market rate oracle.

Recommendation

Asset	pufETH
Chain	Ethereum
Pool	Liquid-Staked ETH
Collateral Factor	80%
Liquidation Threshold	85%
Liquidation Incentive	2%
Supply Cap	3,000
Borrow Cap	300
Kink	45%
Base	0
Multiplier	4.5%
Jump Multiplier	2.0
Reserve Factor	20%