Authors: Mendi Core Team
Title: Deploy a new market with KelpDao wrsETH on Mendi
Type: Mendi Improvement Proposal
Abstract
Eigenlayer restaking has been the dominant narrative this year in DeFi. EigenLayer has grew from $250 million in TVL to $18.653 billion at the time of writing. KelpDao has been a key player in this growth and the protocol abstracts away all complexity from the end-user and enables easy collaboration between them and EigenLayer node operators. With the launch of wrsETH on Linea, Mendi Finance should deploy a new market in the lending protocol for wrsETH to provide lending and borrowing opportunities with this new and dynamically growing market.
Link to snapshot vote: Snapshot
Proposal Summary
Deploying the wrsETH market will further leverage Mendi’s top position within the Linea ecosystem and capture trading activities around the wrsETH token. It will also enable the Mendi community to gain exposure through wrsETH to EigenLayer restaking rewards and 2x Kelp Miles.
The Mendi core team will be responsible for deploying the contracts, using the standardized deployment process. The market will be deployed using wrapped rsETH due to the fact that rsETH such as stETH is a rebasing token**.** wrsETH will ensure users accrue their staking rewards while participating in DeFi protocols such as Mendi Finance.
Motivation
The Mendi community will gain considerable benefit from the deployment of the wrsETH market:
- Mendi will capture the wrsETH market on Linea generating further protocol revenue to be distributed to stakers.
- Lending protocol users will gain exposure to more EigenLayer restaking rewards and Kelp Miles.
- KelpDAO has committed to the following:
- 1x Kelp Miles on wETH supply
- 2x Kelp Miles on wrsETH supply
Technical considerations
Outline the technical aspects of the upgrade and what are the required development works to implement the proposal if the voting passes.
Expected Timeline
- Governance Vote: From 05/23 to 05/26
- Deployment Target: Immediately after vote
Deployment Considerations
The core team will be responsible for deploying the new market.
API3 - Chainlink hybrid price feed will be used to secure the market and the lending protocol.
This architecture will leverage API3 as the primary feed to use Oracle Extractable Value to capture MEV back to the protocol, while any deviation outside of Chainlink thresholds would default the feed to the Chainlink feed, meaning that ultimately Chainlink secures the market. This enables Mendi to capture MEV while also relying on the security provided by Chainlink. The goal with this approach is to leverage API3 technology while also keeping security at the forefront of the protocol by ultimately relying on the oracle with best history of operation.
The methodology behind the price feed will be the same as it was on the ezETH market, using an exchange rate feed. This methodology aligns with the methodology used by Aave on their wrsETH deployments.
Collateral Factor: 70%
Due to the fact that wrsETH is a full market deployment, withdrawals are enabled and has a large global liquidity behind it, the core team proposes to set the collateral ratio at 70%.
Reserve Factor: 20%
Conflict of Interest
There are no conflict of interests regarding this proposal.
Next Steps
Deployment of the market once the vote passes through
