Renzo seeks community votes on onboarding ezETH to Aave V3 Lido and increasing the borrowing limit for wstETH.
Alyssa Davidson
Posted: Oct 22, 2024 11:31 AM Updated: Oct 22, 2024 11:31 AM
Correction and fact check date: October 22, 2024, 11:31 AM
briefly
Renzo’s new proposal proposes to onboard ezETH tokens and increase the borrowing limit for wstETH on Aave V3 Lido instances.
Ethereum liquidity re-staking protocol Renzo announced the launch of its first liquidity re-staking token (LRT) Aave Lido offering, which aims to load the Renzo protocol’s ezETH token and increase the borrowing limit of wstETH on Aave V3 Lido instances. . Renzo wants five days for the community to vote.
Decentralized finance (DeFi) lending platform Aave introduced a dedicated V3 distribution for Lido Finance’s stETH and wstETH tokens this summer. This strengthens Aave’s relationship with Lido, the protocol responsible for stETH, the leading liquid staking token.
According to Renzo, LRT has become a popular collateral asset on the Aave platform. The ezETH token is a rewarded LRT that allows users to deposit liquid stake tokens (LST), including native ETH and currently stETH, in exchange for ezETH.
Due to the strong correlation between LRT and ETH, ezETH is often utilized as collateral for ETH borrowing and leveraged yield staking. Various communities have developed products using Aave to automate these strategies. Integrating ezETH into E-Mode is expected to maximize the return potential of recursive staking strategies. This onboarding process is likely to increase demand for ezETH, increasing revenue for both Aave and Renzo protocols, while also improving ezETH’s liquidity and peg stability.
With the introduction of ezETH and the new LRT wstETH E-Mode, ezETH is expected to primarily serve as collateral for borrowing wstETH to leverage yield. Considering that wstETH’s borrowing limit has already been reached, this proposal aims to increase this limit.
Comprehensive risk parameters demonstrate the viability of ezETH.
Risk parameters were evaluated by Chaos Labs, an on-chain economic security system, and a positive technical assessment for ezETH was performed by BGD Labs, a Web3 blockchain software developer. A qualitative analysis was also performed by LlamaRisk, a risk management services provider.
The Renzo Protocol is designed to simplify and manage Actively Validated Service (AVS) strategies for LRT. Its products, ezETH, pzETH, and ezSOL, serve as interfaces to various ecosystems, including EigenLayer, Symbiotic, and Jito Network. Renzo’s main goal is to democratize the rebooking process so that users of all experience levels can easily participate.
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About the author
As MPost’s resident journalist, Alisa specializes in the broad areas of cryptocurrencies, zero-knowledge proofs, investing, and Web3. With a keen eye for new trends and technologies, she provides comprehensive coverage to inform and engage readers about the ever-evolving digital financial landscape.
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Alyssa Davidson
As MPost’s resident journalist, Alisa specializes in the broad areas of cryptocurrencies, zero-knowledge proofs, investing, and Web3. With a keen eye for new trends and technologies, she provides comprehensive coverage to inform and engage readers about the ever-evolving digital financial landscape.
more articles