[Proposal] Add rETH collateral

General
1

Proposal for the Introduction of rETH as Collateral to Mint R

Dear Raft Community Members,

We write to propose a new form of collateral - the rETH, a liquid staking derivative from RocketPool, to be added alongside our existing collateral option, the stETH from Lido.

The introduction of rETH provides an opportunity for diversification, broadening our collateral base and thereby mitigating specific risks associated with dependency on a single type of collateral. rETH carries a significant market cap of $835 million, over $150 million liquidity in decentralized exchanges, and holds an 8% share within the liquid staking industry. These metrics suggest a robust and active market for rETH, making it a viable candidate as a new form of collateral.

We propose the following parameters for using rETH as collateral to mint R, alongside a comparison with the existing parameters for stETH:

stETH rETH
Minimum Collateralization Requirement 120% 120%
Borrowing spread 0.50% 1.00%
Redemption fee 1.50% 2.00%
Collateral cap uncapped 20,000 rETH
Collateral cap per Position uncapped 1,000 rETH

The conservative approach to rETH parameters, including higher borrowing/redemption fees, and the limit on maximum rETH collateral in Raft, as well as on a per-Position basis, reflects the currently lower liquidity of rETH compared to stETH. These parameters are designed to account for potential market volatility and risk.

However, we view these parameters as not static, but dynamic and adjustable according to market conditions. As the liquidity of rETH potentially increases, and its market presence becomes more robust, we could review and possibly relax these parameters.

We invite all community members to provide their feedback on this proposal. Our objective is to ensure that the integration of rETH within Raft benefits all stakeholders. We are eager to start a discussion about the potential of rETH as a collateral option and how best to incorporate it within our ecosystem.

Thank you for your time and consideration. We look forward to your insights and discussions on this important proposal.

12 Likes
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Sounds like a no-brainer to me.

4 Likes
3

I’m from the Rocket Pool community (not in an official capacity, to be clear). Obviously, we would look forward to rETH being added as collateral. Rocket Pool rETH has much lower tail risk than stETH and has better tracked peg. If anyone has questions about the protocol, please ask or come visit us on twitter or the discord.

3 Likes
4

More assets coming can expand Raft!

5

Highly support adding rETH as the second LST for Raft.
Beneficial for both Raft, getting a battle-tested and crescent LST as collateral, and RocketPool getting new DeFi usecases for rETH.

6

I feel this is a must for Raft, as rETH has the highest TVL among decentralized LSTs.

I feel in general it will be good to see Raft trending towards a share of stETH of not more than 30% (and eventually 22% if the broader ecosystem wakes up to the perils of LST market share centralization.

1 Like
7

Can’t wait for more collateral :clap:

8

rETH has been added as a collateral type, but the TVL is negligible compared to the TVL brought by stETH. I’d welcome any ideas by the communities to increase rETH deposits

9

Hope the team carefully considers the potential risks. It is very important

10

Good project with establish track record, i don’t see any disadvantage

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Raft is relatively unknown in the rocketpool community. They usually use Gravita as it was started from some rocketpool community members.

I tried to bring the communities together with a tweet thread lately:

It was shared by the rocketpool community. Maybe Raft community members could repost it again. :slight_smile:

Cheers,
yusa

4 Likes