Proposal to add wstETH
Proposal to add wstETH as an uncapped collateral to Interest Protocol.
Overview
wstETH is the wrapped version of stETH developed by Lido to facilitate DeFi transactions with the stETH token. Staked Ethereum is a rebase token, so it accrues staking rewards daily. This is a problem for protocols like Uniswap that require a constant known balance of tokens in their liquidity pools. If one were to provide liquidity in stETH in a Uniswap pool they risk losing out on a portion of their rewards.
“Wrapping” the stETH token in the Lido wrapper contract allows a holder to keep their amount of stETH fixed. The wrapper uses a share system to reflect staking rewards upon un-wrapping.
Due to the nature of wstETH it also comes with a tax benefit. Instead of paying income tax on the daily income from rebasing, a wstETH holder can consider the unwrapping of the token to claim rewards as capital gains. From a tax accounting perspective this greatly simplifies things.
The nature of wstETH makes it a highly secure asset, since it is effectively stETH (which is already used as collateral), simply in a wrapper that changes the reward distribution mechanism.
Parameters
Token Address: 0x7f39c581f595b53c5cb19bd0b3f8da6c935e2ca0
LTV: 75%
Liquidation incentive: 10%
Maximum Cap: 4,000 (~$7,000,000)
Primary Oracle Address: 0xD340B57AAcDD10F96FC1CF10e15921936F41E29c
Primary oracle: Uniswap V3 wstETH/ETH pool
Secondary oracle: 0x32296969Ef14EB0c6d29669C550D4a0449130230
Price deviation: Balancer wstETH/ETH pool
Liquidity
Market Cap: N/A
UniV3 Liquidity: $2,756,438
Balancer Liquidity: $203,503,227
Coingecko 7day avg. volume: $36,866,896
Notable Exchanges: Lido, Uniswap V3, Balancer
Technical Risks
Type of contract: ERC-20 wrapper
Underlying asset: stETH
Time: 707 days
Value: The original amount of stETH wrapped plus rewards accrued over the duration of the period the tokens were wrapped.
