Overview
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.
Additionally, in price impact terms it has been more stable given the concentrated liquidity in the wstETH-WETH pairs available on Base.
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 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.
Copyright
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