Gm Seamless community! Kenneth here, I’m a Defi Protocol Relations contributor at Lido Finance. Have spoken with the team and we’re looking to get Seamless DAO’s support on getting wstETH as a collateral integrated onto Seamless through the Spark program.
I am supportive of this proposal.
Having wstETH as collateral asset on Seamless makes sense and it was proven already on multiple DeFi avenues that wstETH is the best and most requested asset to be used as collateral.
Hi! Thanks for the proposal! Despite it seems that Lido is not going to incentivize Seamless community (hehe), Im in favour of adding stETH as a collateral. It seems to have enough liquidity and in general Lido is a leading LSD protocol
I am interested in discussing Seamless using API3 for wstETH oracle rather than Chainlink.
API3 is a first-party provider, meaning that the API providers aggregate the price feeds on chain (dAPIs). Chainlink’s case dApps trust third-party node operators who aren’t the data sources themselves. API3 launched its decentralized APIs (dAPIs)a few months ago and has +15M TVS on Defillama.
Also, we have Oracle Extractable Value (OEV), going fully live soon. OEV allows the dApps to gain the lion’s share of the liquidations that occur- the dApps can decide to fund its treasury or return the profits to the User. OEV BETA is currently being used with our partners.
Given lots of liquidations will be occurring on Seamless, OEV can be a very attractive and lucrative tool for the DAO since it will be able to retain that profit.
I would appreciate any talks around this or further discussions on using API3 oracle. Of course happy to answer any question as it relates to oracles as well.
stETH is a trusted LST on mainnet and the ability to supply this (while retaining upside from staking rewards) is enticing. I’d be curious on supply and borrow caps, as that seems to be something in question for other assets too, especially now that the Adjusting Parameters On Chain Vote has kicked off
Adding a wstETH market will only bolster Seamless’s offerings while also potentially enabling augmentation of asset utility. This is a no brainer in my opinion - great proposal (and solid precedent setter in terms of Spark Framework usage!).
I am in support of adding wstETH to Seamless protocol. wstETH is a well established asset on mainnet and would make a great home on Seamless protocol on Base. The strength of the asset is appealing as is deepening the bench of available assets on the Seamless platform for users to interact with and utilize.
It’s also excellent to see wstETH work through the Spark program, an added benefit of a high quality proposal.
Chaos Labs supports listing wstETH on Seamless as part of the strategy to increase the offering of Seamless protocol with more LSD assets. Following is our analysis and risk parameter recommendations for the initial listing
Liquidity and Market Cap
When analyzing market cap and trading volumes of assets for listing, we look at data from the past 180 days. The average market cap of wstETH over the past 180 days is ~$8B, and the average daily trading volume is ~$55M (CeFi & DeFi).
Following Chaos Labs’ approach to initial supply caps, we propose setting the Supply Cap at 2x the liquidity available under the Liquidation Penalty price impact.
Given the concentrated liquidity of wstETH, we recommend a 7.5% Liquidation Bonus and a supply cap of 400 wstETH.
Based on our observations, the utilization rate for LSDs has been very low. Therefore, we have taken a conservative approach toward LSDs borrow caps of 40 wstETH. However, if there is a significant increase in demand and utilization, we will reassess the caps according to the utilization pattern.
As the original poster, here’s the summary of what the proposal is. Seeing that the temp check seems to be positive on this thread, I will move it to snapshot soon for voting.
A summary of what was discussed above:
Background:
Lido Finance is a family of open-source peer-to-system software tools deployed functioning on Ethereum and Polygon. It is mainly known for enabling users to stake their tokens with validators to receive rewards from validation activities on the blockchain while being able to use the token on-chain in various capacity including as collateral on money markets.
In November 2023, Lido DAO has officially accepted ownership of the wstETH bridging components on Base, bringing wstETH over to Base. 2.5k wstETH has been bridged over to Base thus far.
Proposal:
Seamless is the lending market that has seen the fastest growth in terms of TVL on Base. wstETH is an asset that lends itself well to lending markets. I am proposing to get wstETH as a collateral asset on Seamless. Having wstETH as a collateral asset on Seamless will doors for strategies like leveraged staking and enable users on Seamless to be more efficient with their capital.
As recommended by Chaos Labs, here are the parameters that should be set for listing wstETH as a collateral.
Parameter
Value
Isolation Mode
No
Borrowable
Yes
Collateral Enabled
Yes
Supply Cap (wstETH)
400
Borrow Cap (wstETH)
40
LTV
65.00%
LT
72.00%
Liquidation Bonus
7.50%
Liquidation Protocol Fee
10.00%
Reserve Factor
15.00%
Variable Base
0.0%
Variable Slope1
7.00%
Variable Slope2
300.00%
Uoptimal
45.00%
Flashloanable
Yes
Siloed Borrowing
No
Borrowed in Isolation
No
These parameters set should ensure that wstETH can be used safely as a collateral on Seamless Protocol.
Next steps:
We will soon kick off the off-chain snapshots lab process. The link to the snapshot vote will be shared in this thread as a reply when it’s up
Any thoughts on Oracle usage and the potential of API3 to be used? Our OEV (oracle extractable value) solution will allow dApps to keep profit from liquidations , which other Oracle projects do not and cannot offer.
Hey @api3eag !
In general we are fine with the usage of any oracle as long as it is agreeable by the protocol and the team that does the risk assessment (e.g. Chaos Labs or Gauntlet). Open to going with API3 if the DAO wants to go with API3 as the oracle solution
We can definitely chat for future intergrations, happy to get connected on whichever platforms you would prefer to chat about this!
It is great to hear that Lido/Seamless is open to other oracles. We (API3) are just about to launch OEV (Oracle Extractable Value), which allows dApps to take advantage of and get compensated for any liquidations. This solution will likely be highly advantageous for Lido/Seamless, given its protocol activity. Moreover, there potentially could be rev-share between Lido and Seamless with OEV profits if there is any Incentives being supplied by Lido.
Our team has been in frequent contact with Chaos, and Gauntlet and they understand API3 on a fundamental level, so I’m confident we can get risk assessments cleared from either of them.
We currently have 56M TVS, more onboards are happening, and OEV will be available on BASE and other EVMs.
