I have been tracking Raft since its inception and love what is being built.
I am writing this proposal to introduce a new form of collateral - cbETH, a liquid staking derivative from Coinbase, to be added alongside the existing collateral options, the stETH from Lido and rETH from RocketPool.
In line with the onboarding of rETH, the introduction of cbETH would provide an opportunity for further diversification, broadening the collateral base and thereby mitigating specific risks associated with dependency on a limited number of collateral.
cbETH carries a significant market cap of $2.28 billion, with strong liquidity on the Coinbase exchange platform and almost $ 20 mln TVL on decentralized exchanges, and holds an 11% share within the liquid staking industry. Furthermore, cbETH is likely to become a cornerstone of the Base blockchain which is showing promising signs of early DeFi adoption. As the interoperability potential of the Base blockchain and dApps unfolds, the cbETH usage could lead to more adoption on Ethereum and other blockchains as well. These metrics suggest a robust and active market for cbETH, making it a viable candidate as a new form of collateral.
I am aware of the potential hurdles cbETH entails (see here a detailed risk assessment of the cbETH token). Hence, I have considered such risks in the proposed parameters listed below:
The conservative approach to cbETH parameters, including borrowing/redemption fees, and the limit on maximum cbETH collateral in Raft, as well as on a per-Position basis, reflects the currently lower liquidity of cbETH compared to stETH. These parameters are designed to account for potential market volatility and risk.
However, these parameters should not be static, but dynamic and adjustable according to market conditions. As the liquidity of cbETH potentially increases, and its market presence becomes more robust, the community could review and possibly relax these parameters.
I invite all community members including the core Raft team to provide their feedback on this proposal. I think this proposal to integrate cbETH within Raft will benefit all stakeholders and contribute significantly to the growth of Raft. I would love to start a discussion about the potential of cbETH as a collateral option and how best to incorporate it within the Raft ecosystem.
Thanks for your time and consideration. I look forward to all the community’s insights and discussions on this proposal.