Listing cbETH on Morpho’s AaveV3 Optimizer

Title: Add cbETH to the Morpho’s AaveV3 Optimizer

Author: Rémi Foult

Summary

This publication presents the Morpho community the opportunity to onboard cbETH Coinbase Wrapped Staked ETH - the second biggest LSD/LST by TVL - to Morpho-Aave-v3.

Abstract

By adding cbETH as collateral on Morpho-Aave-v3, we can tap into the vast liquidity and market demand for cbETH. This integration will attract more liquidity to the Morpho platform.

Motivation

cbETH is the second largest LST by market cap: https://dune.com/queries/46128/90778

cbETH presents an excellent opportunity for inclusion on Morpho-Aave-v3 due to its significant market capitalization and deep liquidity across prominent DEXs. As the second-largest staked ETH token, cbETH offers a reliable and secure option for users seeking leveraged staking strategies.

cbETH was built by Coinbase, a leading cryptocurrency exchange and custodian known for its commitment to regulatory compliance and user security. Coinbase’s presence in the crypto ecosystem adds a layer of trust and credibility, attracting both institutional and retail users. Furthermore, Coinbase has actively engaged with regulators to obtain clarity on crypto regulations in the United States. Their efforts in navigating the complex regulatory landscape and advocating for sensible regulations have been instrumental in fostering a healthy and sustainable environment for the broader crypto industry. By including cbETH as collateral on Morpho-Aave-v3, we embrace not only a highly liquid and reliable asset but also contribute to the overall stability and growth of the crypto ecosystem, aligning with Coinbase’s mission of building an open financial system for the world.

Use Case

cbETH is an ERC-20 token on Ethereum that represents underlying staked ETH on the Coinbase platform.

The value of cbETH increases over time due to the accumulation of Beacon Chain rewards, priority fees, and MEV rewards earned by Coinbase node operators. This productive yield feature makes cbETH an attractive option for borrowing and leveraging in Morpho-Aave-v3.

Base cbETH Yield

Users gain 75% of the standard Ethereum staking APR at baseline.

Queued ETH Yield

Redemption of cbETH for ETH is available through Coinbase and the queue time depends on the beacon chain withdrawal queue.

Specifications

Risk Considerations

cbETH is soft pegged to it’s underlyng staked ETH so is subject to market forces. Price deviation from peg brings arbitrage opportunity by claiming redemption at Coinbase which processing time depends depends on beacon chain exit queue length.

cbETH liquidity is spread accross Uniswap, Curve, Maverick and Balancer

A 10000 cbETH to ETH swap on 1inch has a 1.2% price impact.

Market Volatility

There is approximately 10m$ average volume per day onchain.

Contract Address

cbETH: 0xBe9895146f7AF43049ca1c1AE358B0541Ea49704

Oracle

Chainlink Oracle:

Risk Parameter Configuration

Morpho can uniquely suggest parameters and these should only be seen as a starting point. We believe that the cbETH market presents a similar quality to the rETH market and similar parameters are worthwhile.

Go To Market

refine MIP for snapshot vote

References

Project - https://www.coinbase.com/price/coinbase-wrapped-staked-eth

Whitepaper - https://www.coinbase.com/cbeth/whitepaper

Documentation - cbETH Intro | Using cbETH | Sourcing cbETH on Coinbase

Github / source code - Source code | Github

Ethereum contracts - Coinbase Wrapped Staked ETH | Etherscan

Chainlink oracle - cbETH / ETH Chainlink Price Feed

Audit - Coinbase Liquid Staking Token Audit - OpenZeppelin blog

Twitter - https://twitter.com/coinbase

Blog - https://blog.coinbase.com/

Support - https://help.coinbase.com/

4 Likes

Hey,
Thanks for taking the time to write this proposal @remilm
I’m in support of adding cbETH as collateral on Morpho-Aave V3 Optimizer, given the deep liquidity of cbETH and the potential valuable folding strategies that could emerge by borrowing with it on Morpho

1 Like

Hey all, exciting proposal!

After carefully following Morpho’s asset listing checklist, the cbETH can be safely listed on the AaveV3-ETH Optimizer.

The proposal can be translated into the following steps to be batched on the MorphoAdmin:

  1. createMarket(cbETH, reserveFactor = 0, p2pIndexCursor = 0)
  2. setAssetIsCollateralOnPool(cbETH, true)
  3. setAssetIsCollateral(cbETH, true)
  4. setIsSupplyPaused(cbETH, true)
  5. setIsWithdrawPaused(cbETH, true)
  6. setIsBorrowPaused(cbETH, true)
  7. setIsRepayPaused(cbETH, true)
  8. setIsLiquidateBorrowPaused(cbETH, true)
  9. setIsP2PDisabled(cbETH, true)

The Morpho Association will submit the proposal very soon.

Meanwhile, the Morpho Labs team will conduct more tests that will be shared later in this forum.

2 Likes

Now that the checklist has been successfully completed, I’m delighted to be able to support this proposal, which enhances the aaveV3 optimizer.
Full support!

2 Likes

The proposal has been executed: Ethereum Transaction Hash (Txhash) Details | Etherscan. cbETH is now available as collateral on the Morpho-Aave V3 Optimizer!

1 Like