Lido contributors would like to propose the addition of wstETH to Venus Protocol as a core market on Base.
Motivation:
Lido’s wstETH is the leading LST on Base with 45k wstETH in bridged TVL at time of writing.
By bringing wstETH to Venus on Base, users will be able to take advantage of wstETH as collateral and loop it with either ETH or their LRTs of choice.
Benefits:
Adding wstETH as collateral will give existing wstETH users additional utility via Venus Protocol on Base, helping grow Venus’s deployment and instantly give Venus a community of active users for their platform.
The addition of using a reward bearing collateral asset like wstETH increases capital efficiency and lending use cases for Venus Protocol.
The addition of wstETH enables both Lido and Venus to support each other’s growth on Base.
About Lido Lido.fi is a decentralized liquid staking platform behind stETH & wstETH that allows users to participate in Ethereum staking to earn ETH rewards without sacrificing liquidity.
Website: https://lido.fi/
Twitter: x.com
Discord: Lido
Bringing wstETH to base makes a lot of sense. Looping is one of the core defi strategies for Venus and having wstETH as a collateral asset for the Base launch will provide this strategy + others from day 1.
It is nice to have the opportunity to list the assets of partners offering looping strategies before Venus is deployed on Base, this will expand the usability of Venus Base Market.
It’s amazing to see more projects joining our upcoming deployment on Base, especially platforms where looping strategies can be applied. I believe this offers a great opportunity for all DeFi users. I fully support this proposal—count on my vote. Let’s go for that VIP!
Adding wstETH as a core market on Base is a smart move for Venus Protocol. It expands utility for Lido’s leading liquid staking asset while attracting active users to Venus, enhancing both protocols’ presence on Base. Fully support this initiative.
Chaos Labs supports listing wstETH on Venus’s Base 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. However, the protocol has struggled to retain significant deposits in its Liquid Staked ETH pools, which are aimed at facilitating leveraged yield generation for LSTs and LRTs.
As discussed in a previous 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 users 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 Base
There are currently 61,890 wstETH on Base, representing a market cap of $240M. wstETH’s total DEX liquidity has been somewhat volatile in recent months, though it has remained sufficient to support a listing on Venus.
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 2,600 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 aligning the asset’s collateral parameters with those previously proposed for wstETH’s listing on Arbitrum Core. We recommend aligning all other parameters with those of its existing Arbitrum listing.
Specification
Parameter
Value
Asset
wstETH
Chain
Base
Pool
Core
Collateral Factor
78.50%
Liquidation Threshold
81.00%
Supply Cap
2,600
Borrow Cap
260
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.
looking forward to see this market in Base
